Continuing Your Insurance Into Retirement

If you’re planning to retire soon or have recently retired, you might be wondering exactly what happens to your coverage under various insurance programs available to federal employees.

The good news is that most federal employees will continue their Federal Employees Health Benefits Program (FEHBP), Federal Employees Group Life Insurance (FEGLI), Federal Employees Dental and Vision Insurance Program (FEDVIP), and Federal Long Term Care Insurance Program (FLTCIP) benefits into retirement and be covered for life. The only insurance-related benefit that does not continue into retirement is the Federal Flexible Spending Account program (FSAFEDS).

This week, I wanted to share some of the common questions that employees ask about continuing these valuable benefits into retirement. 

What are the requirements to continue FEHBP, FEGLI, FLTCIP and FEDVIP into retirement?

FEHBP and FEGLI both require five years of coverage in order to continue these benefits into retirement. For FEGLI, the five-year test applies to Basic FEGLI as well as each option. An excellent resource to learn about FEGLI in retirement, the five-year test, post-retirement elections, beneficiary designations and procedures for retiring employees can be found in the FEGLI Handbook on pages 113-131. 

Both FEDVIP and FLTCIP allow retirees to enroll, and employees who are enrolled at the time of retirement can continue their coverage. FEDVIP has an annual open season that coincides with the FEHBP open season that runs for four or five weeks every November and December. Coverage is effective for retirees on Jan. 1.

FLTCIP is always open. If a retiree can pass the medical underwriting, they and their spouse may enroll at any time. Remember, your age at enrollment will affect your premiums. 

Does the cost of my health insurance change once I’m retired?

The government contribution continues for employees who are eligible to carry FEHBP into retirement. You pay only the employee share of the premium. But you’ll pay the premium monthly as a withholding from your retirement benefit. 

Remember that most current employees participate in premium conversion, under which allotments from their paychecks for FEHBP coverage are made on a pre-tax basis. Premium conversion is not available to retirees. 

If you’re a federal employee who’s married to another federal employee, and one of you is planning to retire earlier than the other, the employed spouse may benefit from carrying the health insurance for the couple to continue the pre-tax treatment of FEHBP premiums. The tax savings can outweigh the savings of the difference between two self only plans compared to a self plus one coverage.

Once both spouses are retired, you might switch to two self only plans, because this is often less expensive than carrying one self plus one plan or family coverage. 

Is my spouse covered under FEHBP and FEDVIP if I die before them?

A spouse who receives a survivor annuity can continue your self plus one enrollment, as long as they are the designated family member. The survivor annuity requirement can be met by choosing the maximum or a partial spousal survivor election at retirement. A surviving spouse can continue or transfer FEHBP coverage to their own paycheck or retirement benefit if they have their own entitlement to FEHBP through their employment or retirement.

If you are an employee at the time of your death, your eligible survivors are entitled to the same benefits and government contribution as active and retired employees enrolled in the same plan. The survivor annuitant's share of the premiums is deducted from their annuity payments if the benefit is sufficient to cover the premium. 

Does the cost of FEDVIP change once I’m retired?

No. There is no government contribution to FEDVIP. The premiums are based on a group rate, and will be deducted from your monthly retirement benefit once your retirement claim is finalized. Employees who are transitioning to retirement may receive a bill for these premiums. FEDVIP premiums are also paid pre-tax for employees under premium conversion, but are post-tax withholdings for retirees.

Can I reduce my FEGLI coverage?

Employees and retirees can reduce FEGLI coverage at any time. Employees can cancel some or all FEGLI coverage by submitting form SF 2817 to their human resources office and sign up only for the FEGLI coverage that they want to KEEP.

For retirees, there is no form for canceling some or all FEGLI coverage. You must write a letter to: Office of Personnel Management, Retirement Operations Center, P.O. Box 45, Boyers, Pennsylvania 16017-0045.

Any cancellation or reduction of life insurance must be in writing and have an original signature by the insured retiree. Be sure to include your retirement claim number or Social Security number and specify what action you want taken. You can’t increase your coverage after retirement, or reinstate any coverage you cancel. 

Should I replace FEGLI with another policy?

The cost of FEGLI Option B (multiples of your salary, up to five times your basic pay) increases every five years up to age 80. The increases that occur at age 50 and beyond can be significant, so you may wonder if FEGLI is your only option to maintain life insurance. You may have many choices for obtaining life insurance, depending on your insurability.

FEGLI covers everyone in the federal family, regardless of their health or other factors. This is not true of other insurance plans. When you apply for life insurance, the company will examine a number of factors based on its underwriting standards and guidelines.