National Active and Retired Federal Employees Association

NARFE Featured Partners

updated 2011

NARFE’s team of experts has put together these questions and answers on a variety of retirement issues. To get the latest information on changes in your federal retirement, insurance and other benefits, and become a member of an organization fighting to preserve your earned benefits.


Q. Which is the best Federal Employees Health Benefit Program (FEHBP) plan?

A. There is no conclusive answer to that question. People have different health care needs and look for different things in a health benefits plan. A plan can be best for one person but not for another. Statistically, most annuitants have chosen Blue Cross/Blue Shield (BC/BS) (Standard), followed by Mail Handlers and the Government Employees Hospital Association (GEHA).

Q. Which plans have the best dental benefits?

A. Some HMOs have better dental coverage than fee-for-service plans. None of the fee-for-service plans have really good dental benefits. However, some fee-for-service plans offer dental supplements that FEHBP enrollees can purchase for an additional premium. Also a separate dental plan was offered in 2006 under the FEHBP, with the full cost paid by the enrollee.

Q. Are there any waiting periods for benefits, or limitations or exclusions on pre-existing conditions?

A. No FEHBP plan can impose waiting periods, exclusions or limits on benefits because of a pre-existing condition.

Q. Is it possible to make a serious mistake in choosing a plan?

A. Probably not. All FEHBP plans are good. All cover hospital and physician care, prescriptions, outpatient diagnostic lab tests, treatment of mental illness, home health care, routine mammograms for women over 35, routine prostate cancer tests for men over 40, and stop smoking programs. Some also cover special benefits like acupuncture, chiropractic and dental. Generally, you can make a serious mistake only if you enroll in: (1) a costly plan or option when you do not need one; (2) a plan that does not cover a special benefit like dental when you need it; or (3) self-only coverage when you need family, or vice versa.

Q. Which benefit is the most important?

A. For most people not enrolled in Medicare Part B, the Catastrophic Protection Benefit is most important. It puts a dollar limit on the amount of money you have to pay for expenses that the plans cover. Considering the Catastrophic Protection Benefits in a two-option plan, it generally is not possible to recover enough in additional high option benefits to offset the much higher premiums.

Q. Should I consider a Health Maintenance Organization (HMO)?

A. Yes. HMOs are available to most employees and annuitants and offer a good alternative to fee-for-service plans. HMOs cover hospital and physician care and prescriptions, but they stress preventive care, covering routine physicals and immunizations. Many HMOs offer more comprehensive coverage (including dental) at lower premiums than fee-for-service plans do.

Q. Are there any disadvantages to HMOs?

A. Essentially, you give up control over your own medical care. The HMO decides how much, the kind and the location of the patient's medical care. In many HMOs, the enrollee must use the doctors and hospitals that are members of the HMO, or with which the HMO has agreements. HMOs also have limited benefits outside of their full service areas. HMOs are more likely to leave the Federal program. However, you can then transfer to another participating plan if your HMO ends.

Q. What is a Preferred Provider Program?

A. A Preferred Provider Program consists of agreements between a health benefits plan and hospitals, doctors, laboratories, and other providers of medical care. Under the agreements, the Preferred Providers agree to provide service to the plan’s enrollees and covered family members at a lower cost.

Q. What are the advantages of Preferred Provider Programs?

A. They help keep the plan's benefit payments and your premiums down. Also, you will have less out-of-pocket costs.

Q. What are the advantages of using a mail order prescription service?

A. Mail order prescription services enable plans to provide prescription drugs at lower (wholesale) prices, resulting in savings to the plan, to you, and to the government. Mail order services also have extra controls built in that generally are not available through local retail pharmacies. You should carefully review your FEHBP brochure if you change plans to see if the lower option, such as Blue Cross-Blue Shield (BS/BS) (Basic), excludes you from the mail order option if you use prescription drugs frequently.

Q. Should all annuitants enroll in Medicare when they become eligible?

A. If you have coverage under Medicare Part A, you should enroll as soon as eligible since this coverage is at no cost to you. The combination of an FEHBP plan and Medicare Parts A and B provides excellent total coverage for medical service. However,the cost of Medicare Part B has increased in recent years, and is now $115.40 per month for those retirees who do not receive Social Security benefits, which may be another factor you need to consider. Those annuitants enrolled in an HMO plan may find little advantage to enrolling in Part B.

