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Caught Without Coverage

By Mike Causey
Washington Post Staff Writer
Tuesday, June 18, 1996; Page D02

Fear of losing coverage under the government's cradle-to-grave group health program is a big reason many feds don't retire when they planned.

In trying to save premium payments, many feds outsmart themselves. They get their health insurance coverage under a nonfederal spouse's company plan, which may be better or cost less. But when they get close to retirement, many discover that the private-sector plan isn't so great. Many private plans raise premiums or cut benefits, or both, for retirees. Or don't cover them at all.

By contrast, the federal health program is a cradle-to-grave deal that shines in retirement. Nonpostal retirees get the same coverage and pay the same premiums as the healthiest, youngest worker in the same plan. And they can switch plans every year to pick up new benefits or duck premium increases. The problem is that many feds find out too late that they must be in one of the federal plans for the five years preceding retirement to keep coverage when they retire. There are exceptions. Here's the explanation from Tammy Flanagan, of the Rockville-based National Institute of Transition Planning Inc.:

"Health benefits coverage can be continued into retirement for employees who retire on an immediate -- not deferred -- benefit and who have been enrolled continuously in the program for at least five years immediately preceding retirement, or for the entire period before retirement in which they would have been eligible for coverage if that period happens to be less than five years. An `immediate' annuity under the Federal Employees Retirement System (FERS) includes retirement under the MRA (minimum retirement age) plus 10 years' service provision, even if the annuity is postponed to a later date to lessen the age reduction. Health benefits (as well as life insurance coverage) in those situations are suspended until the annuity commences.

"Employees are considered covered if they are enrolled under a spouse's federal health plan. Additionally, their coverage need not have been in the same plan. They may have always had a Mailhandler's benefit plan, but the open season before retirement switched to GEHA or Blue Cross or an HMO. They still are considered to have continuous coverage in the federal program. In some cases, coverage under CHAMPUS (the military health plan) may be creditable toward meeting the coverage test.

"The problem of not having five years' continuous coverage mainly will affect those married employees who are covered under a spouse's private-sector (nonfederal) plan.

"Some employees are eligible for a waiver of the five-year rule due to a policy related to the buyout program. It states that employees retiring with a buyout can continue federal health coverage regardless of those restrictions so long as they were enrolled in a federal health plan (or as a family member) as of March 30, 1994. In addition, this policy covers those separating under early retirement without a buyout and those taking discontinued service retirement because of job abolishment, reduction-in-force, transfer of function outside the commuting area, etc.

"The waiver of the five-year rule applies until the end of the buyout window period (already ended as of March 31, 1995, for most non-Defense agencies), but for Defense agencies through Sept. 30, 1999. It also covers employees who have agreed to retire under the deferred buyout program.

"Waivers aren't granted for disability retirement or for mandatory law enforcement retirements. Those who don't meet waiver requirements can ask the Office of Personnel Management to make an exception. OPM rarely grants waivers in cases of voluntary retirement where an employee could continue working to meet the requirement for five years of coverage."

1996 The Washington Post Co.

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