If you are a FERS employee with children and have TRICARE you may want to think about FEHB. Why? FEHB provides coverage for your children until age 26. TRICARE provides coverage only until age 21 or age 23 if the qualified dependent children are fulltime students.
TRICARE does offer options to your children to be continued on TRICARE up to age 26. TRICARE Young Adult (TYA) is a plan for qualified adult children who are unmarried. They can purchase after eligibility for “regular” TRICARE that would end age 21 or 23 if enrolled in college.
There are two TYA options and this article will not go into the details of the two choices other than costs. TYA Select premiums increased in 2021 from $228 to $257 per month. The more expensive alternative, TYA Prime, premiums in 2021 increased from $376 to $459 a month. Those premiums are for each adult until age 26.
A variety of health care options are available in the market place for young adults who age out of TRICARE. According to eHealth’s recent study of Affordable Care Act (ACA) plans, in 2020 the national average health insurance premium for an ACA plan is $456 a month for an individual. Such ACA plans have one thing in common: Premiums increase. None of these plans, however, offer an advantage inherent in FEHB plans.
The government will pay the lesser of 75% of an FEHB plan’s total premium or 72% of the average premium. If the average premium increases, the maximum government contribution also increases. This government contribution feature continues into retirement.
Federal employees facing a future with children aging out of TRICARE should consider enrolling in an FEHB policy. This is because FEHB plans provide coverage for children in the family option up to age 26. Additionally, the family FEHB premium for the employee, spouse, and children may be less than the cost of the TYA option for one individual.
FEHB employees who are eligible for TRICARE and interested in having their children covered in an FEHB plan have to enroll during Open Season. Federal employees with TRICARE also need to enroll in a plan at least a year ahead of retirement for the FEHB plan to be continue in retirement.
This is because government employees must be participants in an FEHB policy during the last year five continuous years preceding their retirement date in order to participate in the FEHB policy throughout their retirement years. Those employees with TRICARE can have TRICARE count towards fulfillment of the “five-year” rule. All employees must also be participants in a FEHB plan during the last year preceding retirement for the coverage to continue past employment.
Here are some considerations for Federal employees with TRICARE to consider for the strategy of using a FEHB plan for the flexibility of providing health care coverage for children up to age 26:
- Enroll in a FEHB plan at least the year prior to retirement.
- Initially consider a high-deductible low cost FEHB plan to work with TRICARE.
- Each Open Season explore the best FEHB plan to coordinate coverage with TRICARE.
- The FEHB plans are paid with pre-tax dollars while employed.
- The FEHB plans are paid with after-tax dollars during retirement.
- Never cancel your FEHB plan in retirement – instead suspend it.
- FEHB plans suspended in retirement can be reactivated during the Open Season period.
- An FEHB plan during retirement can be suspended to enroll in TRICARE.
When children age out of an FEHB plan, the door is open to investigate Self Plus One FEHB alternatives. Remember if opting only for TRICARE to keep the FEHB door open by suspending your FEHB plan.
Francis Xavier (FX) Bergmeister, CFP®, CLU®, ChFC®, CASL®, ChSNC® is a graduate of the Wharton School. His graduate work includes a Doctor of Arts from George Mason University. He is a retired U.S. Marine Colonel and FBI Analyst. He provides seminars to federal employees and is the owner of Semper Why, LLC.