One of the most valuable aspects of federal employment is the ability to continue your health insurance coverage into retirement. The Federal Employees Health Benefits (FEHB) program provides this option — but understanding the eligibility requirements and how coverage changes in retirement is important for planning.
Can You Keep FEHB in Retirement?
Yes — but you must meet specific eligibility requirements:
- You must retire on an immediate annuity (not a deferred retirement)
- You must have been continuously enrolled in FEHB (or covered as a family member under another enrollment) for the five years immediately preceding retirement, OR since your first opportunity to enroll if that was less than five years ago
Meeting this "5-year rule" is critical. If you let your FEHB coverage lapse before retirement, even briefly, you may lose the ability to carry it into retirement permanently.
What Changes in Retirement
While you can keep the same plan and coverage type, several things change when you transition from active to retired status:
Premium payments — As an active employee, your premiums are deducted pre-tax from your paycheck. In retirement, premiums are deducted from your annuity payment, and the tax treatment may differ.
Government share — The government continues to pay its share of the premium (approximately 72% on average), the same as for active employees.
Plan options — You continue to have access to the same plans and can change plans during Open Season, just as active employees do.
Medicare coordination — When you become eligible for Medicare at age 65, you'll need to decide how Medicare and FEHB work together. Many retirees enroll in Medicare Part A (which is typically premium-free) and keep their FEHB plan, which then coordinates benefits with Medicare.
FEHB and Medicare
The interaction between FEHB and Medicare is one of the most important healthcare decisions for federal retirees:
- Medicare Part A — Most retirees enroll in Part A, as it's usually premium-free and provides additional coverage
- Medicare Part B — Enrolling in Part B is optional if you have FEHB. Part B has a monthly premium. Some FEHB plans offer incentives for Part B enrollment through reduced premiums or lower copays
- FEHB becomes secondary — If you have both FEHB and Medicare, Medicare generally pays first, and FEHB covers remaining costs
The Postal Service Health Benefits (PSHB) Program
Federal employees and retirees should be aware of recent changes. The Postal Service Reform Act created the Postal Service Health Benefits (PSHB) Program, which affects postal employees and retirees separately from the broader FEHB program. Non-postal federal employees are not affected by this change.
Planning Ahead
If you are within several years of retirement, consider:
- Verifying that you meet the 5-year continuous enrollment requirement
- Understanding how your current FEHB plan coordinates with Medicare
- Reviewing whether Medicare Part B enrollment makes financial sense for your situation
- Checking whether your current plan will be available in retirement
Your agency's benefits office can help you verify your eligibility and understand your specific options.
For more educational resources, visit our Information page.
This article is for informational purposes only and does not constitute healthcare or financial advice.