Q. How do I apply for Medicare?

A. If you are receiving Social Security benefits, you will be automatically enrolled. Otherwise, approximately three months prior to becoming age 65, you should call 800-772-1213 and request an appointment with your local Social Security office to enroll for Medicare. Depending on when you retired from federal service (1983 or beyond) or if you have 10 years of Social Security work coverage (or you qualify based on your spouse’s Social Security), you could qualify for premium-free Medicare Part A for hospitalization. Almost all retired federal employees would qualify for Medicare Part B, but all Part B enrollees have to pay a premium. If you enroll in Medicare Part B after your initial opportunity, you will usually be subject to a penalty.

Q. How do I obtain FEHBP coverage for my grandchild who lives with me and is financially dependent on me?

A. You must provide the Office of Personnel Management (OPM): (1) proof of dependency (such as a copy of the recent tax return claiming the grandchild as a dependent) and (2) a written statement that you would expect to raise the child to adulthood. This should be sent to OPM, Retirement Benefits Branch, P. O. Box 14172, Washington DC 20044. That office also can provide further details, such as the requirement for continuing coverage of the grandchild.

Q. Who do I contact at OPM about changing my FEHBP enrollment?

A. For Open Season changes, contact the Open Season Task Force. The address is provided in the instructions/information package mailed to annuitants in early November. There also will be a special telephone number to call during the Open Season and a Web site for accessing Open Season. If you are going to change your plan during the Open Season, wait for an Open Season packet that OPM will send to you. The changes are allowed in November-December of each year and will be effective the following January 1. For information about changes at other times of the year, annuitants should write to the Retirement Benefits Branch, P.O. Box 14172, Washington, DC 20044; or call 888-767-6738 out of the Washington area; or 202-606-0500 within the Washington area. Changes outside the Open Season are restricted to specific events, such as marriage or a one-time opportunity for enrollment in Medicare and others.

Q. If I cancel my Federal Employees Health Benefits Program plan after I retire, can I enroll again as a retired employee?

A. Such a cancellation would be permanent. Annuitants cannot re-enroll in the program once they have cancelled coverage. However, annuitants may suspend their FEHBP coverage to enroll in a Medicare Advantage Plan, CHAMPVA, TRICARE For Life or TRICARE (the last two limited to retired members of the uniformed services, and their dependents and survivors) and later re-enroll. With cancellation, neither you nor your family members would be eligible for continued coverage nor would you be able to convert your coverage to a private non-group contract. Do not drop out of the program by cancellation. You may suspend coverage only for the limited reasons previously stated. Be sure you are able to re-enroll.

Q. What can I do to have OPM order my FEHBP carrier to pay for benefits?

A. First, check your plan's brochure to see if the service is covered, limited or excluded. The next step is to review the disputed claims section of your brochure. Briefly, the disputed claims section will direct you to write to the plan to explain why (in terms of the applicable brochure coverage provisions) you feel the service should be covered and to ask the plan to reconsider your claim. If the plan again denies the claim, read the plan's decision letter carefully and then check your plan's brochure again. If you still disagree with the plan's decision, the disputed claims section of your brochure will show you how to write to OPM to ask for a review of the claim. OPM cannot review a denied claim unless your plan has reconsidered it first (or at least been given the opportunity to reconsider it).

Q. How do I check on the status of a disputed claim after I send it to OPM?

A. Your disputed claim will be reviewed in one of three Insurance Contracts Divisions. Generally, OPM will acknowledge your request within five days. After OPM completes the review, they will promptly send you a final response. (If OPM needs more time before they can decide, or must send for more information, they will contact you within 14 working days.)

Q. What are the conditions for my survivor to continue FEHBP coverage in the event of my death?

A. For most retirees, continuation of FEHBP survivor coverage is an important consideration. In order for survivors to continue coverage, two conditions must be met. First, the retiree must elect to take a reduced annuity at retirement, or upon marriage after retirement, and provide a survivor annuity. Second, at the time of death, the retiree must have FEHBP self-and-family coverage.

Q. If I marry (or remarry) after retirement and elect a survivor annuity at that time, can my new spouse keep the FEHBP coverage upon my death?

A. Yes. If a self-and-family enrollment is in effect at the time of death, the two requirements would be met, regardless of the election type made at the time of retirement.

Q. My spouse is also an annuitant. After retirement, we both changed to self-only coverage. Upon my death, would my spouse be able to keep the FEHBP coverage?

