When Life-Changing Events Happen

The annual insurance open season ended more than two months ago. So what do you do if you need to make a change in your insurance benefits? Did you know that there are some insurance changes that can—and should—be made outside of open season?

This is true for the Federal Employees Health Benefits Program, Federal Employees Group Life Insurance and the Federal Employees Dental and Vision Insurance Programs. When it comes to the five years leading up to your retirement date, the rules regarding changes can be especially important for FEHBP and FEGLI because of the “five-year test” that must be met in order to maintain these valuable benefits during retirement.

I wrote about the five-year test for FEHBP in a previous column. Last July, I received the following anguished email from an employee who was planning to retire in August 2017:

I have been a federal employee for 34 years and I am retiring under CSRS on 31 August 2017. I have had federal health insurance since day one of my career. I was covered by my retired husband’s FEHB self and family plan until the end of 2016. Because all our children are now over the age of 26, we decided during the 2016 open season we would each take a self only insurance plan. What we didn't realize was that a retiree's health insurance takes effect on 1 January 2017, but my insurance didn't go into effect until 8 January 2017, which is the first day of the new leave year. That means that I had no insurance between 1 January and 8 January. Now my human resources office is saying that I won't be able to take my health insurance into retirement because that one week caused a break in my consecutive years. I can't believe this is happening. What should I do?

This is an example of a change that should have been processed as a qualifying life event rather than an open season change. When two federal spouses are changing health insurance, those changes have to be coordinated very carefully to avoid the gap in coverage that occured in this unfortunate situation. In this situation, when the husband made the open season change to drop from self and family to self only coverage, the wife, who was still employed, should have made a QLE change to coordinate with the January 1 date of her loss of coverage.

On health benefits form SF 2809, there is a long list of QLEs that allow changes outside of open season. It notes that a change from not enrolled to enrolled, from self only to self plus one or self and family, and from one plan or option to another can be made as much as 31 days before the event for several reasons, including “loss of coverage under another FEHB enrollment due to termination, cancellation, or change to self plus one or self only of the covering enrollment.”

Fortunately for this employee, her agency was able to correct the error so she could retire. The agency canceled her open season health insurance election and backdated her qualifying life event as of the date that she lost coverage under her husband’s health plan.

This is one example of how important it is to understand the rules for continuation of health insurance coverage. There are times when it makes sense to change FEHBP plans, but it is very important to carefully follow the rules for making changes to avoid a loss of valuable benefits.

Another area that is sometimes misunderstood is changing FEGLI coverage before and after retirement. Open enrollment periods for FEGLI are very infrequent. The last one was held in 2016. But if you need to change your life insurance coverage, you may not have to wait for an open enrollment period.

FEGLI includes basic coverage that is based on annual salary rates for federal employees, and optional coverage that can be added. To continue FEGLI into retirement, you might want to review the rules that are outlined in some of my previous columns:

• Life Insurance Options - Part One
• Life Insurance Options - Part Two
• Life Insurance Lessons
• What You Need to Know About Life and Health Insurance
• How Much Life Insurance Do You Really Need?

Employees may reduce their level of FEGLI coverage at any time using form SF 2817. Life insurance coverage may also be increased outside of an open enrollment period under specific circumstances. The Office of Personnel Management provides detailed information on FEGLI coverage, premiums and benefits.

The FEDVIP program also includes provisions for QLEs that allow you to enroll, change or cancel your plans outside of open season. These events include marriage, loss of other dental or vision coverage, gaining or losing a family member and transferring positions. Here’s more information about changing your FEDVIP.

Photo: Flickr user Madhan Karthikeyan