Should you stick with the Federal Employees Health Benefit Plan (FEHB), or switch over to TRICARE. Here’s what you need to know:
Who. To be eligible for FEHB, you must be a federal employee or a covered family member. In general, to be eligible for TRICARE, you must in the military or a family member; this includes guard, reserves, and retired military.
While activated, guard and reserves are eligible for the same Tricare plans as active duty servicemembers. Retired reservists age 60 and older are eligible for Tricare. However, drilling Guard and Reservists, and retired reservists under age 60, ARE NOT eligible for TRICARE if you are eligible for FEHB.
Tricare vs. FEHB.
Tricare Pros:
1. Simple. Three main categories of Tricare – Select, Prime, Tricare for Life. Select and Prime are for eligible servicemembers under age 65. Tricare for Life is the only plan available for those 65 and older.
2. Consistent. Plans and fees are the same nationwide (FEHB varies by state)..
3. Cheaper (generally) than FEHB for similar coverage.
FEHB Pros:
1. Choice. More types of plans, more providers, and more options.
2. Offers High Deductible Health Plans (HDHP), some with Health Savings Accounts (HSA). These are not offered in Tricare.
Considerations.
If an HDHP is a good fit for you (only available in FEHB) look for one with an HSA that includes employer contributions. HSA’s are the account you deposit money to save and invest to pay the high out of pocket medical expenses associated with the HDHP. If your medical expenses are less than your contributions, these are a great savings tool. The money is yours forever, unspent money is rolled over from year to year. Your contributions and the earnings in your account are NOT taxed, ever, as long as they are used to pay medical expenses. When you turn 65, you are no longer eligible to maintain an HAS and any funds still in your HSA are distributed to you tax-free to spend or invest any way you want.
When you reach age 65, you must sign up for Medicare part B (unless you have an exception) and begin paying Medicare Part B premiums. Both Tricare for Life and HEFB work together with Medicare to cover your needs. Tricare for Life has no fees or premiums. When combined with Medicare coverage is nearly complete with very few other out of pocket expenses (other than Medicare premiums). HEFB plan costs are the same for retirees as for current employees. So you will need to pay your FEHB premiums AND Medicare premiums. Retired federal employees should review you FEHB coverage. You may be able to retain similar overall coverage (FEHB and Medicare combined) and lower your costs by switching to a less robust FEHB plan.
It is very important that you sign up for Medicare Part B when you reach age 65. If you have an exception, you must sign up as soon as lose your exception. There is a 10% Medicare Part B premium penalty for every year you delay (delay 5 years, you owe a 50% penalty). This penalty is permanent - you would need to pay it yearly for the rest of your life.
Tricare and FEHB in retirement.
1. You must be enrolled in Tricare and/or FEHB for the last 5 years before retirement.
2. You will need to enroll in FEHB (if you aren’t already) during the open season before your retirement to meet the requirement to be in FEHB on the day you retire.
3. If you would like to move to Tricare after you begin federal retirement, SUSPEND (do not cancel) FEHB to retain the ability to go back to FEHB later if you want.
4. If you cancel FEHB in retirement, it is permanent and you can never return to FEHB.
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