A. Yes. Since in order to qualify for the change to self-only coverage, your spouse must have had coverage as a family member or in his or her name for five years before an immediate retirement, he/she would be able to keep the FEHBP coverage.

Q. My spouse is still employed by the federal government. I have a self-and-family enrollment, which covers both of us. I elected a survivor annuity at retirement. If I die while my spouse is still employed, can she keep the FEHBP enrollment?

A. Yes. Upon your death, your spouse can elect coverage as an employee (with premiums withheld from her pay) or as a survivor (with premiums withheld from her survivor annuity). It would be a tax advantage for your federally employed spouse to carry the family FEHBP coverage under the Premium Conversion program. Under Premium Conversion, the employee's FEHBP premiums are paid with pre-tax dollars, resulting in an average savings of roughly $800 per year for each employee. Note: if an employee has family coverage and a federally retired spouse who is eligible for Medicare, the FEHBP plan will be the primary insurer for the retiree spouse as well as the employee. Also, a retiree is not eligible for premium conversion, only an employee is eligible.

Q. Does the term "self-and-family" mean that I must have a family enrollment, and my spouse must have a self-only enrollment in order to keep FEHBP coverage after my death?

A. No. In fact, this would be considered a dual enrollment situation, and it would not be allowed under FEHBP regulations. Self-and-family means the enrollee and all his or her dependents are covered.

Q. Are there any circumstances whereby a survivor annuitant who remarries after age 55 and retains the survivor annuity and FEHBP coverage can cover the new spouse?

A. There are no provisions allowing a survivor to elect coverage for a new spouse. The FEHBP coverage conveys from the retired employee (annuitant) to his or her survivor upon the retiree's death. But, the survivor cannot cover a future spouse or that spouse's dependents.

Q. At retirement, I elected a survivor annuity for my spouse, but since she has her own non-federal health plan, I have self-only FEHBP coverage. Can I change to self-and-family coverage at a later date (for example, if my spouse loses her health coverage)?

A. You could change to self-and-family coverage at any future Open Season (mid-November to early December of each year). In most cases, if your spouse loses her health coverage, you can change to self-and-family coverage at that time.

Q. I had more than five years of FEHBP coverage when I retired but elected not to continue the coverage because I was covered by my spouse's private employment plan. My spouse's plan provides better coverage at less cost. If my spouse loses her coverage, can I re-enroll in the FEHBP?

A. No. If you elect not to carry FEHBP coverage into retirement, you cannot re-enroll as a retiree. This unfortunate situation could have been avoided by changing to a less expensive plan in any Open Season prior to retirement, or by changing to self-only coverage at any time prior to or after retirement, and retaining that coverage. Then a change could have been made upon loss of the spouse's coverage (see the immediately preceding question and answer).


Q. Will the Windfall Elimination Provision reduce my Social Security as a retired federal employee?

A. The modified formula used under the Windfall Elimination Provision applies to you if you become age 62 (or disabled) after 1985 for Social Security entitlement and become eligible for your government annuity after 1985. Both must occur after 1985. Your government annuity must be based in whole or in part on work for which you did not pay Social Security taxes. Regular Civil Service Retirement System (CSRS) coverage is employment for which you did not have Social Security deductions and, if used in your annuity computation, may reduce your Social Security. See the Web site www.ssa.gov/pubs/10045.html for a full explanation. Exceptions to the reduction are explained below:

1. The WEP does not apply to federal survivor annuities.

2. The reduction will not apply if a person has 30 or more years of substantial earnings under Social Security. Note: If you had 21-29 years of substantial earnings, you receive a lesser reduction.

3. Anyone who became eligible for his or her government annuity before 1986, or became age 62 or disabled before 1986 and eligible for Social Security, is excepted. Eligible means that you must have met the age and length of service requirements for immediate retirement.

4. Federal employees required by law to be covered by Social Security on January 1, 1984, are excepted.

5. Anyone whose only pension from noncovered employment is based on railroad employment also is exempt.

6. People whose only pension is from noncovered employment prior to 1957 are exempt.

For those with relatively low government annuities, the legislation provides for a guarantee. The guarantee is that the reduction of the Social Security benefit cannot be more than one-half of the amount of that part of the government annuity attributable to earnings after 1956 not covered by Social Security.

