Retired Military Finances 201: FEHB, TRICARE and TFL
InsuranceI kind of like the title of this article. Only one actual word (after the “intro”)…everything else is an acronym or made-up word. So, let’s first define the acronyms:
- FEHB = Federal Employee Health Benefit
- TRICARE = Three-pronged approach to healthcare including “prime”, “extra” and “standard”
- TFL = Tricare for Life
Now that we’ve defined the terms, we can examine how they might work together.
How do FEHB and TRICARE Work Together While I’m Employed by the Federal Government?
The FEHB is the health benefit provided to civilian government employees. Government employees and the government share the costs of the program’s premiums with the government paying for about 70% of the premium. When a government employee is a retired military member or the spouse of an active military member or retiree, that employee will be covered by both the FEHB and TRICARE under most circumstances.
In the case where someone covered by both programs, FEHB pays first and TRICARE pays second. You do have the option, while employed, to opt out of the FEHB, but with the subsidy you receive from the government it might not make sense to do so.
What Happens to My FEHB When I Retire form Federal Service and I Have TRICARE Coverage?
You can maintain your FEHB coverage if you retire on an immediate annuity under FERS (includes MRA + 10) and you have been continuously enrolled in FEHB for the 5 years of service immediately before retiring. Your insurance premiums will be partially paid by the government (if you worked for an agency that paid extra, you won’t get that).
Benefits will be coordinated in the same way as while employed (FEHB pays first, then TRICARE).
You may want to consider suspending your FEHB coverage to reduce expenses in retirement. To be qualified to suspend your FEHB coverage you must be covered by TRICARE or MEDICARE. It is important to remember to suspend the coverage and not cancel it. If you suspend your coverage, you can change your mind and restart it during an open season. If you cancel it, you can never restart the coverage. Pay attention to the paperwork. It costs you nothing to suspend coverage. It could cost you a great deal (in lack of coverage) if you cancel it.
One of the concerns with TRICARE is access to coverage. The FEHB, might give you options that you can’t access on TRICARE.
What Happens to FEHB and TRICARE When I'm Medicare Eligible?
This is when you have to be very careful. You might decide that FEHB and TRICARE are enough, and you don’t need Medicare. It is certainly a reasonable conclusion…except. Under current law, you must sign up and pay for Medicare Part A and Part B in order to maintain TRICARE Coverage. If you elect to not sign up for Medicare because you are happy with the FEHB, TRICARE duo, you’ll get a rude surprise when you file a claim and find out TRICARE won’t pay. The only way to get the TRICARE coverage reinstated is to start paying for Medicare. No exceptions.
What Should I Do with TFL and FEHB?
Suspending FEHB seems like a good starting place (if you already haven’t done so). You’ll pay for Medicare which will keep you covered under TFL. TRICARE will become your Medicare supplement, and you’ll have healthcare coverage a lot of Americans will be envious of. If you later find that TFL isn’t sufficient for your needs (again probably an access issue) you can start up FEHB during open season. You’ll probably have a belt and suspenders when it comes to healthcare coverage, but sometimes that is o.k. As a reminder, suspend don’t cancel.
Military Finances are Different
You’d think that a retired Civil Servant and Civil Servant that also retired from the military have the same benefits and options. You’d be wrong. As a retired Senior Military Officer or NCO your finances are different than anyone who doesn’t have the same history. That is why we think that you should work with a Financial Planner/Advisor who works with retired military members like you each and every day. If you’d like to find out how we work with people like you, use the button below to schedule a free initial consultation.
If you found this article useful, you might like the following blog posts:
Retired Military Finances 101: Don't Lose Your TRICARE
How Much Will I Pay for Tricare for Life?
SGLI Ended. Don't Want VGLI. Now What?