While in federal service, federal employees are privileged to have an important fringe benefit in the form of group health insurance. Employees enrolled in the Federal Employees Health Benefits (FEHB) program pay on average 25 to 28 percent of FEHB program premiums with the federal government paying the other 72 to 75 percent. This is the case no matter which FEHB program health plan the employee is enrolled in and no matter the type of coverage. Employees have the option of “self only”, ”self plus one eligible family member,” and “self and family” coverages. Eligible family members include a spouse and any number of children under the age of 26. Employees can change their FEHB program health plan annually during the benefits “open season” which is held from the second Monday of November through the second Monday of December. The 2026 benefits open season is being held from Nov. 10 through Dec. 8, 2025.
A tremendous feature of the FEHB program is that enrolled employees are eligible to keep their FEHB health insurance in retirement. A federal retiree pays the same percentage of an FEHB program health plan’s premium as an active employee; namely 25 to 28 percent of the premiums. A federal retiree can keep family members on their FEHB program insurance in retirement and federal retirees can change their FEHB program health plan every year during open season. In order to be eligible to keep FEHB program health insurance in retirement, a retiring employee must meet all of the following requirements:
- The employee is entitled to retire via an immediate retirement and then one to two months receive the first of lifetime CSRS annuity or FERS annuity checks. An immediate retirement includes the FERS “MRA+10” (reduced) retirement and early retirement, and
- The employee has been continuously enrolled or covered as a family member in any FEHB program plan for the five years of service time immediately before the annuity starts, or for the full period(s) of service time since the employee’s first opportunity to enroll, if less than five years.
The following are two examples of immediate retirement:
Example 1. Jason plans to retire with 30 years of FERS service at age 57 on March 31, 2026. He is eligible to retire via the immediate retirement rules. Jason’s retirement will become effective on April 1,2026 and he will receive his first FERS annuity check on May 1, 2026.
Example 2. Cindi plans to retire at age 60 on January 31,2026 with 15 years of federal service. She is retiring via the FERS “MRA + 10” (reduced) retirement. Cindi’s retirement becomes effective February 1,2026 and she will receive her first FERS annuity check on March 1, 2026. However, since Cindi is two years under age 62, her FERS annuity will be permanently reduced by 10 percent.
An employee who has been continuously enrolled in the FEHB program in either his or her name, as “self only”, “self plus one”, or “self and family”, or under the enrollment of a family member, such as a spouse for the five-year period ending on the day before the retired employee’s CSRS/FERS retirement becomes effective, is eligible for the FEHB insurance program during retirement.
Returning to Example 1 and Example 2:
- Example 1: Jason’s effective date of retirement will be April 1, 2026. To keep FEHB program health insurance in retirement, Jason must have been continuously enrolled in the FEHB program for the period March 31,2021 through March 31, 2026; and
- Example 2: Cindi’s effective date of retirement will be February 1, 2026. To keep FEHB program health insurance in retirement, Cindi must have been continuously enrolled in the FEHB program for the period January 31,2021 through January 31, 2026.
If an employee chooses to leave federal service before he or she is eligible for immediate retirement and is eligible for a deferred retirement, then the employee will permanently lose FEHB program health insurance eligibility. This is true even though the departed employee will receive a deferred CSRS or FERS annuity at a later age. That age depends on which retirement system (CSRS or FERS) and how many years of creditable service the employee had when he or she left federal service.
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Those employees who intend to retire during 2026 and who want to retain their FEHB program insurance should be aware of the five-year FEHB program participation requirement. If an employee is eligible to retire in 2026 with a certain retirement date in mind but discovers that he or she will not meet the five-year FEHB program participation requirement as of the retirement date, then the employee is advised to postpone his or her retirement date in order to meet the five-year FEHB program participation rule. The following example illustrates:
Example 3. Sanford entered federal service on August 1, 2014, at the age of 57 after retiring from his private industry job. He joined the federal government for the main purpose of getting health insurance for himself and his wife for their retirement. His goal was to enroll in the FEHB program, work five or six years, and then retire at age 62 or 63 with a small FERS annuity and FEHB program health benefits for retirement.
