Key Takeaways
- Upcoming changes to FEDVIP and FEGLI will impact federal employees‘ benefits, making it crucial to review options before retiring.
- Understanding these changes can help federal employees make informed decisions about their healthcare and life insurance plans.
Big Changes Are Coming for FEDVIP and FEGLI—Here’s What Federal Employees Need to Know Before They Retire
- Also Read: New TSP Withdrawal Rules and What They Mean for Your Federal Retirement Plans
- Also Read: TSP Investment Moves That Could Help Federal Employees Retire on Their Own Terms
- Also Read: Early Retirement Myths Federal Employees Need to Stop Believing
What’s New with FEDVIP?
The Federal Employees Dental and Vision Insurance Program (FEDVIP) offers federal employees and retirees dental and vision insurance coverage. While it’s a voluntary benefit, many federal employees rely on FEDVIP to fill in coverage gaps left by other health insurance plans.
One of the most important changes for FEDVIP in the coming years is the expansion of available plans. Federal employees will soon have a broader range of choices, with more options for selecting the type of dental and vision care coverage that best fits their needs. As competition increases among providers, you may see better pricing and enhanced benefits.
However, with more choices comes the challenge of selecting the right plan. It’s crucial to understand the coverage differences between the new plans and to consider how they will meet your needs both now and in retirement. As you approach retirement, make sure to review your FEDVIP options carefully. Some plans may offer more comprehensive post-retirement coverage, while others may provide better short-term value but lack long-term benefits.
Are You Prepared for FEGLI Changes?
The Federal Employees’ Group Life Insurance (FEGLI) program is another critical component of federal employee benefits. FEGLI provides life insurance coverage to millions of federal employees and retirees, but big changes are coming that may affect your coverage choices.
One significant change is the adjustment in premium rates for some age groups. As federal employees get closer to retirement age, the cost of life insurance through FEGLI can increase substantially, particularly for additional optional coverage beyond the basic plan. If you are relying on FEGLI as your primary source of life insurance into retirement, these rising premiums may impact your financial planning.
Another upcoming change includes alterations to the optional coverage levels. As a federal employee, you can currently elect additional insurance—up to five times your salary—without undergoing a medical exam when you’re hired. But as retirement nears, you may want to reconsider whether this additional coverage is still necessary or financially beneficial. The new changes to the FEGLI program may introduce stricter limitations or additional criteria for these higher coverage levels, meaning it’s important to review your policy and update your decisions accordingly.
Should You Reevaluate Your Retirement Strategy?
With the upcoming changes to both FEDVIP and FEGLI, federal employees need to reassess their retirement strategy. Healthcare and life insurance are two of the most significant costs in retirement, and failing to plan for these changes can impact your financial security in the long term.
For healthcare, while you may be enrolled in the Federal Employees Health Benefits (FEHB) program, FEDVIP will continue to play an important role in covering dental and vision expenses. Many retirees overlook the importance of maintaining comprehensive dental and vision coverage, but these services can become increasingly necessary as you age. Ensuring you have the right FEDVIP plan in place before retiring can save you from expensive out-of-pocket costs later.
In terms of life insurance, FEGLI’s rising premiums could become a financial burden if not carefully managed. If you’ve built up substantial savings or have other life insurance policies outside of FEGLI, it may be worth reducing your FEGLI coverage as you approach retirement. Remember, the goal is to strike a balance between having enough coverage to protect your loved ones and not paying excessive premiums for coverage you may no longer need.
How Can You Maximize Your FEDVIP and FEGLI Benefits?
To maximize your benefits before retirement, it’s important to understand your options and how the upcoming changes will affect them. Start by reviewing the plan options for FEDVIP and considering any new choices that may offer better coverage or savings. Additionally, if you haven’t already, consider signing up for both dental and vision coverage before retirement, as enrolling later as a retiree may come with higher costs.
For FEGLI, it’s essential to calculate how much life insurance you really need in retirement. For some federal employees, sticking with the basic coverage may be sufficient, while others might need to keep some optional coverage for added peace of mind. The rising premiums for optional coverage are a key factor to consider, especially as these increases can become significant over time. Comparing your FEGLI benefits to other life insurance options outside the federal system might also help you determine the best path forward.
Why Timing Matters for These Changes
Timing is a critical element when it comes to taking full advantage of your benefits. Both FEDVIP and FEGLI have open enrollment periods, and the new plan changes will roll out during these periods. Failing to review your options and make adjustments during open enrollment can leave you stuck with suboptimal coverage or higher costs.
For federal employees nearing retirement, understanding when to make decisions about FEGLI and FEDVIP is essential. For instance, if you plan to reduce your FEGLI coverage, doing so before retirement could save you from costly premium hikes. Similarly, selecting the right FEDVIP plan before retirement will ensure you have the appropriate coverage for your healthcare needs without overpaying.
What Should You Do Before the Next Open Enrollment?
Before the next open enrollment, federal employees should take the time to review their benefit options carefully. For FEDVIP, compare the new plan options to your current coverage and make sure you’re not missing out on better benefits or lower costs. Remember, the plan you choose before retirement will likely be the one you carry into retirement, so it’s important to get it right.
For FEGLI, calculate your current life insurance needs. If you no longer need as much coverage, consider reducing your optional insurance levels to avoid paying higher premiums as you age. On the other hand, if you do need the coverage, now is the time to lock it in, before the new changes make it more difficult or expensive to obtain.
Why Staying Informed Matters
Federal employees have access to some of the best benefit programs in the country, but staying informed about upcoming changes is key to making the most of them. Both FEDVIP and FEGLI will see significant adjustments in the coming years, and understanding how these changes affect your retirement planning will help you avoid costly mistakes.
Staying proactive in reviewing and adjusting your benefits, particularly as retirement nears, can ensure that you’re not only prepared for the changes but also maximizing the full potential of your federal employee perks. Don’t wait until it’s too late—act now to make sure you’re ready for what’s ahead.
