Thousands of federal and postal workers are piggybacking on their private-sector spouse’s health insurance plan. It may be easier, cheaper, etc. But it’s time to dismount. Fast.
Whatever advantages the non-fed health plan has while you are both working will likely disappear when your spouse retires. Or decides to end the marriage. Or dies. Then you may be up the proverbial creek without a paddle.
Although it is hard to find health insurance as good as the variety of plans available to federal workers and retirees, some people prefer to use their private-sector partner’s insurance. But once feds retire, the plans available to them through the Federal Employees Health Benefits Program are almost always superior. And the government pays about 72 percent of the total premium. That’s why the vast majority of retirees are in one of the two dozen plans in the FEHBP. But some wait until too late to qualify for coverage.
Walton Francis, author of the Consumers’ Checkbook Guide to Health Plans for Federal Employees, says here’s how you can avoid a big risk: “Many people who are covered by their spouse’s private insurance drop FEHBP. This saves premium costs. However, if you are not enrolled in an FEHBP plan and you die suddenly, your spouse cannot ever enroll again. Your best option is to carry an FEHBP family policy and drop the spousal insurance.”
By the same token, feds must be enrolled in one of the FEHBP plans (any plan will do) for the five years prior to retirement. “It’s not expensive to enroll in the FEHBP for the five years before retirement,” Francis said. “Several plans have annual premiums that are about $1,500. These plans cost about $1,000 after tax savings. Some plans even give you savings accounts higher than the tax-advantaged premium cost.” Think of it as buying insurance now, so you can have insurance later on when you are retired.
Francis was my guest yesterday on our Your Turn radio show. He answered dozens of questions from listeners. If you missed the show, want to hear it again or pass it along to a friend, you can click here.