Alyssa Lane
Federal retirees have a range of insurance options available to them, and the choice depends on their personal circumstances. The Federal Employees Health Benefits (FEHB) Program is the largest employer-sponsored group health insurance program globally, covering over 9 million federal employees, retirees, and their families. The Federal Employees' Group Life Insurance (FEGLI) Program is another popular option, as it is the largest group life insurance program in the world, covering over 4 million federal employees and retirees. Additionally, retirees may choose to enroll in Medicare, specifically Part A (Hospital Insurance) and Part B (Medical Insurance), to ensure full benefits. If retirees are employed in the private sector after their federal retirement, they may also have access to health insurance through their new employer.
| Characteristics | Values |
|---|---|
| Federal employee insurance and retirement benefits | Federal Employees Health Benefits (FEHB) Program, Federal Employees' Group Life Insurance (FEGLI), Thrift Savings Plan (TSP), Retirement Annuity, Social Security |
| Medicare | Part A (Hospital Insurance), Part B (Medical Insurance), Part D (Drug Plan) |
| Medicare Supplement Insurance | Medigap |
| Special Enrollment Period | Losing health coverage, moving, getting married, having a baby, adopting a child, low income |
| Medicare costs | $164.90 a month for Part B in 2023 for most people. Higher for individuals with a modified adjusted gross income of over $97,000, or $194,000 if married and filing jointly |
| Medicare and FEHB | Medicare pays first, FEHB becomes secondary |
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What You'll Learn
Federal Employees Health Benefits (FEHB) Program
The Federal Employees Health Benefits (FEHB) Program is a comprehensive health plan available to federal employees, retirees, and their survivors. It offers a wide range of health plans to choose from, including Consumer-Driven and High Deductible plans, Fee-for-Service (FFS) plans, Preferred Provider Organizations (PPO), and Health Maintenance Organizations (HMO). This flexibility allows individuals to select the plan that best suits their needs and preferences.
The FEHB Program provides access to a variety of health services and supplies, with the specific offerings varying by plan. To help individuals make informed decisions, FEHB plan brochures outline the services and supplies covered, as well as the level of coverage provided. These brochures can be obtained from the health plans or the enrollee's human resources office.
The program also offers flexibility in terms of payment and reimbursement. For instance, in certain situations, FEHB health plans may be asked to demonstrate maximum flexibility to assure benefits coverage. This could include relaxing pre-certification requirements for emergency admissions or making additional supplies of medications available for backup in emergency situations.
Additionally, the FEHB Program is exempt from certain federal statutes that restrict participation in pharmacy incentive programs. This means that enrollees in the FEHB Program may participate in such programs, whereas those in other federal programs, like Medicare and Medicaid, are statutorily prohibited from doing so.
The FEHB Program is just one component of the retirement benefits available to federal employees. These employees typically have access to three separate retirement benefits: a Retirement Annuity, the Thrift Savings Plan, and Social Security. By understanding and utilizing these benefits, federal employees can effectively plan for their retirement years.
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Medicare and Medicare Supplement Insurance (Medigap)
If you are a retiree and need health coverage, you can use the Health Insurance Marketplace to buy an insurance plan. If you have retiree health coverage, you have different options to choose from. For example, if you have Medicare, you can learn about Medicare and the Marketplace. If you retire before turning 65 and lose your job-based health plan, you can use the Health Insurance Marketplace to buy a plan.
Medicare is a federal health insurance program for people aged 65 and over, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant). It is the largest health insurance program in the United States, covering more than 55 million people.
Medicare Supplement Insurance, also known as Medigap, is extra insurance that you can buy from a private health insurance company to help pay your share of out-of-pocket costs in Original Medicare (Parts A and B). Medigap plans are designed to assist with costs not covered by Parts A and B, such as deductibles, copays, and coinsurance. These plans are available in all 50 states and Washington, D.C., and the costs and enrollment eligibility can vary.
If you are enrolled in Medicare Part A and Part B (Original Medicare) and have a Medigap policy, Medicare and your Medigap policy will each pay their share of the covered health care costs. Generally, when purchasing a Medigap policy, you must already have Medicare Part A and Part B, and you will need to pay the monthly Medicare Part B premium in addition to a premium to the Medigap insurance company. As long as you pay your premium, your Medigap policy is guaranteed to be renewable, meaning it will automatically renew each year. It's important to compare Medigap policies, as the costs can vary, and some plans cover additional benefits not included in Medicare.
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Federal Employees' Group Life Insurance (FEGLI)
Federal Employees Group Life Insurance (FEGLI) is the largest group life insurance program in the world, covering over 4 million federal employees and retirees, as well as many of their family members. The Federal Government established the program on August 29, 1954. Most federal employees are eligible for FEGLI coverage, which provides group term life insurance. As such, it does not build up any cash value or paid-up value.
