FERS Go Bag: FEHB – Your Best Benefit as a Federal Employee

Item 3: FEHB – your best benefit as a federal employee

Federal Employee Health benefits are hands down the best benefits for federal employees—so good that Congress even has them! 

Do we sound jealous? Well, as civilians on the outside looking in, we are incredibly jealous of your health care benefits as federal employees—they are amazing, so let’s make sure that we do not lose them. 

To ensure you can keep your Federal Employees Health Benefits (FEHB) coverage in retirement, it’s crucial to understand the eligibility requirements and take necessary steps before leaving federal service. Let’s break this down into key points:

Eligibility Requirements for FEHB in Retirement

To qualify for FEHB coverage in retirement, you must meet two main criteria:

1. Retire with an immediate annuity: You must be eligible for an immediate retirement under the Federal Employees Retirement System (FERS). This includes:
   • 30 years of service at your Minimum Retirement Age (MRA)
   • 20 years of service at age 60
   • 5 years of service at age 62
   • 10 years of service at your MRA (MRA+10 Retirement)
2. Five-Year Rule: You must have been continuously enrolled (or covered as a family member) in any FEHB plan(s) for the 5 years of service immediately before your retirement date or for the full period of service since your first opportunity to enroll if less than 5 years3.

Verifying FEHB Coverage for Retirement

To verify your FEHB coverage and ensure you meet the requirements:

1. Review your Official Personnel Folder (OPF): Check your enrollment history to confirm continuous coverage for the past 5 years.
2. Consult with HR: Speak with your agency’s Human Resources office to verify your FEHB enrollment status and eligibility for continuation into retirement.
3. Check your Leave and Earnings Statement: Ensure that FEHB premiums are being deducted from your pay.

Ensuring Coverage Before Leaving Federal Service

To guarantee you have FEHB coverage when you retire:

1. Enroll in FEHB if not already covered: If you’re not currently enrolled, do so as soon as possible to meet the five-year requirement.
2. Maintain continuous enrollment: Avoid any gaps in coverage during the 5 years preceding your planned retirement date1.
3. Consider the Tricare exception: If you’re covered by Tricare, this time can count towards the 5-year requirement. However, you must be enrolled in an FEHB plan on your retirement date.
4. Plan for spouse coverage: If you want your spouse to continue FEHB coverage after your death, elect a survivor benefit on your pension. This is crucial, as no survivor benefit means no FEHB for your spouse after you pass.
5. Double-check your retirement application: Ensure you’ve properly indicated your intention to continue FEHB coverage into retirement.
6. Attend pre-retirement counseling: Many agencies offer sessions that cover FEHB continuation and other important retirement benefits.

How does FEHB and Medicare Work?

FEHB is your best benefit as a federal employee, so how does that benefit work with Medicare, which you must enroll in at age 65?

Understanding how these programs work together is crucial for making informed decisions about your healthcare coverage.

Oh and let’s be super clear about how we feel about your FEHB benefits, if you are ever talking with a financial advisor who tells you to give up this benefit, pick up your belongings and leave immediately. They clearly do not understand your federal employee benefits. Do not walk, hustle out the door before you make an election you can never reverse.

FEHB and Medicare Coordination

When you have both FEHB and Medicare, they work together. Essentially, Medicare is your primary payor, and FEHB becomes the secondary.

1. Primary vs. Secondary Coverage
   • For active federal employees: FEHB is primary, and Medicare is secondary.
   • For retirees: Medicare becomes primary, and FEHB is secondary.
2. Enrollment Options
   • You can keep your FEHB coverage and enroll in Medicare Parts A and B.
   • Some FEHB plans offer reimbursement for Part B premiums.
3. Coverage Comparison
   • FEHB generally covers similar types of expenses as Medicare.
   • FEHB may provide additional coverage for services not covered by Medicare, such as routine physicals and emergency care outside the U.S.

Medicare Enrollment Considerations: there are a lot of parts to Medicare but here are the most common Parts people are familiar with:

1. Part A (Hospital Insurance)
   • Usually premium-free for most people because you already paid into this during your working years.
   • Consider enrolling when first eligible.
2. Part B (Medical Insurance)
   • Requires a monthly premium which is paid for out of pocket, post tax or deducted from your social security payments if you are receiving them.
   • Enrollment decision should be based on individual circumstances and cost-benefit analysis. This one comes with a hefty LIFETIME penalty if you choose not to enroll and come back later, needing the coverage. Make sure that you’re really sitting down and going over the options with someone to know what your risks are.
3. Part D (Prescription Drug Coverage)
   • FEHB provides creditable drug coverage so that you can delay Part D enrollment without penalties, unlike Part B.
   • Compare FEHB and Part D costs and benefits to decide which best suits your needs. 

In some cases, it may be appropriate to enroll in additional insurance, often referred to as “Medi-Ga,” to cover incidents not otherwise covered under FEHB or Medicare. This is an individual decision based on your current and future health circumstances. 

Medical expenses are often a Retirees second largest expense so make sure you take time to decide what your options are and what is most appropriate for you and your family.