Q. How will the WEP reduce my Social Security if it applies to me?

A. Social Security benefits are based on your average monthly earnings adjusted for inflation. When your benefits are figured, Social Security separates your average earnings into three amounts and multiplies the figures using three factors. For example, for a worker who turns age 62 in 2008, the first $711 of average monthly earnings is multiplied by 90 percent; the next $3,577 is multiplied by 32 percent; and the remainder by 15 percent. The 90-percent factor is reduced with the WEP fully for those who become age 62 or disabled after 1990 (partially, from 1986 to 1989). The full reduction is from the 90-percent factor to 40 percent.

The 90-percent factor is not reduced if you have 30 years or more of Social Security substantial earnings ($18,975 in 2008, for example). If you have 21 to 29 years of substantial earnings, the 90-percent reduction decreases instead from 45 percent to 85 percent, depending on your Social Security credit. Substantial earnings are greater than the amount needed to obtain coverage for four credits. See the Social Security Web site at www.ssa.gov for a full explanation of substantial earnings from 1937 to the present.

Q. I receive a Civil Service Retirement System (CSRS) benefit. Will I receive any Social Security based on my spouse's work record?

A. The Social Security laws now place limitations on government retirees who collect both a government annuity based on their own work and Social Security benefits based on their spouse's work record. This change, called the Government Pension Offset (GPO) became effective with government employees who were first eligible to retire in December 1982 or later. The law provides that two-thirds of the government annuity would offset whatever Social Security benefits would be payable to the retired government worker as a spouse (wife, husband, widow, widower). For example, if you get a monthly civil service pension of $1,500, two-thirds of that, or $1,000, must be used to offset your Social Security spouse's or widow(er)'s benefit. In our example, if you would normally be eligible for a $500 widow's benefit but are subject to the GPO, you will receive no benefit from Social Security as a survivor.

There are some exceptions. The GPO does not apply to survivor annuitants who are not themselves government retirees. Other exceptions:

1. The person was eligible for his or her federal annuity before December 1982 and meets all requirements of the law in effect in January 1977 (i.e., one-half support requirement for men, 20-year marriage requirement for divorced spouses); OR

2. The person was eligible for his or her federal annuity before July 1, 1983, and was receiving one-half support from his or her spouse; OR

3. The person transferred to FERS by December 31, 1987 (or under approved late enrollment), or has five years in FERS if joining after December 31, 1987.

Some or all of your Social Security spouse's or widow's benefit may be offset if you receive a pension from a job where you did not pay Social Security, and you do not qualify for an exception explained above. The offset will reduce the amount of your Social Security spouse's or widow(er)'s benefit by two-thirds of the amount of your civil service annuity.

4. If you are CSRS Offset (Social Security and Civil Service), you are exempt. You are exempt if you received or were eligible to receive a federal pension before December 1982 and meet the above requirements. If your federal employment includes mandatory coverage under Social Security, such as an appointment under FERS, you are exempt. However, if you choose to switch from CSRS to FERS after December 31, 1987, you will need five years under FERS to be exempt.

Q. If I divorce, will my former spouse be eligible for the survivor benefit I elected for her when we were married at the time of my retirement?

A. Survivor benefits and health benefits coverage end at the time of the divorce. However, the court order at the time of the divorce can include a survivor benefit that will continue both (but your former spouse will have to pay all of the health benefits cost, including the government share, for her own enrollment), or you may be able to elect a survivor benefit for a former spouse if your election is received by OPM within two years of the divorce.

Q. If I marry after my federal retirement, can I provide a survivor's benefit for my spouse?

A. You may elect to provide a survivor's annuity for someone you marry after retirement as described below. Keep in mind that your new wife or husband can continue health benefits coverage under your FEHBP plan only if he or she has a survivor benefit and family coverage at the time of your death. If you make this election, your monthly annuity will be reduced. OPM will send you detailed information about the effect of the election and the exact amount of your reduced annuity when you tell them you want to make the election. However, they will not send the information until you have been married for nine months--the time when your new spouse becomes eligible. It is best if you are sure you want to make an election of survivor benefits to notify OPM soon after the marriage. There is a two-year period for receipt of the election at OPM, but some members forget. You will have a confirmation letter with the exact figures from OPM to consider your final decision as explained above.

There will be two reductions in your annuity if you elect to provide survivor benefits. One will be the reduction to provide the survivor benefit. The amount of the reduction depends on the survivor base you elect to provide--full survivor annuity or a lesser amount. This maximum amount is generally a little less than 10 percent.

