In this article, we'll go over the things that change with your FEHB program when you retire.
Can you keep your FEHB coverage in retirement?
The rule says that you can keep your coverage in retirement if you've been enrolled in the program during the five consecutive years prior to your retirement. Still, this rule has exceptions. For instance, you can still be eligible with less than five years if you have transferred from a job that didn't have FEHB coverage to one that did, and you retire before the five years of coverage have passed.
This rule can be discarded in other situations as well, like the following:
In case you are covered by Tricare or CHAMPVA, that period will be recognized for the five-year requirement if you are enrolled in an FEHB plan when you retire.
If you opt for an early optional or discontinued service retirement, with or without a buyout.
If it's against equity and good conscience not to do it. Though, this is rarely the case.
What will happen with premiums after retirement?
Premium rates remain unchanged when you retire. However, there is one noteworthy exception for Postal Service retirees. The unions negotiated lower premiums for them that end when an employee retires. That means that they pay more for their FEHB coverage in retirement than while they are employed.
It goes for both postal and non-postal retirees that when they retire, they are no longer eligible for premium conversion that means paying premiums with pre-tax money. That makes premiums more costly for retirees, and how much more they will pay depends on their tax situation.
Don't expect that this will change. Over the past few years, there have been proposals for retirees to qualify for the tax break. Yet, those proposals haven't even been considered at all during recent years.
How do FEHB and Medicare Part A work together?
Medicare Part A (Hospital) coverage is deducted from every federal employee's pay. Your FEHB benefits won't get reduced if you are in retirement and you qualify for Medicare, usually at 65. If you are covered by both, and if they provide the same benefit, Medicare will be the primary payer of your medical services, while your FEHB plan will be the secondary payer. If your FEHB plan has some benefit that Medicare doesn’t, it will be the only payer and vice versa.
How about Medicare Parts B, C, and D?
While you’re working, Medicare Part A coverage gets deducted from your payroll, and that is how you've paid for it. However, if you wish to enroll in Medicare Part B (Medical) or Part D (Prescription Drugs), you'll have to pay for it with your own money.
As for Medicare Part C (Medicare advantage Managed Care), you can get it through private insurers, but only if you are a retiree enrolled in Medicare Part A and B. If you enroll in Medicare Part C, you don't have to cancel your FEHB plan. Instead, you can suspend it, which means that you can re-enroll in the program throughout any Open Season or whenever if your Part C provider cancels coverage.
