Ask The Experts: Retirement

By Reg Jones

Medicare

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Q. I am an unmarried 64-year-old CSRS annuitant who will turn 65 on July 15. I’ve had Blue Cross/Blue Shield coverage for many years. What should I do about Medicare and when?

A. You can apply online at www.ssa.gov/medicareonly. Do it a few months in advance to avoid delays in being covered.

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Retirement eligibility

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Q. I retired from the Army after 18 months of military service at age 22 because of combat wounds. I retired from a nonprofit and went to work for the government at age 56. I am now 62 and have eight years of federal service (executive agency), including depositing the 18-month military buyback. At what age and number of federal service years am I eligible to retire and receive medical benefits as a retiree?

A. You could retire now if you wanted to. Any federal employee with five years of service can do that. As for medical benefits, there aren’t any, regardless of age and service. However, if you have been enrolled in the Federal Employees Health Benefits program for the five consecutive years before you retire, you could carry that coverage into retirement.

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65 or 66?

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Q. I have been retired under Social Security disability since 2000. I declined Part B because of federal insurance. My Postal Service disability turned over to regular pension at age 62.  I am now 64. According to new law, I am eligible for regular Social Security at age 66. Will my federal Blue Cross/Blue Shield continue until age 66, or does it end at age 65? And do benefits change at all? Do I then have to apply for Part B at 65, or do I wait to apply at 66? And do I have to pay a penalty for all of those years I didn’t apply while on BC/BS? Everywhere says apply for Part B at age 65, but does that apply even though I am eligible for regular Social Security at age 66?

A. Your Federal Employees Health Benefits program coverage will continue as long as you keep paying the premiums. In your case, I assume that you are doing that through deductions from your annuity. Whether you decide to enroll in Medicare Part B is up to you. You’ll first become eligible for Part B when you reach age 65. The law covering Part B is separate from the one that determines your eligibility for a Social Security benefit.

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Suspending FEHB

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Q. I am about ready to retire and currently maintain a FEHB policy. My wife is still working and I can fall under her health plan at no extra cost, and the coverage is better. I have been told that you can “suspend” FEHB in retirement and reinstate it if need be. Is this true?

A. No, it isn’t true. About the only ones who can suspend coverage are those who are covered by the military’s Tricare program. And they can only re-enroll if they lose that coverage or during an open season.

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Annuity reduction and health insurance

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Q. I am a CSRS employee and plan to retire March 29.

1. Will I be on the annuity roll for my first check on April 1 or May 1?

2. Will I incur a reduction in my annuity because of the retirement date?

3. I will turn 65 in April, so I will be eligible for Medicare. I have had Federal Employees Health Benefits for four years, and I am Tricare-eligible. I am aware that my time with Tricare will count toward my five years and that I can suspend my FEHB and go with Medicare/Tricare for Life. What type of paperwork will the Office of Personnel Management need showing my eligibility for Tricare? Should I provide this with my retirement paperwork?

A. You will be on the annuity roll in April and be entitled to your first annuity payment in May. Based on your proposed retirement date, there would be no reduction in your annuity.

Your Tricare coverage only counts if you have been, in total, covered by the FEHB program and Tricare for the five consecutive years before you retire and are enrolled in the FEHB program on the day you retire. You should visit you personnel office and ask them what confirmation they require and to be sure that you are, in fact, eligible to carry your FEHB coverage into retirement.

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Five-year rule

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Q. I will be 66 years old in April. I have been with the Postal Service (FERS) for 16 years. I am eligible for retirement, but I am concerned about health insurance. I was always covered under my spouse’s insurance, since she started in the workforce before I did. I took on my own health insurance in January 2011 since she retired on disability due to medical complications. When I took on health insurance, I also covered for her health insurance. I know it has not been five years yet. What do I need to do to be eligible to keep health insurance?

A. You can relax. You only need to be enrolled in or covered by the FEHB program for the five consecutive years before you retire. You’ve met that requirement.

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Temporary loss of health coverage

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Q. I am a retired foreign service officer whose spouse is still an active federal employee working for an agency other than the State Department. To save money, we decided to move from one self-and-family policy under my name to separate self-only plans. I opted for a completely different carrier, while my wife chose to stay with the one we had had for six years.

