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Federal employees benefit from a variety of insurance options, including health insurance, life insurance, supplemental dental and vision coverage, and a flexible spending account program that allows them to manage out-of-pocket expenses using tax-free funds. Additionally, since its inception in 2002, long-term care insurance has also been available to federal employees, although it’s currently not open for new applicants.
Many of these benefits can continue into retirement, provided specific criteria are met. However, for those unable to maintain these benefits post-employment, the loss can be particularly challenging. Here is an overview of the federal insurance benefits available after leaving federal service.
Federal Employees Health Benefits
An overview of eligibility and benefits can be found here.
Continuation into Retirement
To continue receiving health benefits in retirement, certain conditions must be satisfied:
- You must be qualified for immediate annuity (commencing within 31 days of separation from federal employment) under a civilian retirement system, such as the Federal Employees Retirement System (FERS) Minimum Retirement Age + 10 retirement.
- You should have maintained continuous enrollment in any Federal Employees Health Benefits (FEHB) plan for at least the five years preceding your annuity start date, or for the entirety of your service if it is less than five years. This includes family member coverage through someone else’s FEHB enrollment or under the Uniformed Services Health Benefits Program (TRICARE) if previously enrolled.
If delaying retirement to avoid age penalties, you can reenroll once your annuity begins if you meet the aforementioned criteria. Surviving spouses and eligible federal annuitants retain FEHB coverage at the same cost as active employees.
Leaving Federal Service without Immediate Retirement Eligibility
Upon leaving federal service and lacking immediate retirement eligibility, you receive a complimentary 31-day extension of your health coverage.
Temporary Continuation of Coverage (TCC)
You may maintain your coverage for up to 18 months after separation, barring gross misconduct. However, during this time, you will be responsible for paying the full premium, which includes both employee and employer contributions plus an additional 2% administrative fee. After your initial enrollment, you may switch plans or options during open season or due to qualifying life events. If your TCC duration expires, you are still entitled to a 31-day temporary extension, but that is not applicable if your enrollment ends due to cancellation.
Federal Employees Group Life Insurance
Continuation into Retirement
If you have an immediate annuity and have been insured for at least five years before retirement—or the full period eligible if less than five years—you may continue your Federal Employees Group Life Insurance (FEGLI). To initiate this, you must complete the SF 2818 form, indicating your desire to continue your Basic life insurance into retirement.
On the form, you’ll also have to decide on the amount of Basic insurance you want to keep after reaching age 65 or at the time of retirement. Options include reduced amounts or no reduction at all. Additionally, the amount under Option A will automatically decrease at age 65, while you must make selections regarding Options B and C coverage.
Reinstatement of FEGLI coverage occurs upon filing for retirement, contingent upon meeting previous enrollment criteria. The Office of Personnel Management (OPM) will notify you of your eligibility and will provide the necessary forms upon retirement.
Leaving Federal Service without Immediate Retirement Eligibility
Upon separation without immediate retirement benefits, you have a 31-day extension for your life insurance coverage, and you may convert to an individual policy. The process for this involves submitting the SF 2819 and Agency Certification of Insurance Status (SF 2821) to selected insurance carriers, allowing for customized policy choices.
Federal Employees Dental and Vision Insurance Program
Continuation into Retirement
Those who enrolled in the Federal Employees Dental and Vision Insurance Program (FEDVIP) while employed will generally see no interruption of coverage upon retirement, as it will automatically carry over. Premium deductions will be arranged with the annuity system after retirement notification.
Leaving Federal Service without Immediate Retirement Eligibility
If you leave federal service without retiring, your FEDVIP coverage ends at the conclusion of the last pay period of employment. Unfortunately, there is no extension or private conversion option available.
Federal Long Term Care Insurance Program
Continuation into Retirement
For those who already pay premiums via payroll deductions, these arrangements typically transition to deductions from retirement annuities seamlessly. Should you notice a lack of deductions after two pay periods, it’s advisable to contact FLTCIP for verification.
Leaving Federal Service without Immediate Retirement Eligibility
Your long-term care insurance remains intact after leaving federal service, provided you continue premium payments. If you primarily utilize payroll deductions, coordination with FLTCIP is necessary to establish a new payment method.
Flexible Spending Accounts
The fate of your Flexible Spending Account (FSA) funds is determined by separation timing. If you part ways with federal employment before the end of the plan year, any remaining balances in your Health Care Flexible Spending Account (HCFSA) or Limited Expense Health Care Flexible Spending Account (LEX HCFSA) will not be reimbursable for expenses incurred post-separation. However, your Dependent Care Flexible Spending Account (DCFSA) can continue to cover eligible expenses until the balance is depleted, or the end of the year.
Conclusion
Understanding the benefits and options available to federal employees and retirees is essential for effective financial planning and maintaining coverage during and after employment transitions. Staying informed about timelines and obligations can help navigate these benefits efficiently.
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