Ask The Experts: Retirement

By Reg Jones

‘Quitting’ FEHB and re-enrolling

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Q. Can a retired employee quit his Federal Employees Health Benefits in retirement for, say, Tricare for Life and Medicare if retired military, and later opt to switch back to FEHB?

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FEHB re-enrollment

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Q. Before retirement under FERS, I canceled my Federal Employees Health Benefits to be covered by my wife’s FEHB. Now my wife is resigning. She has no minimum retirement age with 25 years. She will not be allowed to continue FEHB. Am I allowed to re-enroll in self and family (code 2F) as a retiree with 35 years (33 self, two under wife) of FEHB? If I am, how soon can I re-enroll?

A. Yes. And you can do it from 31 days before the loss of coverage through 60 days after.

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FEHB re-enrollment

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Q. I was a federal employee for 26 years and, from 1987 onward, was under FERS. I left my last federal job in June 2009 at age 58, after having passed the minimum retirement age and having been enrolled in the Federal Employees Health Benefits plan over the entire 26 years of my federal employment. In June 2009, I said that I intended to take a postponed retirement, some time after I reached age 60. It is my understanding that my enrollment in FEHBP was suspended at the time I left my last federal employment, in June 2009.

I had health insurance coverage under temporary continuation of coverage, ending in December 2010.

I applied to the Office of Personnel Management for a postponed retirement on Dec. 28, 2011, by filing Form RI 92-19. OPM acknowledges having received my application in February 2012, and I have been in interim status since that time. I began receiving interim payments in March 2012.

In a phone conversation I had with OPM in February 2012, I was told that I would not be able to re-enroll in FEHBP until my retirement was finalized.

Another year has passed, and my retirement is still not finalized. I am still in interim status. Is it really impossible for me to re-enroll with FEHBP before my retirement is finalized? Does the word “annuity” apply to my interim pay? If so, it seems that I can re-enroll in FEHB now.

An article by Reg Jones on your website says, “…if you were enrolled in FEGLI or FEHBP for the five continuous years before you retired, you may re-enroll in them when your annuity begins.” This suggests that the statement made to me on the phone in February 2012 was incorrect. Could you please clarify this? If I am eligible to re-enroll in FEHBP, what procedure should I follow to re-enroll?

A. You could only have re-enrolled in the Federal Employees Health Benefits program if you retired and postponed the receipt of your annuity to a later date. You didn’t do that. Instead, you resigned from the government and later applied for a deferred annuity. Deferred annuitants cannot re-enroll in the FEHB program.

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FEHB and postponed retirement

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Q. I would appreciate a clarification of eligibility for Federal Employees Health Benefits under postponed retirement. I selected a postponed retirement and have recently begun receiving benefits. I may, at some point, want to sign up for FEHB as a FERS retiree. In my situation, in my last government position (as an appointee), I had continuous coverage under my wife’s FEHB as a part of a family plan. Since I left the government position, I have continued to be covered under my wife’s FEHB family plan. As I understand it, postponed retirees who were enrolled at the time they left government can re-enroll once they start benefits. In my case: Am I eligible for benefits even though I was not enrolled myself but was covered under my wife’s plan? Given that I am still covered under my wife’s plan, can I, if it makes sense, enroll myself in an FEHB plan?

A. Yes, but only if your wife switches to self-only at the same time during an open season or if she passes on before you while you are still covered by her self and family enrollment.

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Retirees, Medicare and the ‘creditable plan’

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Q. I am retired with Blue Cross/Blue Shield and will be signing up for Medicare Part A soon to avoid penalties for Part B and Part D. Does my BC/BS meet the “creditable plan” requirement to avoid penalties? I have been told “yes and no” on the phone by Medicare. If I sign up for an HMO with a lower cost, will I meet “creditable plan” standards if I drop Federal Employees Health Benefits? Can I re-sign up for BC/BS later if I don’t like the coverage?

A. The “creditable plan” feature you’re referring to only applies to those who are currently employed or are covered by a family member who is employed. It doesn’t apply to retirees, regardless of the plan they are in.

If you drop your FEHB coverage, you can’t re-enroll in it unless you return to work for the government in a position that allows you to be covered by the FEHB program.

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Five-year rule and break in service

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Q. I enrolled in Federal Employees Health Benefits on April 26, 1987. Resigned March 21, 1992. Temporary appointment Aug. 26, 2001, to Oct. 19, 2002. Re-enrolled Nov. 3, 2002. Resigned Sept. 27, 2008. Temporary appointment, not eligible to enroll Dec. 7, 2008, to July 3, 2010.  Re-enrolled July 18, 2010, until present. Had COBRA between enrollments. My human resources department says I should be able to continue health benefits into retirement if I work through June 20. I am planning on retiring in December. I know the Office of Personnel Management has the final say but wanted to know if this response sounds correct.

A. To be eligible to carry your FEHB coverage into retirement, you need to have five consecutive years of coverage. Those periods don’t have to be continuous. They can be broken by times when you weren’t a federal employee or when you weren’t eligible to enroll in the program. What’s important is that you be covered each time when you left and re-enrolled immediately each time that you were eligible to enroll. You need to recheck your employment records to be sure that you met the requirements and that the total time you were covered adds up to at least five years.