We had not counted, however, on the fact that this year, there would be a nearly two-week gap between the time frame for changes for retirees and for active employees. The end result has been that my self-and-family coverage ended Dec. 31, but my wife’s self-only coverage will only begin with the start of a new pay period Jan. 13. I confirmed with my former carrier that, despite having a record of her new enrollment, there was nothing it could do to continue her coverage without some sort of code or certification from my wife’s agency or the Office of Personnel Management. State essentially confirmed this and added that it would only have been able to modify my wife’s action had she also worked for State. My wife’s agency, meanwhile, seems to have been caught flat-footed by this problem and, after initially pronouncing her out of luck, claims to be researching her situation and that of a few others similarly affected.

This sort of Catch-22 is quite frustrating, not to mention upsetting. Neither my wife nor I saw any information during the open season warning of this potential pitfall much less guidance on how to avoid it. I advised State human resources, when I filed my change, that my wife would drop from my coverage to obtain her own through her agency. She, however, did not do so since her agency’s online enrollment procedure did not seem to allow for that.

Can you please advise as to how this should have been handled and what sort of remedial action (OPM code, certification) is possible? My wife is in good health and could probably make it to the 13th without problem, but her lack of coverage during an emergency is worrying. She has also already had to postpone seeking an elective appointment and been declined insurance coverage for a prescription she rushed to have filled on the 31st. It is hard to believe that the Federal Employees Health Benefits plan regulations would not address such a gap, greater this year than in most, given the number of mixed marriages between active and retired feds.

A. What happened is unfortunate. However, I’m not aware of any action you could take that would change that.

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Switching from Blue Cross/Blue Shield to Medicare Part B

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Q. 1. Can someone switch from Blue Cross/Blue Shield to Medicare Part B at age 71?

2. Should it be done?

3. If yes, how can it be done, and what are the costs?

I am 71 and self-employed (since 2011), covered under my wife’s federal Blue Cross/Blue Shield plan. My wife has been retired for a few years and she also turned 71 in 2012.

My wife was just operated for a brain tumor and is being scheduled for radiation therapy and chemotherapy.

A. While your wife could disenroll from the Federal Employees Health Benefits program and both of you enroll in Medicare Part B, what she gained by no longer having to pay premiums for the former would likely be offset by the premiums you’d both have to pay for the latter. Although each of you would have to pay $99 per month in 2013, the fact that neither of you enrolled when you were first eligible would mean that those premiums would be increased by 10 percent for every year you failed to do so.

Further, the benefits you both now receive from Blue Cross/Blue Shield are substantial. While adding Part B would increase that coverage, dropping the FEHB coverage would adversely affect it. Further, if she dropped her FEHB enrollment, she would never be able to re-enroll.

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Employment after retiring

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Q. I will turn 62 in March and was planning on retiring with 22 years of service under CSRS. A job opportunity may come available before then, and I’m trying to figure out my options. If I retired now, would there be a significant difference in my annuity because I haven’t turned 62? Should I consider a deferred retirement? If so, until when? Should I keep my federal health benefits even though the new job will have better coverage? I probably will only work there for about five years — the minimum time to become vested in the 401(k) plan — so I will not qualify for any substantial retirement there.

A. Because you already have 20 years of service, you can retire any time you want. Each month you work adds 1/6 percent to your annuity when you retire. So if you retired six months before you were age 62, your annuity would be 1 percent less; if you worked six months past age 62, it would be 1 percent more.

Resigning and later applying for a deferred annuity would make no sense because you wouldn’t be able to re-enroll in the Federal Employees Health Benefits program. The same is true if you dropped that coverage when you took a private-sector job.

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5-year rule vs. service computation date

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Q. I am a 63-year-old Air Force civilian employee and have been employed since Sept. 2, 2008. With no break in service, I was employed by the Internal Revenue Service as a seasonal employee for approximately eight months since Feb. 20, 2008.

Being a seasonal employee, I was not able to have Federal Employees Health Benefits. But I took out the coverage once I transferred over to full time with the Air Force.

If I retire in February, would I be able to take my health benefits with me, or would I have to wait until September?

A. The rule is that you must be enrolled for five years or from your first opportunity to enroll. If you enrolled at your first opportunity, you would be able to carry that coverage into retirement. Check with your personnel office to be sure that they understand that.

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FEGLI

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Q. I plan to retire Jan. 3. In Federal Employees’ Group Life Insurance, I have $55,000 basic and three times Option B for a total of $161,000 of insurance. I have paid 38 years into FEGLI and recently found out that when I turn 65 years old, my insurance reduces to nothing. Due to health conditions — cancer three years ago and diabetes — finding whole life insurance is very expensive and hard to afford. If I have $55,000 of basic insurance and decide to reduce my insurance by 50 percent, which leaves $27,500, how much does my family receive if I should die at 80 years old or older? The same with my Option B, three times my salary? What other options do I have? I need to leave my family with something.

