Q for Federal Employees - FEHB, advisors, etc.

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nick evets
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Q for Federal Employees - FEHB, advisors, etc.

Post by nick evets » Sun Feb 17, 2019 9:19 am

Going to the well again - I know many of y'all are Federal employees, and I could use some clarity....

My wife left industry and started a job with the Federal Government in 2014; her dept. operates under the FERS retirement system. My first question is, when is the earliest (not that she'd necessarily want to) she could leave and keep her health benefits (FEHB)?

From reading the OPM docs, my understanding is *62* -- is this correct? She wouldn't qualify under MRA+10, and instead would have to wait until she became an annuitant under FERS at age 62. But at that point she could retain FEHB and even add me as a spouse in the future (currently I have my own benefits) when I retire....

However, an advisor (there seem to be a number of financial advisors from DMV firms who have some sort of loose connection to agencies) is telling her that she could take a reduced annuity (5% per year) and get 90% and retire at 60 and keep FEHB. However, I would not be able to be covered in the future.

This makes no sense to me -- the annuity $ isn't really consequential, but the FEHB is, and want to be sure we understand. Thx!

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VictoriaF
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by VictoriaF » Sun Feb 17, 2019 10:25 am

nick evets wrote:
Sun Feb 17, 2019 9:19 am
Going to the well again - I know many of y'all are Federal employees, and I could use some clarity....

My wife left industry and started a job with the Federal Government in 2014; her dept. operates under the FERS retirement system. My first question is, when is the earliest (not that she'd necessarily want to) she could leave and keep her health benefits (FEHB)?

From reading the OPM docs, my understanding is *62* -- is this correct? She wouldn't qualify under MRA+10, and instead would have to wait until she became an annuitant under FERS at age 62. But at that point she could retain FEHB and even add me as a spouse in the future (currently I have my own benefits) when I retire....

However, an advisor (there seem to be a number of financial advisors from DMV firms who have some sort of loose connection to agencies) is telling her that she could take a reduced annuity (5% per year) and get 90% and retire at 60 and keep FEHB. However, I would not be able to be covered in the future.

This makes no sense to me -- the annuity $ isn't really consequential, but the FEHB is, and want to be sure we understand. Thx!
I retired in 2014 with MRA+10. My Federal annuity is reduced by 2% 5% for every year that I was less than 62 on the day of my retirement. I became eligible for FEHB from the start. I consider this one of my best decisions.

If your wife retires with MRA+10 after the age of 62, her annuity will not be reduced.

I don't know if the OPM rules have changed since 2014.

Victoria

EDIT: I corrected a typo. It is 5% (not 2%).
Last edited by VictoriaF on Mon Feb 18, 2019 12:55 pm, edited 2 times in total.
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

Topic Author
nick evets
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by nick evets » Sun Feb 17, 2019 12:00 pm

VictoriaF wrote:
Sun Feb 17, 2019 10:25 am
I retired in 2014 with MRA+10. My Federal annuity is reduced by 2% for every year that I was less than 62 on the day of my retirement. I became eligible for FEHB from the start. I consider this one of my best decisions.

If your wife retires with MRA+10 after the age of 62, her annuity will not be reduced.

I don't know if the OPM rules have changed since 2014.

Victoria
Thanks Victoria -- but that's the thing and point of my question: my wife would NOT be able to qualify for MRA+10 considering she joined in 2014 at age 54, but when she turns 62 would be eligible for retirement under FERS and have had more than enough years of continues FEHB to continue coverage in retirement.

I'm just having trouble seeing how this guy is saying she can leave at age 60 and retain the benefit....

gtd98765
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by gtd98765 » Sun Feb 17, 2019 12:41 pm

I worked in the Fed govt for decades. I never heard of any stigma attached to an employee for going to HR and asking about future retirement possibilities, rules, etc. That's the easiest way to get info likely to be correct.

Lost Laker
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by Lost Laker » Sun Feb 17, 2019 12:54 pm

OPM's website is also a good resource. For example, according to the OPM website (emphasis added):

"Federal retirees and their surviving spouses retain their eligibility for FEHB health coverage at the same cost as current employees. In order to carry your FEHB coverage into retirement, you must be entitled to retire on an immediate annuity under a retirement system for civilian employees (including the Federal Employees Retirement System (FERS) Minimum Retirement Age (MRA) + 10 retirement) and must have been continuously enrolled (or covered as a family member) in any FEHB plan(s) for the 5 years of service immediately before the date your annuity starts, or for the full period(s) of service since your first opportunity to enroll (if less than 5 years). The 5 year requirement period can include the following: the time you are covered as a family member under another person's FEHB enrollment; or the time you are covered under the Uniformed Services Health Benefits Program (also known as TRICARE) as long as you were covered under an FEHB enrollment at the time of your retirement."

