For many federal employees, FEHB is the single most valuable benefit they have — a health plan the government keeps subsidizing into retirement, for life, with no pre-existing-condition exclusions. Private employers almost never offer that. But carrying FEHB into retirement isn't a given. You have to clear two gates while you're still on the job, and missing either one can cost you the coverage permanently.
The 5-year rule, in plain terms
The first gate is the famous "5-year rule." To keep FEHB in retirement, you must have been continuously covered under FEHB for the five years of service immediately before you retire — or, if you've had the chance to enroll for less than five years, for all your service since that first opportunity.
Two clarifications that trip people up:
- You don't have to be the policyholder. Being covered as a family member on a spouse's FEHB plan counts. So does coverage under TRICARE — as long as you're enrolled in an FEHB plan at the moment you retire.
- You can switch plans. Moving from one carrier to another during those five years is fine. What matters is no gap in coverage. And watch the effective date, not the date you signed up — they're often different.
Breaks in service
For the coverage count, OPM looks only at your periods of actual federal employment and "skips over" your private-sector years. So ten years in, seven out, three back with FEHB the whole final stretch can satisfy the five years. Two cautions, though. First, if you stayed continuously employed and merely cancelled your FEHB at some point, the five-year clock restarts from your re-enrollment. Second — and this is the one people miss — clearing the coverage math doesn't by itself keep your FEHB. You still have to retire on an immediate annuity (the next gate below), and someone with only a handful of years of total service can reach that gate only at age 62 with 5 years. Briefly returning to federal service before 62 rebuilds the coverage, but not the eligibility.
The second gate everyone forgets: an immediate annuity
Meeting the 5-year rule is only half of it. You also have to retire on an immediate annuity — a pension that begins within 30 days of leaving. This is where people who were certain they qualified get blindsided.
The immediate-annuity paths are the same age-and-service combinations that let you retire in the first place: your Minimum Retirement Age (MRA) with 30 years, age 60 with 20, age 62 with 5, or the special-category rules for law enforcement officers, firefighters, and air traffic controllers.
Watch Out
A deferred retirement — where you leave the government and claim your pension years later — permanently ends your FEHB and your Federal Employees' Group Life Insurance (FEGLI). You can have thirty years of coverage and still lose it this way. If keeping FEHB matters, you must reach immediate-annuity eligibility before you separate.
The MRA+10 Nuance
If you retire under MRA+10 and postpone your annuity to dodge the early-retirement penalty, your FEHB is suspended during the postponement — not lost. It's reinstated when your annuity begins, as long as you met the 5-year rule. You'll need private coverage to bridge the gap in between.
What FEHB costs in retirement
Good news: your premium share doesn't jump when you retire. The government keeps paying roughly 70–75% of the premium, exactly as it did when you were working — the cost simply shifts from a paycheck deduction to a deduction from your monthly annuity. The trade-off is that premiums rise over time; 2026 brought a sizable increase across most plans, which is worth factoring into your retirement budget.
Medicare at 65: the decision that confuses everyone
When you turn 65, Medicare enters the picture — but for most federal retirees it doesn't replace FEHB. You have three broad paths:
- Part A only. Part A (hospital) is premium-free for most people who paid Medicare taxes for 40+ quarters. There's no downside to taking it, and FEHB stays your primary coverage.
- Part A + Part B. Part B (outpatient) costs $202.90/month in 2026 (more for higher incomes, through the Income-Related Monthly Adjustment Amount, or IRMAA). With both, Medicare pays first and FEHB becomes secondary — a combination that can nearly eliminate out-of-pocket costs.
- FEHB only, skip Part B. Perfectly allowed. Your FEHB doesn't shrink or pay less because you declined Part B — it just keeps working under its own rules.
The Part B question is genuinely a math problem, not a one-size answer: you're weighing roughly $2,400 a year in premiums against how much coordination would save given your health and your specific plan. There's no universal right choice.