A. Let’s deal with basic insurance first. When you retire, you’ll have a decision to make about the amount of coverage you want to keep. Up to age 65, you’ll continue to pay your current premiums. After that, it will depend on the option you elect. If you want to keep the same coverage, you’ll have to pay more for that benefit. If you want to keep only half of that coverage, you’ll also pay more, but not as much as if you’d elected full coverage. If you elect the 75 percent reduction, the remaining coverage will be free.

Now to Optional Part B insurance. When you retire, you’ll also have to decide how much coverage you want beginning at age 65. You can choose to retain full coverage or full reduction. In either case, the premiums you’ll pay until age 65 will continue to rise. If you elect full coverage, they will rise even more. If you elect the full reduction, at age 65 you will pay no further premiums, but your coverage will decline at a rate of 2 percent per month until they reach zero.

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Health insurance change

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Q. If I change my health insurance to self-only (due to my wife having insurance through her company) and I retire next year, can I add her back to mine if she loses or changes jobs. I ask because it’s open season and I plan on retiring the end of May from the Postal Service. I have my minimum retirement age and 31 years, three of which are my military buyback.

A. As a retiree, you could change from self-only to self and family under Qualifying Life Event 2G. And you could do that from 31 days before through 60 days after her loss of coverage.

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Suspension of FEHB coverage

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Q. I am a federal employee with 32+ years of civil service, planning on retiring in the next five years. I have been enrolled in a Federal Employees Health Benefits plan throughout my career. My husband retired from active duty Aug. 31 with 23+ years. We had dual coverage under Tricare and FEHB since August 1995, with FEHB being primary and Tricare as secondary. Now that my husband has retired, to continue to be covered under Tricare, he had to sign up for a specific Tricare plan, for which we are now charged a monthly premium. We are trying to determine whether or not we should cancel the FEHB and save the $3,500 per year. The Tricare representatives advised my husband that we should suspend the FEHB and not cancel it, so if we decided at a later date to re-enroll in the FEHB, we could. I have also read that if I don’t have FEHB for five years prior to retiring, I won’t be able to sign up for FEHB coverage when I retire, but that I can include the time in Tricare toward that five years.

I went to the BENEFEDS and Office of Personnel Management websites and contacted a benefits and entitlements counselor through the Employee Benefits Information System to ask this question, but I am receiving conflicting information.

1. Can I suspend my FEHB and re-enroll, as long as it is during open season, at any time?

2. Can I cancel my FEHB and re-enroll, as long as it is during open season, at any time?

3. So if I cancel/suspend my FEHB and retire in five years, can I count the time in Tricare toward being enrolled in a FEHB plan?

4. If I cancel/suspend my FEHB and am no longer covered under Tricare (through no fault of my own) I can re-enroll in FEHB plan at any time; I don’t have to wait for an open season?

5. Can I sign up for a dental plan and/or a vision plan under the FEHB without being enrolled in a FEHB plan?

A. You can suspend your coverage in the FEHB in favor of Tricare. If you do, you could reactivate that coverage at any time if you were to lose Tricare coverage sometime in the future. If you canceled your FEHB coverage and were still employed, you could re-enroll at a later date; however, you would be required to maintain that FEHB coverage for five consecutive years to be able to carry it into retirement. If you canceled that coverage and retired, you wouldn’t be able to re-enroll. Retirees cannot re-enroll in the FEHB program. Finally, dental and vision coverage isn’t tied to enrollment in FEHB.

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Tricare vs. FEHB

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Q. I am a new federal employee with Tricare Prime that I am paying for since I am retired military. Is there any advantage in taking Federal Employees Health Benefits. If so, what would it be? Second, can I only sign up for the Federal Flexible Spending Account Program to take care of my co-payments and additional dental cost if I don’t sign up for FEHB?

A. As to your first question, I have only anecdotal advice to give you. Some employees who are covered by Tricare have told me that they enrolled in the least expensive FEHB plan as a backup in case they lost their Tricare coverage or decided to leave the program. As to your second question, you don’t have to be enrolled in an FEHB plan to sign up for FSAFEDS.

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Medicare Part B

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Q. I’m retiring under CSRS on Dec. 31. I’m covered by Federal Employees Health Benefits. I intend to sign up for Part B and keep FEHB. My wife is under my FEHB and Medicare A/B. When would be the best time for me to sign up for Medicare Part B? Under Part B, how do I know what level of coverage I need under FEHB? Should I keep what I have now?

