If You’re Retiring Soon, These FEHB Tips Can Save You Money Long-Term

Key Takeaways

• Planning your FEHB transition before you retire can help you avoid unnecessary costs and protect your long-term healthcare options.

• Understanding how FEHB interacts with Medicare and survivor benefits is essential to keeping coverage active and affordable in retirement.

Understanding the Basics of FEHB in Retirement

• Also Read: Divorce and Your Federal Pension—What Happens When You Split Assets and How It Could Affect Your TSP
• Also Read: What Happens to Your Federal Benefits After Divorce? Here’s the Lowdown
• Also Read: The Best FEHB Plans for 2025: Which One Fits Your Lifestyle and Budget the Best?

As a government employee, your Federal Employees Health Benefits (FEHB) coverage is one of your most valuable assets going into retirement. In 2025, the structure of FEHB remains largely intact, but how you use it in retirement can significantly affect your finances. If you’re close to retiring, making informed choices now ensures your health coverage remains both effective and cost-conscious in the years ahead.

Eligibility to Continue FEHB After Retirement

To keep your FEHB benefits in retirement, you must meet two main conditions:

• You are entitled to retire under a retirement system (like FERS or CSRS).

• You have been continuously enrolled in any FEHB plan (or covered as a family member) for at least five years immediately before retirement.

Failing to meet either of these criteria means you cannot continue your FEHB coverage as a retiree.

Timing Your Retirement Wisely

The date you choose to retire affects more than just your first annuity payment—it impacts your healthcare as well. Here are a few timing tips:

• Avoid gaps in coverage: Retiring at the end of the month ensures that your FEHB carries into retirement without a lapse.

• Coordinate with Medicare eligibility: If you’re turning 65 soon after retirement, align your FEHB and Medicare enrollment to avoid penalties or duplicate costs.

Considering Medicare Part B When You Turn 65

Once you turn 65, you’re eligible for Medicare. Many retirees with FEHB ask whether enrolling in Medicare Part B makes sense. In 2025, Medicare Part B has a standard monthly premium of $185 and a deductible of $257. Whether you choose to enroll should depend on your healthcare usage, financial situation, and long-term plans.

Why Some Choose to Enroll in Part B

• Reduces out-of-pocket costs on FEHB plans that coordinate with Medicare.

• Offers nationwide provider access with fewer billing surprises.

• Protects against future late enrollment penalties if you decide to join later.

Why Others May Delay Part B

• Paying the premium may not seem worthwhile if your FEHB plan already covers most services.

• You’re not a high healthcare user and don’t anticipate needing frequent services.

There’s no one-size-fits-all answer. Reviewing your current FEHB plan and talking to a licensed agent helps clarify what works for your situation.

Managing Costs by Choosing the Right Enrollment Option

FEHB lets you pick from Self Only, Self Plus One, or Self and Family. Choosing the right option affects your monthly premium and total yearly cost.

• Self Only: Ideal if you’re single or your spouse has other coverage.

• Self Plus One: Often misunderstood. In some cases, Self and Family can be cheaper or offer better value, especially if premiums are close.

• Self and Family: Necessary if covering more than one dependent.

Review these options annually. Family needs and premiums change, so don’t set it and forget it.

Using Open Season to Your Advantage

Every year, from November to December, you have a chance to adjust your FEHB plan. Open Season is your window to:

• Switch to a lower-cost plan.

• Change your enrollment type (e.g., Self Plus One to Self Only).

• Add or drop dependents based on eligibility.

As a retiree, you’ll receive information by mail or electronically, depending on your preferences. Use the opportunity to compare benefits, deductibles, and total annual costs—not just premiums.

How FEHB Interacts with Medicare in Retirement

Once enrolled in Medicare, your FEHB becomes secondary for most services. Here’s how that works:

• Medicare pays first for hospital (Part A) and medical services (Part B).

• FEHB covers costs that Medicare doesn’t, such as copayments, coinsurance, and services not included in Medicare.

This coordination can significantly reduce your out-of-pocket costs, especially for surgeries or hospital stays.

In 2025, many retirees find that pairing Medicare Part A and B with their existing FEHB plan creates a stronger coverage structure, even when factoring in the Part B premium.

Understanding Survivor Benefit Implications

If you’re married, choosing a survivor benefit for your spouse is crucial to keeping their FEHB coverage if you die first. Here’s what you need to know:

• Your spouse can only keep FEHB if you elect a survivor annuity of at least 25%.

• If you waive the survivor benefit, FEHB coverage ends for your spouse upon your death.

Even if you are healthy now, long-term planning ensures your spouse doesn’t lose access to affordable care unexpectedly.

Knowing When to Cancel or Suspend FEHB

Some retirees consider canceling or suspending FEHB if they’re covered under another plan, such as a Medicare Advantage plan. While canceling is permanent, suspension allows you to return to FEHB under specific conditions.

You can suspend FEHB if:

• You enroll in a Medicare Advantage plan.

• You enroll in TRICARE, CHAMPVA, or Medicaid.

Suspension allows re-enrollment in FEHB during any future Open Season, but only under qualified circumstances. Cancellation does not.

Federal Long Term Care and FEHB Are Separate

Your FEHB plan doesn’t include long-term care coverage. If you want this kind of insurance, it must be purchased separately. While the Federal Long Term Care Insurance Program remains suspended for new enrollees as of 2025, current policyholders retain coverage.

Keep this distinction in mind when estimating future health costs—especially in the later stages of retirement.

Don’t Forget About FEDVIP for Dental and Vision

Dental and vision coverage is not automatically included in FEHB. You can add it through the Federal Employees Dental and Vision Insurance Program (FEDVIP), which remains available to retirees in 2025.

• Separate premium from FEHB.

• Can be changed during Open Season.

• Offers flexibility for those needing specific providers or services.

If you’re anticipating more dental work or want broader vision options, FEDVIP may be worth considering.

Reviewing Your Plan Every Year Matters

Healthcare needs evolve. What worked for you pre-retirement might not work well after a few years. Make it a habit to:

• Review your plan during each Open Season.

• Compare cost-sharing amounts like copayments and deductibles.

• Check for plan network changes or coverage limits.

Staying proactive helps you avoid expensive surprises.

Protecting Your Retirement with Smart Health Coverage Decisions

Your health coverage in retirement isn’t a set-it-and-forget-it situation. It needs regular attention—especially as your life stage, health, and family needs change. The FEHB Program offers strong protection, but only if you manage it wisely.

If you’re not sure what the best path looks like for your situation, get in touch with a licensed agent listed on this website for professional advice tailored to your retirement plan.