Suppose you’ve worked 20, 30, 50 years for Uncle Sam. You’ve had good times and bad, successes and failures — but now it’s time to go. You have things to do, places to be, people (maybe grandkids) to visit. Maybe books to read. So on what is supposed to be that happy final day, you march into HR to be sure your health insurance is good. For you and your spouse. And the HR person casually asks if you are sure you’ve had one of the Federal Employees Health Benefits (FEHB) plans for at least five years.
Five years! No, you haven’t been in an FEHB plan for the past five years. You got your health insurance through your significant others’ private employer. Maybe it was less costly. But whatever the reason for piggybacking on a spouses private plan, things change when it comes time to retire. And now that they are retiring — unlike Uncle Sam — no more company-backed health plan. Your fallback has always been to switch one of the FEHB plans when you retire from government. Good plan, except it won’t work. You’ve violated the five-year rule.
That isn’t a problem for federal and postal workers who had family plans while working. Especially the last five years of employment. But if they didn’t have FEHB coverage (any plan or option would do) for their last five years of federal employment, they won’t be able to get FEHB coverage when they retire. There are some rare exceptions, but in most cases the five-year rule prevails. Meaning you may have to work another five years before you can retire under the FEHB program.
Here’s how insurance experts Walton Francis explains it in this years Checkbook’s Guide to Federal Health Plans:
…do not assume that you need not enroll in the FEHB program just because you have other coverage.
If your spouse has a low-cost health plan through a private employer, or you have a health plan from prior employment, check to be sure that it covers you and your children, and has a benefit package as good as the Federal plans.
Even if your spouse’s plan is every bit as good as any of the Federal plans, consider the cost of this coverage compared to some of the lower-premium Federal plans. Remember that you must be covered under the FEHB program continuously for the five years preceding retirement to continue enrollment after retirement (there are some very rare exceptions, such as certain agency downsizing situations). You don’t have to be in the same plan in each year, but you must be covered continuously by some FEHB plan or, in the special case of former military, TRICARE.
Most importantly, if you should die while you are not enrolled in a FEHB family plan, your spouse will lose eligibility for the program. Since most employers do not continue coverage past retirement, or cannot be counted on to do so, your only guarantee that your spouse can keep this entitlement is to be continuously enrolled. There is an excellent strategy for doing so at minimum cost. All of the plans showing a very low or negative number in the “No Costs” column are Consumer-Driven or High Deductible plans that give you a savings account as large as or larger than the premium. With double coverage you will probably not ever reach the high deductible and will realize this saving in most circumstances. In other words, these plans really are almost “free” if they supplement other coverage from your spouse.