Regarding an immediate annuity, the OPM website provides this information:

"Immediate Retirement
An immediate retirement benefit is one that starts within 30 days from the date you stop working. If you meet one of the following sets of age and service requirements, you are entitled to an immediate retirement benefit:

Eligibility Information

Age Years of Service
62 5
60 20
MRA 30
MRA 10

If you retire at the MRA with at least 10, but less than 30 years of service, your benefit will be reduced by 5 percent a year for each year you are under 62, unless you have 20 years of service and your benefit starts when you reach age 60 or later."

DrGoogle2017
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by DrGoogle2017 » Sun Feb 17, 2019 1:18 pm

My understanding is 62 and five years. And if she has an immediate annuity, she can have her FEHB. And if she has an FEHB , then you can sign up as a spouse or family. That’s what we did. Must make sure she has been on this insurance for 5 years though.

Glomar
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by Glomar » Sun Feb 17, 2019 2:09 pm

Agree with DrGoogle2017 - assuming your wife is currently age ~59 with 5 years of service, she'd need to wait until age 62 to be able to retire under the age 62/5 years of service provision. She will reach age 62 before she reaches eligibility for MRA + 10 (in 2024).

Possibly, the advisors have in mind the option to retire and "postpone" the annuity until a later age (as a way to pick back up FEHB at the later age), but one needs to still qualify for an immediate retirement (MRA + 10) to do this. Maybe the advisors are assuming she has 10 years of service under her belt, and aren't aware she's a more recent hire?

The thing the advisors say about coverage for her but not for you, also does not ring any bells. My understanding is the same as DrGoogle2017: if she can continue coverage herself, then it should always be possible to add you during open season/ after a Qualifying Life Event. And if she elects a survivor annuity then you'd be eligible for coverage for your lifetime.

2cents2
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by 2cents2 » Sun Feb 17, 2019 2:34 pm

Provided your DW meets all the other requirements to carry FEHB into retirement, another gotcha that I can think of is in order for you to continue FEHB as a survivor you must receive a survivor annuity— if she does not elect a survivor benefit from her pension then you would be shut out of FEHB as a survivor. My memory is a little dim about how much of a pension survivor benefit is necessary. (I would have to look at the regs). Maybe someone else might know.

Topic Author
nick evets
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by nick evets » Sun Feb 17, 2019 2:52 pm

Glomar wrote:
Sun Feb 17, 2019 2:09 pm
Agree with DrGoogle2017 - assuming your wife is currently age ~59 with 5 years of service, she'd need to wait until age 62 to be able to retire under the age 62/5 years of service provision. She will reach age 62 before she reaches eligibility for MRA + 10 (in 2024).

Possibly, the advisors have in mind the option to retire and "postpone" the annuity until a later age (as a way to pick back up FEHB at the later age), but one needs to still qualify for an immediate retirement (MRA + 10) to do this. Maybe the advisors are assuming she has 10 years of service under her belt, and aren't aware she's a more recent hire?

The thing the advisors say about coverage for her but not for you, also does not ring any bells. My understanding is the same as DrGoogle2017: if she can continue coverage herself, then it should always be possible to add you during open season/ after a Qualifying Life Event. And if she elects a survivor annuity then you'd be eligible for coverage for your lifetime.
Thanks all -- right, all of us, except for the "advisor" is on the same page, so far. The language in the OPM website is pretty clear. I will ask my wife call HR when she has time, but, from past experience that's not been a quick channel. HR, that is, not my wife. :)

I'm intrinsically suspicious of advisors -- we had a poor experience with one in the not too distant past, which led me to finding this site. From what I can tell there are numerous financial services companies who can pitch on-site at various Federal agencies, but aren't actually affiliated or provided as a benefit. That line is clear to me, but not always to my wife, I suspect, and I'm not with her in DC.
Last edited by nick evets on Sun Feb 17, 2019 4:29 pm, edited 1 time in total.

2cents2
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by 2cents2 » Sun Feb 17, 2019 2:56 pm

This is from OPM’s web site:

“Requirements for Continuing Enrollment
For your surviving family members to continue your health benefits enrollment after your death, all of the following requirements must be met:
You must have been enrolled for Self and Family at the time of your death; and
At least one family member must be entitled to an annuity as your survivor.”

It goes on to say if the survivor benefit is less than the FEHB cost then you must make arrangements to pay directly.
(I would have cut and pasted this as well, but my iPhone is acting a little finicky.)