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Deferred annuity

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Q. My husband left federal employment at age 55 after seven years. He was covered under FERS. He is almost 63 and has applied for a deferred annuity. He is thinking of returning to federal employment. If he does so and receives health benefits, when he retires, can he carry those benefits into retirement? Must he be re-employed for a certain length of time to do this?

A. He must be enrolled in the Federal Employees Health Benefits program for a total of five years to carry that coverage into retirement. If he was enrolled in the program on the day he left and re-enrolls when he returns to work, those periods of coverage will be treated as though they were continuous.

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FEHB enrollment date

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Q. I am 64 years old and have nine years in CSRS. Four years were 1972 to 1976. At that time, I took my retirement out, then another seven months in 1985-86. I was reinstated in the federal government in February 2008, working for the IRS under seasonal but worked full time. I transferred in September with no break in service, accepting a position for the Defense Department. My service computation date gives me Feb. 4, 2004, under FERS. I signed up for Federal Employees Health Benefits at that point. I want to retire, but I need to take my FEHB with me when I do. What date would I be eligible to use as my retirement date and take with me my FEHB?

A. The law requires that you be enrolled in the FEHB program for the five consecutive years before you retire. Breaks in service won’t have a negative impact if you were enrolled when you left and immediately re-enrolled when you returned to government service. You’ll need to check with your personnel office to see if that was the case for you. If it wasn’t, the five-year period will start over from the date that you re-enrolled.

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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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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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Reinstating FEHB

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Q. I am a CSRS employee with 34 years of federal service. I am going to retire in 2013. If I suspend my Federal Employees Health Benefits to go under my husband’s Tricare, will I still be able to reinstate my FEHB any time I want during an open season after I become an annuitant? Also, will I still be able to join the long-term federal health insurance plan?

A. Yes to both questions. If you suspend your coverage to be under Tricare, you can re-enroll in the FEHB program during any open season. You can enroll in the Federal Long-Term Care Insurance Program as an employee or a retiree.

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Postponed retirement and FEHB

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Q. I am a Veterans Affairs Department term employee with 28 years of service, 57 years old. My term appointment has only been extended to Jan. 31, 2013, with a “continuation of ongoing research funds.” If research funds are not available to pay me past this date, I understand that I can retire under the MRA +10 provision and postpone receipt of my annuity until I am 60 to avoid the age reduction penalty. And, at that time, can re-enroll for Federal Employees Health Benefits since I will have been enrolled for the previous five years. If I choose not to retire but rather am terminated due to lack of funds, will I still be able to re-enroll in FEHB? I have been told that choosing the retirement option will affect eligibility for unemployment benefits, but I certainly don’t want to lose health coverage in retirement.

A. If you have been covered by the FEHB program for five consecutive years, retire and postpone the receipt of your annuity, you’ll be able to re-enroll in it when your annuity begins. If you are terminated and later apply for a deferred annuity, you wouldn’t be able to re-enroll in the FEHB program.

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Resignation vs. retirement

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Q. The person who processes retirements at my agency told me that I could not retire with 32 years at 51 years. I am an offset employee under CSRS. I thought the Office of Personnel Management indicated that if you retire before 55 years of age, you are penalized 1/6 (no more than 2 percent for the first year and 2 percent for every after for being under 55.

So, I resigned. It’s only been a few days. The agency person said I could only retire at this age if they were offering a buyout. That seems right because I was offered a buyout about 15 years ago.

Can I file for retirement, get my benefits and health care, dental and vision care.  I think this person has it wrong. Can you explain to me?

My start date was January 1979 and I had a break of one year in 1983, but I had already worked more than four years when they put me in CSRS Offset.

Can I change my resignation from this agency to file formal retirement to Boyers, Pa.?

A. You could only retire before age 55 if you were offered either early retirement or a buyout. Anyone offered early retirement may do so if he is age 50 and has 20 years of service or at any age with 25. The annuity of that employee would, as you pointed out, be reduced by 1/6 percent for every year he was under age 55.

Any employee who is offered a buyout can accept it, regardless of whether he is eligible to retire. If he qualifies under the early retirement age and service requirements, he can do so. If he doesn’t, he can simply take the money and resign.

Because you resigned before being eligible to retire and had at least 20 years of service, you could apply for a deferred retirement at age 60. For the present, you would be able to continue your health and life insurance for 31 days at no cost to you. After that, you could continue your health insurance coverage under the temporary continuation of coverage provision for 18 month by paying 100 percent of the premium cost plus 2 percent.

Your life insurance would expire unless you decided to convert to an individual policy. Deferred retirees may not re-enroll in the health or life insurance programs.

Since you weren’t eligible to retire, you may want to approach your agency and ask if they would be willing to reinstate you.

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Q. I have 11 years total service (eight years military buyback and three years federal civilian employment) and I am 49 years old. If I leave federal employment at age 51 (with a total of 13 years service, five as a civilian employee), can I apply for deferred MRA+10 retirement and receive my pension and health care benefits when I turn 62? Or do I need to be my minimum retirement age (57 years old) when I leave federal employment?

