Are you piggybacking on your private-sector spouse’s health plan because it is better, cheaper or just easier than enrolling in one of Uncle Sam’s Federal Employees Health Benefits Program plans? If so, listen up.

You could be setting yourself up to working another five years so you can have the best health coverage for yourself and your nonfederal  spouse in retirement. That’s when many private-sector plans either fall apart or disappear, unlike the federal plans which treat young healthy workers and older, less healthy retirees the same.

But there is a catch.

You can’t be covered by any of the FEHBP plans unless you were enrolled in one — as in paying premiums — for the five years prior to retirement. It’s called — surprise, surprise — the five-year rule.  And many people never hear about it until it’s too late. Every year dozens, maybe hundreds of about-to-retire civil servants learn they will either have to work another five years, or retire with inferior health insurance.

You work for Uncle Sam. Government has been your career. Your spouse is in the private sector. Their health insurance is cheaper and better than any of the 20 to 30 plans available to you under the Federal Employee Health Benefits Program — or it’s more convenient. Whatever. In any case, you’ve piggybacked on the plan for years. But you realize that when you both retire you’ll have to switch to one of the FEHBP plans. They are better, less expensive and Uncle Sam pays most of the premium.

A no-brainer. So far, so good. Right?

For retirees, the FEHBP’s cradle-to-grave coverage with Uncle Sam paying up to 75% of the premium is the best deal around — anywhere. So what could possibly go wrong? The short answer is plenty, as in just about everything. How come?

If you ignore the five-year rule, you could wind up working for Uncle Sam a lot longer. I got a call earlier this week from a frantic fed. She’s been carried on her private-sector husband’s health plan for years. They like it and it worked for them — until now.

She happened to mention to a co-worker that she’s going to retire in December 2020. Her friend asked, “What about health insurance after you retire?” The woman answered, “What about it?” She would just switch to one of the FEHBP plans for herself and her husband. His insurance will cost more and cover less in retirement. It’s not the first time I have heard this, so what’s the problem?

Some feds, who use their spouses non-FEHBP plan, get around the five-year rule by enrolling in one of the less expensive federal plans. They pay minimal premiums but it guarantees that when they retire, after five years under the federal health program, they can continue it in retirement, when it counts most.

Here’s how benefits expert Tammy Flanagan explained the rule:

“Health benefits coverage can be continued into retirement for employees who retire on an immediate — not deferred — benefit and who have been enrolled continuously in the program for at least five years immediately preceding retirement, or for the entire period before retirement in which they would have been eligible for coverage if that period happens to be less than five years. An ‘immediate’ annuity under the Federal Employees Retirement System includes retirement under the minimum retirement age plus 10 years’ service provision, even if the annuity is postponed to a later date to lessen the age reduction. Health benefits, as well as life insurance coverage, in those situations are suspended until the annuity commences.

“Employees are considered covered if they are enrolled under a spouse’s federal health plan. Additionally, their coverage need not have been in the same plan. They may have always had a [Postal Service] mail handler’s benefit plan, but the open season before retirement switched to GEHA, or SAMBA, Aetna, Blue Cross [Blue Shield] or an HMO. They still are considered to have continuous coverage in the federal program. In some cases, coverage under CHAMPUS (the military health plan) may be creditable toward meeting the coverage test.

“The problem of not having five years’ continuous coverage mainly will affect those married employees who are covered under a spouse’s private-sector [plan.]

“Some employees are eligible for a waiver of the five-year rule due to a policy related to the buyout program. It states that employees retiring with a buyout can continue federal health coverage regardless of those restrictions so long as they were enrolled in a federal health plan (or as a family member) as of March 30, 1994. In addition, this policy covers those separating under early retirement without a buyout and those taking discontinued service retirement because of job abolishment, reduction-in-force, transfer of function outside the commuting area, etc.”

Nearly Useless Factoid

By Amelia Brust

When ancient Egyptians began brewing beer it was primarily done by women, as the drink was culturally considered more effeminate than wine. Through the medieval period in Europe, women remained the lead brewers for homes and small-scale commercial purposes. Not until the 15th century did the practice become more commercialized and, therefore, required more legal and financial resources available only to men that they displaced women as heads of the industry. Nevertheless, it was a 17th century German nun who discovered that adding hops to beer increased its shelf life.

Source: Vice

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