ProFeds Founder, Chris Kowalik, explores the rules for keeping various government insurance programs such as health (FEHB), life (FEGLI), dental and vision (FEDVIP), and long term care (FLTCIP).
Key takeaways:
- Rules for being able to keep various federal benefits
- Timelines for changes to take place
- How the cost can change for each benefit
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Transcript of this episode coming soon:
Originally released on 3/7/2025
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If you’ve listened to several of these videos so far before you got to this one, you know that we talk a lot about the health insurance and the life insurance because those are two really important benefits that federal employees are considering when they’re stepping into retirement and certainly, when they’re leaving the government.
But what happens to that great insurance? Are you allowed to keep it? Does it automatically go away or somewhere in between? Today’s episode, we’ll cover just that.
Hi, I’m Chris Kowalik of ProFeds and welcome to the FedImpact Podcast, where we offer candid insights on your federal retirement.
Reduction in Force – Will I Get to Keep My Government Insurance?
So no joke, these insurance benefits, even aside from life insurance and health insurance are super important to federal employees. And we want to make sure that you have an opportunity to be able to keep those benefits or at least know what you’re giving up if you make a choice to leave.
We’re going to of course, cover the health insurance, the FEHB Program, next we have the FEGLI, which is the Life Insurance, the Dental and Vision Program called FEDVIP, and then the Federal Long Term Care Insurance Program called the FLTCIP.
Rules for Keeping Federal Benefits
Let’s talk about the normal rule to be able to keep FEHB. In a normal retirement scenario, so aside from a RIF or early out or discontinued service or any of that, the FEHB rule is that you must be enrolled on the day that you retire and five years prior, right? The day you retire and five years prior. In order to be able to keep that coverage in retirement, you must meet that rule.
But there are some special exceptions to that rule. If you’re going out under an early out or a VERA, a discontinued service retirement or a voluntary cash incentive or a VSIP, that five-year rule can be waived by OPM. In fact, it’s an automatic waiver if you’re retiring in one of these categories.
And although you may have a waiver to meet the five-year rule, keep in mind you also have to be enrolled in the FEHB Plan on the day that you retire. In the event that you are not in FEHB now and you are offered an early out, for instance, you are not allowed to enroll in the FEHB Plan at that time. You already had to have been enrolled and then they will simply waive the five-year requirement that you normally would have.
Flexible Spending Account
Now, a benefit that is closely related to the FEHB Program is the Flexible Spending Account. This program, normally if you retire on January 31st, you were allowed to use the plan up to that point and any eligible expenses that you’ve had up to that moment in time. But once you retire, the FSA is done.
And it works exactly the same way even if you take an early out, a discontinued service retirement or the voluntary cash incentive called the VSIP. So important. If you’ve got a lot of money in your FSA, stock up on your Band-Aids and your rubbing alcohol. You’re going to need something to be able to gobble up that money. Otherwise, it vanishes the moment that you step out the door.
FEGLI
Next up is FEGLI, so this is the Life Insurance Program. Same rule, you must be enrolled in it on the day that you retire and five years prior. There is no waiver by the Office of Personnel Management for the five-year rule for this plan. If you want to be able to keep this life insurance in retirement, you must have already had it for five years prior to the moment that you walk out the door and be enrolled in it on that day.
Very important, there is no waiver for this like there is for the FEHB Plan. If you have no immediate pension payable to you, you will not be able to keep this FEGLI coverage. You’ll have the coverage lasting for an additional 31 days after you leave federal service. And you’ll have an opportunity to convert this to a private plan if you choose to do so. But you’re going to be paying the full premium for this, and the premiums don’t look the same as they do under the FEGLI Program.
Dental & Vision
For the Dental and Vision Program, if there’s no immediate pension, this benefit will stop automatically when you leave service. You need to time those things. If you’ve got the trip to the eye doctor, make sure that that’s happening before you leave federal service so that you can at least use your Dental and Vision Program.
Federal Long Term Health Care Program
Next step is the Federal Long Term Care Program. You are allowed to keep this program as long as you keep paying your premiums. No matter how it is that you leave federal service, whether you retire, whether you get a pension right away or it’s many years down the road, or no pension at all, you have the ability to keep your Long Term Care coverage as long as you continue to pay the premiums.
This program is closed for additional registrations or sign-ups for this plan. So no new people are allowed in, but if you’ve already got this plan, as long as you keep paying the premiums, you’ll be able to keep it.
Get Connected & Next Steps
There’s an awful lot to cover. There’s lots of ways to slice and dice all of this material, but insurance I know is going to be a big factor for a lot of people, and we want to make sure that you are super, super prepared for what is to come.
Hopefully this has been helpful. To stay connected to us, pull out that phone and text the word podcast to 224-444-6144, we’ll be connected, you’ll have access to all the tools and resources. If you are extra interested in these insurance programs, we’ve got a slew of webinar replays on these different topics, so feel free to dive in.
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