Key Takeaways
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Many government employees miss out on essential benefits simply because they don’t use them before retirement deadlines arrive.
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Timing matters. Some benefits are only available while you’re still actively employed, and overlooking them can mean losing valuable retirement income or protection.
The Overlooked Power of Federal Employee Benefits
- 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?
This article is designed to help you take stock of the lesser-known but highly valuable benefits available to public sector workers like you—and how to avoid missing out.
1. Long-Term Care Insurance Enrollment Opportunities
The Federal Long Term Care Insurance Program (FLTCIP) has been suspended for new enrollees since late 2022, and there is no confirmed reopening date in 2025. If you hadn’t taken advantage of it before the suspension, you currently can’t enroll.
However, many employees never even explored this benefit when it was available. When and if it opens again, it’s vital to consider enrolling while you’re still actively employed, because:
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Premiums are generally lower for younger enrollees.
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You may qualify with less medical underwriting.
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Retirees often face stricter eligibility and higher costs.
If the program becomes available again, your active employment window might be your only chance to get in with fewer restrictions.
2. Flexible Spending Accounts: Use Them Before You Lose Them
Health Care and Dependent Care FSAs allow you to set aside pre-tax dollars, but they come with a use-it-or-lose-it clause. In 2025, the healthcare FSA limit is $3,300, with up to $660 carryover allowed. These benefits are forfeited if you don’t spend them by the deadline.
Once you retire, FSAs are no longer available. You can only use remaining funds for eligible expenses incurred while you were still employed. This is why maximizing your FSA during your final working years is essential:
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Schedule medical and dental procedures before retirement.
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Use up dependent care funds before separating from service.
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Consider aligning retirement with the end of the calendar year to reduce waste.
3. Sick Leave Conversion for Retirement Credit
One of the most misunderstood benefits is your unused sick leave. You can’t cash it out, but it can add significant value to your annuity. Under FERS, every 174 hours of unused sick leave adds about one month to your creditable service time. This matters because:
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It could increase your annuity amount.
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It may push you over a service milestone, like 20 or 30 years.
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It doesn’t count toward retirement eligibility but does increase your pension.
You can’t accumulate more sick leave after retirement, so continue banking it while working—don’t waste it unless truly necessary.
4. Federal Employees’ Group Life Insurance (FEGLI) Decisions
FEGLI offers Basic and Optional life insurance coverage. Your ability to adjust, reduce, or continue this coverage becomes limited after retirement. By default, Basic coverage continues with automatic reductions unless you opt to keep it at full value—which comes at a higher cost.
You must make decisions about post-retirement coverage before you leave service:
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Review coverage and costs well before your retirement date.
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Decide whether you want to maintain, reduce, or cancel options.
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Understand that premiums rise significantly with age, especially after 65.
Waiting too long to act means you’ll be stuck with whatever choices were in place at retirement.
5. Federal Employee Health Benefits (FEHB) and Medicare Coordination
You may know that you can keep your FEHB into retirement if you’ve had it for at least five consecutive years before retirement. But there are a few key things many overlook:
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If you plan to enroll in Medicare later, some FEHB plans coordinate better than others. Review coordination policies while you’re still employed.
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Certain plans reduce copayments, deductibles, or even reimburse Medicare Part B premiums. But you need to be enrolled in the right FEHB plan before you retire to access those perks.
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Making plan changes post-retirement is restricted to Open Season or qualifying life events. Planning while employed offers more flexibility.
A careful FEHB review before retirement can lead to significant savings later on.
6. TSP Withdrawal Planning and In-Service Options
The Thrift Savings Plan is a major part of your retirement income, but some strategies are only available while you’re still working:
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You can make one in-service withdrawal if you’re 59½ or older.
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You can also take a financial hardship withdrawal while employed (though taxes and penalties may apply).
If you delay planning, you might:
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Miss opportunities to rebalance your portfolio while actively contributing.
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Enter retirement without a distribution strategy.
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Overlook Roth vs. Traditional tax implications.
In 2025, TSP limits are $23,500 in elective deferrals, with catch-up contributions varying by age. Maximizing these in your final years can cushion your retirement fund.
7. Federal Employee Dental and Vision Insurance Program (FEDVIP)
FEDVIP continues into retirement, but many forget that you need to be enrolled prior to retirement in order to maintain coverage.
Why this matters:
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You can’t newly enroll after retirement unless during Open Season or due to a qualifying life event.
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Dropping coverage in retirement means you generally can’t get it back.
FEDVIP offers valuable dental and vision benefits that aren’t covered by FEHB or Medicare. If you’re not currently enrolled but anticipate needing it, enroll before you separate.
8. Retirement Counseling and Benefit Reviews
Your agency’s HR office and retirement counselors are only available while you’re employed. Once you retire, those resources are no longer directly accessible. Take advantage of them by:
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Requesting a retirement benefits estimate.
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Verifying service history and deposit/redeposit status.
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Attending pre-retirement seminars or webinars.
These consultations help avoid surprises—like service credits not counting, or retirement applications delayed due to missing documents.
9. Service Credit for Military and Temp Time
If you have military service or temporary federal time not currently credited toward retirement, you may need to make a deposit to have it count.
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For military time, interest accrues if you wait too long. The earlier you pay, the less you owe.
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For temporary time (e.g., pre-1989 temp employment), you may be eligible to make a redeposit.
Once you retire, you can’t pay these deposits. If you don’t take care of this while still working, you permanently lose the opportunity to add those years to your service credit.
10. Beneficiary Designations and Financial Readiness
Too many employees forget to update their beneficiary forms. These override wills and can significantly affect where your benefits go after death. Forms you should review include:
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FEGLI
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TSP
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Unpaid compensation
Also, ensure your personal financial records are aligned with your retirement goals:
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Update your address and emergency contacts.
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Review survivor benefits for your spouse or other dependents.
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Ensure that your annuity election and survivor benefit elections match your current wishes.
Failure to update these can create complications or delays for your loved ones.
Make the Most of Your Final Working Years
Every benefit you have as a federal employee serves a purpose, but timing and awareness determine how much of that value you actually capture. As you near retirement, it’s essential to not only focus on the big-ticket items like your annuity or TSP balance but also on the lesser-known tools and opportunities that disappear the moment you leave service.
Talk to HR, read through your benefit statements, and ask detailed questions. If you’re unsure about how any of these programs work or how they apply to your situation, a licensed agent listed on this website can help you make confident, informed decisions.