More details can be found here:
https://www.opm.gov/healthcare-insuranc ... sationers/

stan1
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by stan1 » Sun Feb 17, 2019 3:08 pm

nick evets wrote:
Sun Feb 17, 2019 2:52 pm
From what I can tell there are numerous financial services companies who can pitch on-site at various Federal agencies, but aren't actually affiliated or provided as a benefit. That line is clear to me, but not always to my wife, I suspect, and I'm not with her in DC.
This has not been my experience. My agency does offer pre-retirement courses but the instructors are not allowed to "pitch" a product. I'd be very careful about anyone's motivations here. Among the ways for financial advisors to make money are rolling TSP into high cost IRAs or by selling annuities or other insurance products. I

I think reading the OPM web site is going to be your best source on something like this and someone extracted the two relevant sections already. Agency HR departments may not know all the ins and outs of retirement especially on something as important as FEHB eligibility or spousal benefits. I'd want to validate anything told to me.

tj
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by tj » Sun Feb 17, 2019 3:15 pm

VictoriaF wrote:
Sun Feb 17, 2019 10:25 am
nick evets wrote:
Sun Feb 17, 2019 9:19 am
Going to the well again - I know many of y'all are Federal employees, and I could use some clarity....

My wife left industry and started a job with the Federal Government in 2014; her dept. operates under the FERS retirement system. My first question is, when is the earliest (not that she'd necessarily want to) she could leave and keep her health benefits (FEHB)?

From reading the OPM docs, my understanding is *62* -- is this correct? She wouldn't qualify under MRA+10, and instead would have to wait until she became an annuitant under FERS at age 62. But at that point she could retain FEHB and even add me as a spouse in the future (currently I have my own benefits) when I retire....

However, an advisor (there seem to be a number of financial advisors from DMV firms who have some sort of loose connection to agencies) is telling her that she could take a reduced annuity (5% per year) and get 90% and retire at 60 and keep FEHB. However, I would not be able to be covered in the future.

This makes no sense to me -- the annuity $ isn't really consequential, but the FEHB is, and want to be sure we understand. Thx!
I retired in 2014 with MRA+10. My Federal annuity is reduced by 2% for every year that I was less than 62 on the day of my retirement. I became eligible for FEHB from the start. I consider this one of my best decisions.

If your wife retires with MRA+10 after the age of 62, her annuity will not be reduced.

I don't know if the OPM rules have changed since 2014.

Victoria
Yours was 2% per year reduction rather than 5%?

DrGoogle2017
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by DrGoogle2017 » Sun Feb 17, 2019 4:13 pm

2cents2 wrote:
Sun Feb 17, 2019 2:34 pm
Provided your DW meets all the other requirements to carry FEHB into retirement, another gotcha that I can think of is in order for you to continue FEHB as a survivor you must receive a survivor annuity— if she does not elect a survivor benefit from her pension then you would be shut out of FEHB as a survivor. My memory is a little dim about how much of a pension survivor benefit is necessary. (I would have to look at the regs). Maybe someone else might know.
This is correct, my husband has 50% annuity survivor for this particular reason.

DrGoogle2017
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by DrGoogle2017 » Sun Feb 17, 2019 4:16 pm

2cents2 wrote:
Sun Feb 17, 2019 2:56 pm
This is from OPM’s web site:

“Requirements for Continuing Enrollment
For your surviving family members to continue your health benefits enrollment after your death, all of the following requirements must be met:
You must have been enrolled for Self and Family at the time of your death; and
At least one family member must be entitled to an annuity as your survivor.”

It goes on to say if the survivor benefit is less than the FEHB cost then you must make arrangements to pay directly.
(I would have cut and pasted this as well, but my iPhone is acting a little finicky.)

More details can be found here:
https://www.opm.gov/healthcare-insuranc ... sationers/
We’re self plus one now. I hope it’s ok. Though I won’t know for sure until my husband is not alive.

Yooper16
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by Yooper16 » Sun Feb 17, 2019 10:31 pm

Dr.Google---self plus one refers to any eligible family member of which spouse is one, can also be a child up to age 26

https://www.opm.gov/faqs/QA.aspx?fid=fd ... 0dcce88eff

DrGoogle2017
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by DrGoogle2017 » Sun Feb 17, 2019 11:03 pm

Thank you Yooper, good to know I didn’t screw up royally. We just removed one child from our health plan in 2019, it used to be self plus family hence my confusion.

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VictoriaF
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Re: Q for Federal Employees - FEHB, advisors, etc.

Post by VictoriaF » Mon Feb 18, 2019 12:53 pm

tj wrote:
Sun Feb 17, 2019 3:15 pm
VictoriaF wrote:
Sun Feb 17, 2019 10:25 am

I retired in 2014 with MRA+10. My Federal annuity is reduced by 2% 5% for every year that I was less than 62 on the day of my retirement. I became eligible for FEHB from the start. I consider this one of my best decisions.

If your wife retires with MRA+10 after the age of 62, her annuity will not be reduced.

I don't know if the OPM rules have changed since 2014.

Victoria
Yours was 2% per year reduction rather than 5%?
5% per year. Thank you for catching it! I have corrected my original message.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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