Key health coverage choices to make before retiring

From FEHB eligibility rules to Medicare enrollment deadlines, the right steps before your last day can help protect coverage for you and your spouse.

Before setting a retirement date, it is worth asking a question beyond your pension estimate: will your health insurance continue with you? Federal Employees Health Benefits, or FEHB, coverage includes a government contribution toward premiums and is a valuable retirement benefit. To keep it, you generally need an immediate annuity that starts no later than one month after separation from federal service, plus continuous FEHB coverage for the five years before retirement, or since your first chance to enroll if that period is shorter. Check your eligibility before you decide when to retire.

Military retirees: keep your choices open

Military retirees who work as civilian federal employees may count TRICARE coverage toward the five-year test, but they must be enrolled in FEHB — or Postal Service Health Benefits (PSHB), where applicable — on the last day of civilian employment before retirement. Enroll during the prior Open Season and make sure coverage is effective before retirement.

After retirement, if you are eligible to continue coverage, you can request a suspension with RI 79-9 and remain on TRICARE. Read the form closely: it also allows cancellation, which is not the same as suspension. Suspending coverage preserves the option to reenroll during a future Open Season, subject to eligibility rules.

Medicare: compare expenses and deadlines

Medicare changes for 2027 include home telehealth access through Dec. 31, 2027, virtual and self-paced Medicare Diabetes Prevention Program options, and possible electronic prior authorization processing by Medicare Advantage plans beginning Jan. 1. As of the latest announcement, the standard Part B premium and income-related monthly adjustment amounts for Parts B and D have not yet been officially released.

The 2026 standard Part B premium is $202.90 per person each month. IRMAA for Parts B and D begins above $109,000 in modified adjusted gross income for individual filers or $218,000 for joint filers, generally based on 2024 income. Higher income levels bring larger surcharges. Married people filing separately who lived with their spouse follow a different schedule that also starts above $109,000.

If you are retiring at 65 or older, compare how FEHB or PSHB plans work with Medicare when Medicare pays first. Deductibles, copayments and coinsurance reductions vary by plan. Postal retirees should confirm whether Part B is required to keep PSHB, since exceptions may apply.

To avoid a Part B late-enrollment penalty, employees who qualify through their own current job coverage or a spouse’s current job coverage can enroll while that employment and coverage continue, or during the eight-month Special Enrollment Period after employment or coverage ends, whichever comes first. Retiree coverage does not extend that period. Arrange enrollment through Social Security before retirement so the start date is coordinated. If you already have Part A, apply for Part B online or submit CMS-40B and CMS-L564.

Federal couples: plan the transition carefully

When spouses retire at different times, moving FEHB coverage to the working spouse can preserve pretax premium payments through premium conversion. BAL 25-102 requires the working spouse to carry Self Plus One or Self and Family coverage and include the retiree. The retiree can then cancel their own enrollment while keeping the right to reenroll through continued spousal FEHB coverage. That cancellation is different from suspending coverage for TRICARE. The letter’s process does not apply to people covered by PSHB.

Timing is important. Making the switch during an earlier Open Season, while both spouses are still employed when the change takes effect, is usually simpler. Close to retirement, different employee and annuitant effective dates can create a coverage gap. Ask HR to coordinate the transition instead of assuming two Open Season elections will line up.

After retirement begins, use RI 79-9 — not SF 2809 — to cancel the retiree’s enrollment, along with proof of coverage under the working spouse’s FEHB plan. The cancellation usually becomes effective on the first day of the month after OPM receives the signed form and supporting documents.

Open Season near retirement: use the proper process

Under BAL 24-103, retiring employees whose FEHB Open Season election takes effect after retirement must use a paper SF 2809 rather than the agency’s electronic enrollment system. Discuss the election during retirement counseling. HR certifies it, sends it to the carrier, and places a copy and the FEHB Enrollment Change Cover Sheet on top of the retirement package sent to OPM. That helps reduce delays in processing coverage and issuing identification cards.

Check the effective date carefully: if retirement occurs before Jan. 1, the post-retirement election takes effect Jan. 1. If retirement occurs from Jan. 1 through the day before the active-employee Open Season effective date, it takes effect on the annuity commencement date. Active-employee elections generally begin with the first full pay period starting on or after Jan. 1. October and November retirees should discuss Open Season elections while retirement paperwork is still being processed. These procedures do not apply to PSHB; request the appropriate postal instructions.

Protect your spouse and your long-term benefit

A survivor annuity election protects more than income. If your spouse will depend on your FEHB enrollment after your death, elect a continuing monthly survivor benefit and cover your spouse under Self Plus One or Self and Family when you die. A survivor annuity without health coverage is not enough, and Self Only provides no survivor health coverage. If your spouse has independent FEHB eligibility as an employee or retiree, discuss that with your benefits counselor before making a final choice.

FEHB or PSHB can stay with you for life if you keep enrolling, pay your share and meet program requirements. The government continues to pay its share of the premium, so you do not take on the full cost at retirement. Retirees still have annual Open Season opportunities to review and change coverage as premiums, benefits and needs change. Qualifying life events, such as marriage, loss of other coverage or moving outside an HMO’s service area, can also allow changes, subject to deadlines and restrictions. Protecting your eligibility now can help safeguard your health coverage and retirement budget for years.