Rules for Continuing FEHB Program Health Benefits After Retiring from Federal Service – Part II
Edward A. Zurndorfer
This is the second of two FEDZONE columns discussing the requirements that a federal employee must fulfill in order to continue his or her Federal Employee Health Benefits (FEHB) program health benefits in retirement. This column will discuss a federal retiree’s FEHB program benefits, FEHB health plan premium cost, how a retiree can cancel, suspend or change FEHB program coverage, what happens in the event of changes in family status, and what a retiree can do during the annual FEHB program “open season.”
Benefits and Cost
Retiring federal employees who have been continuously enrolled in the FEHB program for the five years ending on the day they retire from federal service and who receive a CSRS or FERS annuity (called “annuitants”) are eligible to keep their FEHB program benefits throughout their retirement. Annuitant FEHB programs medical care benefits are the same as for a federal employee enrolled in the same FEHB program health insurance plan. The annuitant’s percentage share of the FEHB program premiums is the same as when they were an employee. Annuitants -like employees – pay on average 25 to 28 percent of an FEHB program health plan insurance premium. The FEHB program health plan insurance premiums are deducted from an annuitant’s monthly CSRS or FERS annuity payment.
If an annuitant’s monthly annuity payment is not sufficient enough to cover the annuitant’s share of the monthly FEHB plan premium, then the annuitant may switch to a lower-cost FEHB program health plan or option, a plan or option in which the amount of the health plan premium is small enough and withheld from the annuitant’s monthly annuity. Another option is the annuitant can choose to pay the premiums directly to the retirement system. For CSRS or FERS annuitants, this means paying the premiums directly to the Office of Personnel Management (OPM).
Direct FEHB Program Premium Payments
If an annuitant decides to pay his or her share of the FEHB program health plan premium directly to his or her retirement system, then the retirement system will establish a payment schedule for the annuitant. The annuitant must continue to make premium payments directly for the length of the enrollment, even if his or her CSRS or FERS annuity increases sufficiently through cost-of-living adjustments (COLAs) to cover the FEHB program health plan monthly premiums.
Nonpayment of FEHB Program Premiums
If an annuitant has arranged to make direct health plan premium payments to the retirement system but the retirement system does not receive the premium payment by the premium due date, the retirement system must notify the annuitant in writing that the payment must be made within 15 days (45 days if the annuitant lives overseas) in order for his or her FEHB program coverage to continue. If the payment is not made, the retirement system will terminate the enrollment 60 days (90 days for an annuitant living overseas) after the date of the notice. Coverage will be terminated retroactive to the end of the last pay period in which the annuitant made the payment. An annuitant terminated for nonpayment may not reenroll, unless the nonpayment was for reasons beyond his or her control.
If an annuitant was unable to make timely payment for reasons beyond his or her control, he or she may write to the retirement system to ask that coverage be reinstated. The request must be filed within 30 days from the date enrollment was terminated and provide proof that the nonpayment was beyond the annuitant’s control. The retirement system will determine if an annuitant is eligible for reinstatement of coverage. If the retirement system decides to allow reinstatement, it will be restored retroactively to the termination date. If the request is denied, the annuitant may request that the retirement system reconsider its initial decision.
Procedures for Retiring Employees Who Want to Continue FEHB Health Benefits Coverage in Retirement
If a retiring employee meets all the requirements for continuing FEHB program coverage during his or her retirement, he or she need not do anything at the time of retirement. No forms need be filed with the retiring employee’s agency or with OPM.
Cancel, Suspend, or Change FEHB Health Benefits Coverage
If an employee does not want to continue his or her FEHB benefits enrollment upon retiring from federal service, the employee must cancel enrollment by completing and submitting form SF 2809 (Health Benefits Election Form) or through another appropriate request such as an agency electronic enrollment system or a letter. This must be the retiring employee’s action. The employing office must not initiate the termination of the enrollment unless the individual is not eligible to continue FEHB program enrollment after retiring from federal service.