Sanford enrolled in the FEHB program in November 2014 during the FEHB program open season, with his FEHB program health insurance coverage becoming effective on the first day of the 2015 leave year: January 8, 2015. Sanford had five years of continuous federal service as of August 1, 2019, and decided to retire initially on December 31, 2019. He was advised that retiring at the end of December is a good time to retire. He was eligible to retire on December 31,2019 since he had over five years of FERS-covered service and he was age 62. However, after meeting with his retirement specialist, Sanford discovered that while he was eligible to retire on December 31, 2019, he would not be eligible to keep his FEHB program health insurance during retirement. This is because Sanford’s FEHB program health insurance became effective January 8, 2015. Five continuous years of FEHB program enrollment means that the earliest date Sanford could retire would be January 8, 2020. Had Sanford retired on December 31, 2019, the effective date of his retirement would have been January 1, 2020, 7 days before January 8, 2020, and therefore making him ineligible to keep his FEHB program health insurance in retirement. Sanford therefore changed his retirement date to January 31, 2020. He was therefore able to keep his enrollment in the FEHB program throughout retirement for himself and for his wife.
Family Members Continuing Coverage After the Death of the Annuitant
Family members, including a spouse and children under the age of 26, can continue their FEHB program health plan enrollment after the death of a federal retiree if the deceased retiree had elected to give a CSRS or FERS spousal survivor annuity. A surviving spouse must also have been enrolled on the deceased retiree’s FEHB program health plan, as part of self plus one or self and family coverage, at the time of the retiree’s death.
It has happened that a federal employee elected to give a survivor annuity at the time the employee retired from federal service. However, the retiree’s spouse was not included on the retiree’s FEHB program health plan at the time of the retiree’s death. This typically happens when a spouse has his or her own health insurance coverage usually through a private employer’s group health insurance. In this situation, when the retiree dies, the surviving spouse will be ineligible to enroll in the FEHB program as a surviving spouse.
Those employees who intend to retire during 2026 and who want to make sure that their spouse retains the FEHB program health insurance when the retiree dies should make sure that:
- They are giving a spousal survivor annuity (CSRS or FERS) to their spouse, and
- Their spouse is included on their FEHB program health plan. Note that adding a spouse who currently has his or her own health insurance coverage to a federal employee’s or federal retiree’s FEHB program health plan can only be done during an open season.
The following example illustrates:
Example 4. Ken, age 57, is a FERS employee who plans to retire from federal service on March 31, 2026. Ken has been enrolled in the FEHB program during all of his 32 years of federal service self only enrollment. He is married to Jessica who works in private industry. Jessica is enrolled on her private company group health insurance plan. When Jessica retires from her private company in three years, she intends to join Ken’s FEHB program health plan. This is because Jessica’s private company does not provide health insurance coverage for company retirees. Under this scenario, Jessica is risking not being eligible to enroll in the FEHB program. This would occur if Ken were to die between now and the time Jessica retired, a result of not being enrolled in the FEHB program as part of Ken’s “self plus one” enrollment. This would be true even though Ken is giving Jessica a full FERS spousal survivor annuity. To avoid this possibility, Ken should add Jessica to his coverage during the current FEHB program open season, November 10,2025 to December 8, 2025.
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.
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Ed Zurndorfer, EA, ATA, CFP®, CLU®, ChFC®, CEBS®, ChFEBC℠: Federal Employee Benefits Expert
A former career Federal employee, Ed has published a staggering 1,200+ separate articles on Federal Benefits and Retirement!
Just “Google” his name, and you are likely to find a plethora of sites that contain his writings. Drawn to its mission to reach, teach
and serve Feds, Serving Those Who Serve is the only financial planning practice with which Ed has chosen to affiliate in over
20 years teaching. In addition to conducting Federal Benefits seminars for Serving Those Who Serve, you can find Ed’s
writings here on our blog in the FedZone, and on Fed-Soup, MyFederalRetirement, FederalNews Radio and NITP.
He is a member of the Maryland Society of Accountants, the National Association of Enrolled Agents, the International Society of Certified Employee Benefits Specialists, the Financial Planning Association, the National Association of Health Underwriters,
and the Society of Financial Service Professionals. Since 1999, Ed has taught many thousands of Federal employees about
their benefits, in person and at Federal agencies all over the country. Ed is a true national treasure.
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.