The other reduction in your annuity is a permanent actuarial reduction to pay the survivor benefit deposit. The deposit equals the difference between the new annuity rate and the annuity paid to you for each month since retirement that there was no survivor reduction, plus 6 percent interest. The reduction is determined by dividing the amount of the deposit by an actuarial factor for your age on the date your annuity is reduced to provide the survivor benefit. The actuarial reduction is generally less than 5 percent of your annuity.

If you were not married at retirement (or if you were married at retirement and your marriage ended), and you marry after you retire, you must notify OPM in writing within two years after the marriage if you want to provide a survivor annuity benefit. Be sure to send the election so that it reaches OPM before the two years are up if you want to provide the benefit. You may want to send the letter soon after marriage, since there are no exceptions if you exceed the two years.

Note: If your current spouse was married to you when you retired and consented to a survivor annuity benefit based on less than "all " of your annuity, you cannot elect a survivor annuity greater than the amount provided in your original election.

Q. How is the cost-of-living adjustment (COLA) amount paid?

A. COLAs are effective on December 1 of the year in which you become eligible. The new amount will appear in your check the following month (January). The amount of your first COLA is prorated. The prorated factor is based on the number of months from the annuity commencing date to the effective date of the first COLA after the commencing date. For example, if you were retired for only four months at the time of your first COLA, your rate would be 4/12th of the full COLA. After the first prorated COLA, your regular COLA is payable.

The amount of the COLA under the Civil Service Retirement System (CSRS) is determined by the percent change in the base quarter price index from the previous year to the year in which the COLA is to become effective, adjusted to the nearest 1/10th of one percent.

The base quarters are July, August and September of each year compared to July, August and September of the previous year, for example, comparing these months in 2004 and 2005. See the monthly update on the NARFE Web site home page by clicking on COLA Update, or in NARFE magazine.

COLAs under the Federal Employees Retirement System (FERS)

FERS COLAs are sometimes one percent less than the increase in the CPI determined for CSRS retirees. If the CPI increase is between two and three percent, the FERS COLA is two percent. If the actual increase is two percent or less, the FERS COLA matches the CPI increase. However, if you are entitled to a CSRS computation for a portion of your annuity, any CSRS portion of your annuity is subject to the CSRS COLA rules, rather than the FERS COLA rules. Note: The annual COLA amounts are rounded down by law.

Q. Can I change my federal tax withholding from my retirement benefits over the telephone?

A. Yes! Using a touch-tone phone, you can call OPM on a toll-free number: 800-409-6528. By following the menu prompts, you can change the amount of federal income tax withheld from your monthly annuity, or request that state income tax be withheld or changed. For all tax transactions, you will need your CSA or CSF claim number and a perosnal identification number (PIN). You can obtain a PIN from OPM if you do not already have one. You can write to the Office of Personnel Management, Retirement Services Division, Room 1312, Attention: PIN, Washington, DC 20415. You also can obtain a PIN by telephone from OPM or on the Web site at www.opm.gov/retire.

You must indicate the exact amount of federal and state income tax you want withheld from your monthly annuity. OPM will confirm, before you end your call, the amount of income tax they will begin to deduct from your monthly annuity check and tell you when the deductions will begin.

You cannot reach a customer service representative using this number. To change taxes with a customer service representative, you can call 888-767-6738 (202-606-0500 in the Washington, DC, area). These numbers also can be used to obtain a PIN. Online changes also can be made. Use the Web site, www.opm.gov. Click on "Retirement & Insurance," then click on "Retirement." Follow the instructions for online changes. You will need to have your PIN for any inquiry or change online.


OPM offers valuable information to employees and retirees on its Web site. You may want to see the site at www.opm.gov. Look at the sections on Retirement, Health Insurance, Life Insurance and Long Term Care Insurance. Click on the topic that interests you.

In the Retirement section, you will see a heading,"Pamphlets/Publications/Forms." This will provide you with information under the topics of "Federal Employees Retirement System (FERS)" and "Civil Service Retirement System (CSRS)," and “Other” publications.

For detailed information, you may want to see the Web site, www.opm.gov/asd. Scroll down until you see the CSRS and FERS Handbook for Personnel and Payroll Offices. See the topics listed for the detailed information your agency will often use.

National Active and Retired Federal Employees Association
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