When the retiring employee cancels his or her FEHB program enrollment before he or she retires (or during retirement), he or she will never be able to reenroll. However, an annuitant or a survivor annuitant may suspend FEHB program enrollment in order to enroll in one of the following health care insurance programs:
- (1) A private Medicare Advantage Plan;
- (2) The Medicaid program or a similar State-sponsored program of medical assistance for the needy; or
- (3) Peace Corps, CHAMPVA, TriCare or TriCare-for-Life.
To suspend FEHB coverage, documentation of eligibility for coverage under the non-FEHB program must be submitted to the retirement system. If the documentation is received within the period beginning 31 days before and ending 31 days after the effective date of the Medicare Advantage Plan, or the Medicare or similar program, or within 31 days before or after the day designated by the annuitant or survivor annuitant as the day he or she want to suspend FEHB coverage to use Peace Corps, TriCare, or TriCare-for-Life instead of FEHB program coverage, then suspension will be effective at the end of the day before the effective date of new coverage. Otherwise, the suspension is effective the first day of the first pay period that begins after the date the retirement system receives the documentation.
Annuitants and survivor annuitants who have suspended their FEHB program enrollment are eligible to reenroll in the FEHB program during a future FEHB open season for any reason other than an involuntary loss of coverage. If an annuitant or survivor annuitant is involuntarily disenrolled from the other coverage, he or she can reenroll in the FEHB program immediately.
FEHB Program Enrollment Changes Effective Date
Unless otherwise specified, enrollment changes take effect on the first day of the month that follows the retirement system’s receipt of his or her enrollment change request.
FEHB Enrollment Election by Proxy
A retirement system may permit an individual’s representative to make an enrollment election or change with the individual’s written authorization.
Decrease FEHB Program Enrollment
Annuitants may decrease their enrollment from self plus one or self and family to self only, or from self and family to self plus one, at any time under the same conditions (called “life events”) as an active employee with one exception. An annuitant who as an employee who was subject to a court or administrative order requiring coverage for his or her children cannot:
- cancel or suspend his or her enrollment
- change to self only, or
- change to a comprehensive medical plan that does not serve the court order.
This rule remains the case after the employee retires from federal service as long as the court or administrative order is still in effect and the annuitant has at least one child identified in the order who is still eligible under the FEHB program. The only exception is when an annuitant provides documentation to the retirement system that he or she has other coverage for the child or children.
FEHB Program Open Season
FEHB program enrolled annuitants may change from one FEHB program health plan to another FEHB program health plan, option or type of enrollment, during the annual FEHB program “open season,” held every year from the second Monday of November through the second Monday of December.
A non-enrolled annuitant is not permitted to enroll during an open season unless he or she suspended his or her FEHB enrollment in order to:
- join and have subsequently voluntarily disenrolled from a private Medicare Advantage Plan
- join and have subsequently disenrolled from a Peace Corps, TriCare or TriCare-for-Life plan, or
- because he or she furnished proof of eligibility for Medicare, or a similar state-sponsored program of medical assistance for the needy and wishes to reenroll in a FEHB program for reasons other than involuntary loss of that other coverage.
An enrollment change or reenrollment is effective on January 1 following the end of “open season”.
Change in Family Status
Annuitants may change plans, options or types of FEHB enrollment when they have a change in family status under the same conditions as active federal employees. Enrolled annuitants may also change FEHB program plans, options, and type of enrollment at any time beginning on the 30th day before becoming eligible for Medicare. Enrolled annuitants may make an enrollment change under this event only once during their lifetime. There are different enrollment rules for survivor annuitants. FEHB program enrollment rules for survivor annuitants and other FEHB program rules are discussed in the next FEDZONE column.
Edward A. Zurndorfer is a Certified Financial Planner, 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 the employees of Serving Those Who Serve 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.