Keeping your FEHB health insurance in retirement

The five-year rule

To carry FEHB into retirement, you generally must retire on an immediate annuity and have been enrolled in FEHB for the five years of service right before you retire, or for all the time since you were first eligible if that period is shorter than five years.

The rule is about continuous enrollment. If you dropped coverage for a stretch, for example because you were on a spouse's plan, that gap can disqualify you.

What the government pays

In retirement, the government continues to pay its share of your premium, the same way it did while you worked. You pay your share, usually taken from your annuity. You can change plans each year during open season, which runs from mid-November to mid-December.

Where Medicare fits in

At 65 you become eligible for Medicare. You are not required to drop FEHB, and many retirees keep both. When you have Medicare Part A and Part B, Medicare generally pays first and your FEHB plan pays second, which can lower what you pay out of pocket.

Part A is premium-free for most people who paid Medicare taxes. Part B has a monthly premium, so the real question is whether the extra coverage is worth the cost for you. Some FEHB plans offer lower costs or reimbursements for retirees who have Part B.

The enrollment trap

Retirees on FEHB do not get the same special enrollment period for Medicare Part B as people who are still working and covered by an employer. If you sign up late, you can face a lifelong 10% premium increase for each full 12-month period you could have had Part B but did not.

Confirm your enrollment window before you turn 65, and ask your plan how it coordinates with Medicare.

Other coverage to know about

Retirees can also enroll in the Federal Employees Dental and Vision Insurance Program (FEDVIP) and the Federal Long Term Care Insurance Program, though eligibility and rules differ. Review each one on its own terms.