Retirement planning always requires thoughtful preparation. For federal couples, where both spouses work for federal agencies, the decisions can be more complex. Two of the most important considerations are which FEHB coverage to carry into retirement and whether to elect a survivor annuity.
Choosing the Right FEHB Coverage
If dependent coverage for children isn’t needed, couples must decide whether each spouse should maintain a self-only plan or if one should elect self-plus-one coverage. The right choice depends on several factors, including employment status, timing of retirement, and healthcare needs—but each approach offers distinct advantages.
Self-Only Coverage
Maintaining two self-only plans provides flexibility to tailor coverage to each spouse’s individual needs. For example, one spouse may already be enrolled in Medicare and benefit from a plan that coordinates efficiently with Parts A and B. Meanwhile, the other—if not yet Medicare-eligible—might find greater value in a high-deductible health plan paired with a Health Savings Account.
Running the numbers is key, as two self-only plans can sometimes be more cost-effective than a single self-plus-one option.
Self-Plus-One Coverage
Differences in age and years of service often mean federal couples retire at different times. In cases where one spouse continues working, a self-plus-one plan can allow the employed spouse to maintain coverage for both.
This option also carries a tax advantage, since premiums are paid with pre-tax dollars while the employee remains on payroll.
If the spouse carrying the self-plus-one plan separates from service before becoming retirement-eligible, coverage must be transferred to the still-employed spouse. Fortunately, this can be done outside of Open Season, as loss of FEHB coverage qualifies as a life event.
Survivor Benefits
Electing a survivor annuity does more than provide ongoing income, it also ensures continued eligibility for FEHB coverage for the surviving spouse.
If both spouses independently qualify to carry FEHB into retirement, this may be less of a concern. However, income planning remains critical. When one spouse passes away, the surviving spouse is left with a single pension and the higher of the two Social Security benefits.
If that reduced income, along with any TSP withdrawals, falls short of expected expenses, a survivor annuity can help close the gap.
For more guidance on coordinating federal retirement benefits, schedule a complimentary analysis with a Federal Retirement Consultant (FRC®).
