Myth-conception: You and your spouse must have been enrolled in the same health insurance plan for 5 calendar years before your retirement in order to have Family coverage in retirement.
Reality: You (and only you) must have been enrolled in (or covered under) the Federal Employees Health Benefits PROGRAM (not any one plan within the Program) for the 5 years of actual service immediately before retirement. Spouses can be covered in retirement after less than 5 years of coverage while the retiree was working – in fact, retirees can change from Self Only coverage to Self and Family coverage in retirement!
This common misunderstanding probably flows from the numerous variables that must be addressed in Federal Employees Health Benefits Program (FEHBP) requirements. Here’s what the FEHBP Handbook states with regard to eligibility to continue FEHB coverage into retirement:
You are eligible to continue health benefits coverage, upon retirement, if you meet all of the following requirements:
- you are entitled to retire on an immediate annuity under a retirement system for civilian employees (including FERS MRA + 10 retirements); and
- you have been continuously enrolled (or covered as a family member) in any FEHB plan(s) for the 5 years of service immediately before the date your annuity starts, or for the full period(s) of service since your first opportunity to enroll (if less than 5 years).
Let’s break these requirements into their components:
- Entitled to retire on an immediate annuity: That means that you must be eligible to begin receiving your annuity within 1 month of separation from service. That’s the standard for most retirements from service (regular voluntary retirements, “early-out” retirements, disability retirements, FERS MRA+10 retirements, etc.).With a FERS MRA+10 retirement, you are eligible to receive an immediate annuity, but you can elect to postpone receipt of it. If you postpone receipt of the annuity, your FEHB eligibility is suspended, and you can elect to start the coverage again when you begin to receive your annuity.
- You have been continuously enrolled (or covered as a family member) in any FEHB plan(s): “Continuously enrolled” essentially means the coverage hasn’t been cancelled by the enrollee; virtually any other break in coverage (e.g. military service; breaks in federal service; termination by the carrier for failure to pay dues, etc.) would not count against you for purposes of the “continuously enrolled” requirement.“Or covered as a family member” means that if you and your spouse are both federal employees, your coverage as a spouse counts the same as if you had been the enrollee who actually paid the premium. Coverage is coverage, whether it is as the primary enrollee or as a federal spouse.“In any FEHB plan(s)” means you can change plans any number of times during the critical 5 years with no impact on your eligibility to continue coverage in retirement. You could have changed plans during Open Season every year, and changed mid-year because of Qualifying Life Events – no problem! As long as you were covered (as the enrollee or a federal spouse) in any plan within the FEHBP during those critical 5 years, it counts.
- For the 5 years of service immediately before the date your annuity starts, or for the full period(s) of service since your first opportunity to enroll (if less than 5 years): For most people, this is not an issue: most employees enroll (or are covered as family members) throughout their careers, including the last 5 years. If, however, you’ve had breaks in your federal service or are eligible to retire with less than 5 years of service, this requirement can be critical.The key phrase here is years of service. What if you have a break in your federal service and return to complete just a few years of service before retiring? If you have only 3 years of service in your current period of employment, you would have to be enrolled for that entire time, PLUS the last 2 years of federal service in a position where you were eligible for FEHB before the break. Failure to enroll (or to be covered as a family member) until your final years of a longer career could make you ineligible for FEHB coverage in retirement.If your short coverage was due to a late arrival on the federal scene, though, you might get to continue your coverage into retirement after less than 5 years of enrollment/coverage. Let’s say you were in a position that was eligible for FERS coverage for only 4 years, but you made a deposit for previous Social Security-covered federal service (when you weren’t eligible to enroll in the FEHB). You would be eligible to retire, and take your FEHB enrollment with you with only 4 years of enrollment because you were enrolled for the full period of service since your first opportunity to enroll. (Such situations are obviously rare!)
The important knowledge to take away from this is that most employees have no problem meeting this requirement. However, if you have changes in your life situation close to retirement, be careful. If you had only your spouse’s non-federal plan through most of your federal career and that coverage was lost just a few years before your planned retirement, enrolling at that point in your career may cause you to work longer to satisfy these requirements.