A. There is a seven-month initial enrollment period for Medicare Part B. It begins three months before you turn 65 and ends three months after that month. It’s up to you to decide when to enroll. Whether you need to alter your level of coverage under the FEHB is something you’ll have to decide for yourself after reviewing the benefits each provides. There is no single answer that fits everyone.

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Health insurance coverage after retirement

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Q. I am a government employee, but my husband is working in the private sector. To date, we have been using my husband’s health insurance because it provides excellent coverage. However, my husband’s company does not provide health coverage after retirement. To that end, I plan to enroll in a Federal Employees Health Benefits program in December since my retirement date is five years away. (My husband is retiring in five years, as well.) Does my husband need to be covered on my program for five years, too? Or can I add him in the last year prior to my retirement?

A. No, he doesn’t have to be covered for five years, only covered by a self and family enrollment when you retire. However, you need to remember that if you were to die while covered by a self-only enrollment, he wouldn’t be eligible for coverage under FEHB.

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Medicare

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Q. When I retire from the Veterans Affairs Department at age 62 in nine years, I will have carried Blue Cross/Blue Shield on myself for 20 years and my spouse for 16. He will be 65 then. Can we continue the BC/BS family plan after I retire? What will be the difference in premiums? I pay approximately $200 per month now. I am worried that I won’t have health insurance because I won’t be Medicare-eligible until age 65?

A. Relax. You’ll not only be able to continue your coverage in retirement, but the premiums will be the same as those you’d pay as an employee.

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Survivor annuity

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Q. My wife and I are both federal employees. I am CSRS and she is FERS. Since 2009, I have carried “family” health coverage that is deducted from my CSRS paycheck to cover our health insurance needs. Prior to 2009, she carried her own federal health insurance. She has had no break in federal service (health care coverage) between 1988 and August 2012. Should I precede my wife in death, how much spousal retirement benefit should I leave her so she can continue to receive full federal health insurance benefits?

I have been told that all I have to leave her is $0.01 for the “letter of the law” to be met for full health benefits to be passed on to her. Is this true? I also realize that with $0.01 she would be billed each month for the entire insurance premium and that is why the spousal benefit is usually put at an amount that would at least  pay for the monthly health insurance premium. If what I typed is correct than is the amount I can provide my spouse upon my death anywhere in the range between $0.01 (minimum) and 50 percent (maximum) of my retirement annuity for her to be able to retain full federal health care benefits?

I turned 65 in February and have been employed as a CSRS federal employee since 1977.  As required by law, I signed up for Medicare Part A. Once I retire, should I pay for Part B, or will my federal health insurance coverage always be adequate for covering my health insurance needs and those of my wife? We both are carrying long-term health care coverage through a nongovernment-sponsored plan.

A. Let’s get one thing out of the way. You have to provide your spouse with a full survivor annuity unless she agrees in writing to a lesser amount or none at all. As a CSRS employee, the minimum survivor annuity you could provide her would be $1. The air being cleared, let’s move on.

Because she is a federal employee who has been covered by your self-and-family FEHB enrollment, if you were to die, she could continue that coverage and have the premiums taken out of her pay. If you were to die after she retired, she could have the premiums taken out of her annuity.

Only if she resigned from the government instead of retiring would you have had to provide her with some amount of annuity for her to continue FEHB coverage.

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Health care coverage for new spouse

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Q. I have worked for the federal government for 26 years, and will be eligible to retire next year at age 56. I have family coverage with Blue Cross/Blue Shield for myself and my children but not my ex-husband. If I remarry, I assume I can add my new husband to my family policy. Will my new husband be eligible for health care coverage under my policy in retirement if I retire within the next two to five years?

A. As long as your husband is covered by your self-and-family enrollment on the day you retire, he will remain covered as long as you keep that coverage. If you were to die, he would only be able to do that if he was receiving a CSRS or FERS annuity or you had elected a survivor annuity for him.

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FEGLI

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Q. I retired from federal service in 1989. At that time, I maintained my Federal Employees’ Group Life Insurance coverage. After all those years, how can I ascertain if I still have it?

A. Assuming you are talking about your basic insurance, unless you elected to maintain a higher level of coverage (for which you’d still be paying), it will have declined in value at a rate of 2 percent per month beginning at age 65 until it reached 25 percent of its face value on the day you retired. It will stay at that level until you pass on, at which time the money will be paid out to the beneficiary or beneficiaries you designated.

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