Pro Tip
Before deciding on Part B, read Section 9 of your FEHB plan brochure. Some plans waive deductibles and copays entirely when Medicare Part B is primary, and several (like certain BCBS, GEHA, and NALC options) offer a Medicare Reimbursement Account that pays back part of your Part B premium. Many retirees leave that money on the table simply because they never checked.
One timing warning: if you delay Part B past your initial enrollment window without active-employment coverage, you face a permanent late-enrollment penalty — 10% added to your premium for every 12 months you could have enrolled but didn't. If you work past 65 with active FEHB, you can safely delay and get a special enrollment period when you retire.
If you're a postal employee: PSHB
Postal workers now have their own program. The Postal Service Reform Act created the Postal Service Health Benefits (PSHB) program, which replaced FEHB for postal employees and retirees starting January 1, 2025. The biggest difference: most Medicare-eligible postal annuitants are required to enroll in Medicare Part B to keep their PSHB coverage, with limited exemptions (such as those who had already retired before the program began). If you're postal, confirm your specific Part B obligation — losing PSHB is not the same low-stakes choice it is for other retirees.
If you don't qualify
If you reach retirement without meeting both gates, your options narrow quickly. You get a 31-day free extension of coverage, after which you can request Temporary Continuation of Coverage (TCC) for up to 18 months — but you'll pay 100% of the premium plus a 2% administrative fee, which is a steep jump from what you paid as an employee. After that, you're converting to a private policy.
One-Way Door
If you keep FEHB into retirement and later cancel it, you generally cannot re-enroll — unlike active employment, where Open Season is always there. You can suspend it (to use a Medicare Advantage plan or TRICARE) and return later, but cancelling is usually permanent. When in doubt, suspend, don't cancel.
Don't forget your spouse
Keeping FEHB for yourself is one decision; keeping it for your spouse after you're gone is another. For a surviving spouse to continue FEHB coverage, you must elect a survivor annuity on your retirement application. Skip it, and a non-federal spouse loses the coverage when you pass. It's a small premium for a large protection, and it's easy to overlook in the paperwork.
The bottom line
FEHB in retirement comes down to planning early. Check your enrollment history years before you set a date — not months — and make sure it lines up with the 5-year rule, that you'll retire on an immediate annuity, and that you've made the Medicare and survivor decisions deliberately. The cost of getting it wrong is measured in tens of thousands of dollars over a retirement.
It's one piece of a bigger picture: your pension, TSP, and Social Security on the income side, and FEHB and Medicare on the protection side. The Federal Employee's Financial Playbook walks through all of it — FEHB, HSA, and Medicare coordination included — in plain language, written by someone who's navigated the system firsthand.
Frequently asked questions
What is the FEHB 5-year rule?
You must be continuously covered under FEHB for the five years immediately before retirement (or since your first chance to enroll, if that's less than five years), and you must retire on an immediate annuity. Both are required.
Does coverage under my spouse's plan or TRICARE count?
Yes. Being covered as a family member on a spouse's FEHB plan counts, and so does TRICARE — as long as you're enrolled in an FEHB plan when you retire. You can also change plans during the five years, as long as there's no gap.
Can I keep FEHB with a deferred retirement?
No. A deferred retirement permanently ends FEHB and FEGLI. You need an immediate annuity. A postponed MRA+10 retirement is different — FEHB is suspended and then reinstated when your annuity begins.
Do I have to take Medicare at 65?
For most federal retirees, no — FEHB continues either way and won't pay less if you skip Part B. Part A is free for most and worth taking; Part B ($202.90/month in 2026) is optional but coordinates with FEHB to cut costs. Most Medicare-eligible postal retirees under PSHB, however, must enroll in Part B.
How much does FEHB cost in retirement?
The same share you paid as an employee — the government covers about 70–75% and you pay the rest from your annuity. Premiums vary by plan and rise yearly; 2026 saw a notable increase.