Playing Russian roulette with your health plan

If you are a federal or postal worker who is close to retirement, thinking about taking a buyout, likely to be laid off or are involved in a shaky marriage, listen up:

Your lifetime health insurance benefits may be in danger.

Under the Federal Employee Health Benefits Program, eligible retirees (and their survivors) can keep their government-subsidized health insurance coverage for life. Uncle Sam now pays about 70 percent of the total premium for workers and retirees. Active and retired feds pay the same premiums and most have a dozen or more plans (with a variety of options). They can switch plans each year during the open season (this year that’s November 14 to December 12th) regardless of age, habits, health or pre-existing condition.

But you gotta play (and pay) to win.


You cannot (in most instances) rely on your private sector spouse’s health plan to cover you after you retire, or he or she dies. In some cases you will lose coverage because of a divorce. And you cannot — in most cases — switch to the FEHBP at the last minute (before you retire) and get lifetime coverage under that program.

In most cases (buyouts and early retirements can be the exception) feds who were not enrolled in one of the FEHBP plans for the five years prior to retirement cannot sign up for the federal program at the last minute (or last several years of service) and keep that coverage in retirement. That’s known as the five-year rule.

OPM can and does offer waivers to the five-year rule. But you need to understand how it works. With the open season coming up, any who even THINKS they may lose coverage under their private sector spouse’s health plan (because of death, divorce or suddenly leaving the government) should seriously consider signing up for one of the FEHBP plans next month. Consider it as buying insurance so you can keep your insurance, for life, when you retire from government.

David B. Snell, director of retirement services for NARFE, says OPM has a policy regarding waiving the five year FEHBP participation requirement. “Normally, if an employee doesn’t meet the five year participation requirement he/she can request a waiver directly by writing to OPM. However, in some circumstances such as early outs with VISIPs, OPM has an automatic waiver that agencies can follow,” he said.

Health plan expert Walton Francis recommends that feds who are covered by their private sector spouses health plan purchase one of the low-premium FEHBP plans, even if they never use it. He’s author of the Washington Consumer Checkbook Guide to Federal Health Plans.

When feds retire, or hit 65, they will often find that the FEHBP program is much better, much more comprehensive than their private sector spouses’ health plan. Sometimes the plan reduces coverage, increases premiums or goes away. Sometimes the eligible spouse goes away too!

There is also the issue of premiums. In 2012 the “average” federal health premium is going up about 3.5 percent. Some HMOs are increasing a lot more than that. Some of the fee-for-service plans are actually cutting premiums a little. And consider this…

Last week Wal-Mart, one of the largest employers in the nation, reportedly told employees that for some of them, health premiums will go up around 40 percent next year.

To check out FEHBP premiums for both federal and postal workers, and maybe find a low-premium plan to protect you from the five-year rule, click here.


By Jack Moore

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