A. To retire under the MRA+10 provision, you’d have to be 57, your minimum retirement age. To avoid the 5 percent-per-year age penalty, you could postpone the receipt of your annuity to a later date. When you began receiving your annuity, you could re-enroll in the Federal Employees Health Benefits program. If you left government at age 51, you’d be eligible for a deferred annuity at age 62. However, deferred retirees cannot re-enroll in the FEHB program.

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Resignation vs. termination

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Q. I am a FERS employee with 31 years of creditable service but will not reach my minimum retirement age (56) until May 2013. I am faced with possible termination but plan to resign. I understand that deferred retirees are not eligible for supplemental annuity, nor are they eligible to enroll in life insurance and health benefits. What if I am terminated rather than resigning? Will I be eligible for immediate annuity plus supplement and eligible to enroll in health benefits? Or I will only be eligible for deferred retirement in 2013 after reaching my MRA?

A. It won’t make any difference to your benefits if you resign or are terminated. In neither case would you be eligible to retire. In either case, because you have at least 20 years of service, you’d be eligible for deferred retirement at age 60. Deferred retirees aren’t eligible to receive the special retirement supplement, nor may they re-enroll in the Federal Employees Health Benefits or the Federal Employees’ Group Life Insurance programs.

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Medicare Part B vs. GEHA

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Q. We have GEHA high option (Code 312) for our family. I just got the letter from Medicare about choosing Medicare Part B.

However, even if I am on Medicare after retiring, my wife will have seven more years before being eligible for Medicare.

Thus, I am considering continuing GEHA high for both of us and not taking Medicare B, since GEHA 312 covers expenses quite well and my wife would need health insurance.

If I take Medicare B and drop GEHA, I would have Medicare A and B, but she would have no health insurance.

Is the above correct? Are you aware of a better solution?

A. It isn’t an either/or decision. Don’t even consider dropping your FEHB enrollment. If you did, you wouldn’t be able to re-enroll. As for enrolling in Part B, that’s a personal decision based on your health care needs.

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Health coverage, refund and re-enrollment

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Q. I am 57 and worked for the Postal Service from 1981 to 1997. I took a refund of my contributions when I left. Am I eligible for health benefits? If I took a position now with the USPS, could I get reinstated?

A. No, you aren’t eligible for health benefits. If you went back to work for the government, you could enroll in the Federal Employees Health Benefits program (or re-enroll if you were enrolled in the FEHB program during your previous period of employment).

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FERS retirement and FEHB

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Q. I retired from active duty in 2005. I made a service deposit to buy my academy time. When I reach minimum retirement age+10 next month, I will have 10 years and five months of creditable service (six years and six months since hired, plus three years and 11 months purchased service), more than 240 hours of annual leave and more than 600 hours of sick leave. I’ve gotten a formal Office of Personnel Management retirement estimate to verify my understanding that I can do a MRA+10 retirement this year.

I initially used Tricare for my health insurance, however, to have the option of FEHB later. I enrolled in a Federal Employees Health Benefits self-and-family plan during the open season in 2010.

1. If I leave federal employment next month, I understand I can start a permanently reduced annuity and continue my FEHB. If I choose to defer my annuity to lessen the permanent reduction (say until age 60), am I still able to elect FEHB once I start my FERS annuity? If so, can I commence it when I start my annuity, or do I have to wait until an open season?

2. If I leave federal employment next month and start my FERS annuity (reduced), can I suspend my FEHB coverage and reinstate at a later date?

3. Do either of the above choices affect FEHB coverage for my spouse (assuming that I have self-and-family FEHB)? I plan to elect the smallest survivor benefit in my FERS annuity.

A. If you retire on an immediate annuity, are enrolled in the FEHB program at that time, and the combination of Tricare and FEHB are at least five continuous years, you can continue that coverage into retirement. If you postpone the receipt of your annuity to a later date to avoid the age penalty, you may restart your FEHB coverage when your annuity begins. When you do so, you can select the coverage and plan that you prefer. If you resign from the government and later apply for a deferred annuity, you won’t be eligible to re-enroll in the FEHB program.

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Repay withdrawn funds and re-enroll in CSRS?

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Q. I worked for the Postal Service for two years and eight months, and left in the early 1970s to raise my child. At that time, I withdrew my contributions. When I returned to federal service (not the post office) in 1987, I was told I was not vested in CSRS and therefore had to be enrolled in FERS. I was credited with my post office service, so my service computation date is Dec. 7, 1984, rather than February 1987, when I was hired.

I would like to know if I should have been offered the opportunity to repay my withdrawn funds and re-enroll in CSRS. I believe this would be of benefit to me as I will be retiring within the next two to five years. What is your advice on this?

A. Because you didn’t have five years of service under CSRS, you were automatically placed in FERS. Making a re-deposit wouldn’t change that. You do, however, have a choice. You can either re-deposit the money you took out, plus accrued interest, and get credit for that time in your annuity computation or not make the re-deposit and have your annuity actuarially reduced based on how much you owe and your age at retirement.

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