FEHB

Yes, but you must meet two requirements: (1) You must retire on an immediate annuity (not a deferred retirement), and (2) You must be enrolled in FEHB for the 5 years immediately before retirement. There are limited exceptions to the 5-year rule for certain circumstances like returning from active military duty. If you meet these requirements, you can keep FEHB for life, and the government continues to pay approximately 72% of the weighted average premium just as they did while you were working.

Most federal retirees should enroll in Medicare Part A (which is premium-free if you have 40 quarters of Medicare-covered employment) and Part B when they turn 65. Medicare becomes your primary insurance and FEHB becomes secondary, which can significantly reduce your out-of-pocket costs. Some FEHB plans waive deductibles and copays for Medicare-enrolled members. Delaying Medicare Part B enrollment can result in permanent late-enrollment penalties. We recommend reviewing your specific FEHB plan's Medicare coordination benefits before deciding.

The 5-year rule requires continuous FEHB enrollment for the 5 years immediately preceding your retirement to carry FEHB into retirement. This means 5 consecutive years — not 5 total years. If you weren't enrolled in FEHB, were covered under a spouse's plan, or had a lapse in coverage during those last 5 years, you may not be eligible to continue FEHB. Limited exceptions exist for employees who return from active military service or lose coverage under a spouse's FEHB enrollment. It's critical to verify your eligibility well before your planned retirement date.

Once you enroll in Medicare, it becomes your primary payer and FEHB becomes secondary. This means Medicare pays first, then your FEHB plan pays some or all of what Medicare doesn't cover, depending on your specific plan's coordination rules. Many FEHB plans offer enhanced benefits for Medicare enrollees, such as waived deductibles or reduced copays. You continue paying your FEHB premium, but your combined coverage (Medicare + FEHB) is typically better than either alone. Most federal retirees find this combination provides excellent coverage without needing a Medicare Supplement (Medigap) policy.

The Postal Service Health Benefits (PSHB) program was created as a separate health insurance program for postal employees and retirees, distinct from FEHB. Starting in 2025-2026, postal employees and annuitants were transitioned from FEHB to PSHB. PSHB plans are similar to FEHB but are specifically designed for the postal workforce. Postal retirees in PSHB must enroll in Medicare Part A and Part B when eligible. If you're a postal employee approaching retirement, understanding the PSHB enrollment requirements and plan options is essential — the rules differ from traditional FEHB in important ways.