FEGLI consists of Basic life insurance coverage and three optional forms of insurance. In most cases, new federal employees are automatically covered by Basic life insurance, and their premiums are deducted from their paychecks unless they waive the coverage. Basic Life Insurance is equal to the actual rate of annual basic pay (rounded to the next $1,000) plus $2,000, or $10,000, whichever is greater. There is also an Extra Benefit for employees under age 45: double life insurance benefits until age 36, decreasing at 10% per year until age 45, when the extra coverage ends.
The three forms of optional insurance that can be elected are:
- Option A - Standard, which doubles in the case of accidental death, with coverage of $10,000.
- Option B - Additional, which offers one to five multiples of pay.
- Option C - Family, which insures an employee's eligible family members from one to five multiples of coverage, with each multiple equal to $5,000 upon the death of a spouse and $2,500 upon the death of an eligible child.
It is important to note that employees must have Basic insurance to elect any of the optional coverages. While Basic insurance enrollment is typically automatic, optional insurance enrollment is not—employees must take action to elect these options within 31 days of becoming eligible.
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Federal Employees Dental and Vision Insurance Program (FEDVIP)
The Federal Employees Dental and Vision Insurance Program (FEDVIP) is a program that allows eligible federal and postal employees, retirees, and their eligible family members to purchase dental and vision insurance on a group basis. This means that participants benefit from competitive premiums and no pre-existing condition limitations.
To be eligible to enroll in FEDVIP, individuals must be eligible for the FEHB Program, although they do not necessarily need to be enrolled in it. Annuitants are not required to be eligible or enrolled in the FEHB Program to qualify for FEDVIP. Eligible family members include a spouse and unmarried civilian dependent children under the age of 22, or unmarried TRICARE-eligible dependent children under the age of 21 (non-student) or 23 (full-time student). This includes legally adopted children, recognized natural children who meet certain dependency requirements, stepchildren, and foster children who live with the enrollee in a regular parent-child relationship.
FEDVIP offers three types of coverage: Self Only, Self Plus One, or Self and Family. Under certain circumstances, coverage can continue for a child aged 22 or older who is incapable of self-support, and for a TRICARE-eligible dependent child over the age of 21 or 23 who meets the Department of Defense's standard for incapacity and support or dependency.
Enrollment in FEDVIP takes place during the annual Federal Benefits Open Season in November and December, and premiums for federal and postal employees are withheld from salaries on a pre-tax basis.
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Retirement Annuity, Thrift Savings Plan, Social Security
Retirement Annuity, Thrift Savings Plan, and Social Security are three separate retirement benefits that work together to provide a comprehensive retirement plan for federal employees.
The Federal Employees Retirement System (FERS) is a retirement plan that provides benefits from these three sources. The Basic Benefit and Social Security parts of FERS require employees to pay into the plan each pay period, with the agency also contributing. After retirement, employees receive annuity payments each month for life. The Thrift Savings Plan (TSP) part of FERS is an account set up by the agency, into which they deposit an amount equal to 1% of the employee's basic pay each pay period. Employees can also make their own contributions, which the agency will match.
The TSP is a defined contribution retirement savings and investment plan that offers federal employees the same type of savings and tax benefits that many private corporations offer their employees under 401(k) plans. By participating in the TSP, federal employees can save part of their income for retirement, receive matching agency contributions, and reduce their current taxes. The TSP is administered by the Federal Retirement Thrift Investment Board.
Employees hired prior to January 1, 1984, under the Civil Service Retirement System (CSRS) do not have a Social Security component, unless earned from non-federal employment. If covered by CSRS, the TSP is a supplement to the CSRS annuity or military retired pay.
It is important to note that federal employees can access a variety of consumer publications and training modules to help them understand their retirement benefits and plan for their retirement.
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Frequently asked questions
Federal retirees can apply for the Federal Employees Health Benefits (FEHB) Program, which is the largest employer-sponsored group health insurance program worldwide, covering over 9 million federal employees, retirees, former employees, family members, and former spouses. Additionally, retirees can apply for the Federal Employees Dental and Vision Insurance Program (FEDVIP), which is available to eligible federal retirees and their families on a group basis, offering competitive premiums and no pre-existing condition limitations.
Established in 1954, the FEGLI Program is the largest group life insurance program globally, covering over 4 million federal employees, retirees, and their families.
Most federal employees today have three separate retirement benefits: a Retirement Annuity, the Thrift Savings Plan, and Social Security. However, employees hired before 1/1/1984 under the Civil Service Retirement System do not have a Social Security component unless earned from non-federal employment.
Medicare typically pays first after retirement, and your retiree coverage may function similarly to Medicare Supplement Insurance (Medigap), filling in gaps in Medicare coverage. You may need to enroll in Medicare Parts A and B to receive full benefits from your retiree coverage, and you should consider enrolling within six months to avoid potential penalties.
Resources such as wiserwomen.org offer training modules on basic financial topics, including spending plans, saving, obtaining and using credit, and checking account maintenance. These resources can help federal retirees make the most of their retirement benefits and plan for the future.
