Early retirement from the federal government due to a disability or injury can lead to a lot of questions, especially about the future of your health insurance. If you’re a federal employee retiring early and are worried about health care coverage, rest assured knowing you have good options that allow you to keep taking care of yourself and your family. Read through this primer on health insurance plans to better understand which one may be the smart choice for you in retirement.
#1 – If You’re 65+ Years Old
At age 65, most retirees become eligible for Medicare. This federal health insurance program offers various benefits that can work together with your FEHB plan. For instance, you can use Medicare as your primary insurance and your FEHB coverage as secondary insurance. If you are younger than 65 with a disability or End-Stage Renal Disease, you are also eligible for Medicare.
Please keep in mind that Medicare is composed of 4 different parts that are the building blocks of your health coverage: Part A, Part B, Part C, and Part D.
Part A
Medicare Part A is sometimes called hospital insurance, which helps cover inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care. Usually, you don’t need to pay a monthly premium for Part A.
Part B
Medicare Part B, or medical insurance, covers certain services like doctor visits, outpatient care, medical equipment like wheelchairs, and preventive services like flu shots. With Part B, you’ll pay a premium every month.
Original Medicare: Part A + Part B
Medicare Part A and Part B are both under Original Medicare. If you want drug coverage too, then you can join a separate Medicare Part D plan.
Part D
Medicare Part D coverage is provided by private companies that you can choose from. For a Medicare Part D plan, you’ll plan a monthly premium that depends on the plan.
Part C: Medicare Advantage
Finally, there’s Medicare Advantage, also known as Medicare Part C. Medicare Advantage plans, are another way to get your Medicare Part A and Part B coverage. These are Medicare approved plans offered by private companies that bundle your Part A and Part B coverage. They usually include Part D coverage too. Most plans include extra benefits like hearing, vision, and dental.
#2 – If You Have an Injury or Illness That Keeps You from Performing At Least One Job Duty
For injured or ill federal employees, you are eligible to continue your FEHB coverage with Federal Disability Retirement. Disability retirement is a “built-in” benefit within your FERS retirement plan that allows federal workers to retire early due to a medical condition or injury that impairs their ability to perform at least one essential function of their job.
If approved for this benefit, you’ll receive:
- A monthly annuity payment
- Additional creditable years of service on top of your current service
- Continued health and life insurance
- The option to work in the private sector and earn up to 80% of your old position’s current salary
Federal Disability Retirement offers the peace of mind you need as an injured or ill federal worker when it comes to health insurance. Keep in mind that when you reach the full retirement age of 62, your health insurance will roll over into your regular retirement.
It’s important to know that your insurance can be reinstated retroactively if you’ve been out of work for less than a year and are approved for Federal Disability Retirement.
#3 – If You Have a Total Disability
If you’re a totally disabled federal employee, you’re eligible for Social Security Disability Insurance. SSDI provides both health coverage and monthly payments. If approved for SSDI, you’ll receive:
- Medicare coverage as your primary insurer. Any private insurance you may have becomes secondary.
- Monthly payments based on the credits you have paid into social security from previous work history
Please be aware that the Social Security Administration has outlined a list of disabilities that prevent “substantial gainful activity” and can automatically qualify for SSDI. While this is great for those in desperate need of these benefits, strong medical evidence and documentation is still required to be approved.
One of the key benefits of SSDI is that after a 24-month waiting period, beneficiaries automatically qualify for Medicare. This includes at least 93 months (about 8 years) of hospital and medical insurance coverage after the trial work period, as long as the individual still has a disabling impairment.
#4 – If You’re Ineligible to Continue FEHB Coverage
Continuation of Health (COBRA) is another option for retirees who are ineligible to continue FEHB coverage. It gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan.
#5 – IF FEHB or COBRA Don’t Meet Your Health Care Needs
Lastly, you can explore options under the Affordable Care Act. The ACA offers a range of Marketplace Health Insurance plans based on your state, with varying costs and levels of coverage, which can be a good fit for some early retirees.
For those who do not have access to employer-sponsored health insurance, the ACA created Health Insurance Marketplaces where individuals can buy coverage.
The ACA also expanded Medicaid eligibility to include individuals below certain income levels. However, not all states chose to expand Medicaid, so eligibility varies by state.
Under the ACA, all health insurance plans must cover a set of benefits such doctor visits, medical equipment, preventative services, and drug coverage. Specific services may vary based on your state’s requirements.
The ACA prohibits insurance companies from denying coverage or charging higher premiums based on pre-existing conditions.
Navigating your health insurance options can help ensure you have the coverage you need in early retirement. We understand that there’s a lot to learn and this process can be overwhelming, especially when you’re struggling with an injury or illness.
At Harris Federal, we help federal employees explore their options when it comes to early retirement, ensuring their health coverage and financial future is secured. If you’re a federal worker with a medical condition or injury looking to retire early on Federal Disability Retirement, give us a call today to schedule a free case evaluation to see if you qualify.
