FEHB Cost in Retirement Calculator

FEHB in retirement: the 5-year rule

Three things have to be true when you retire or you lose FEHB coverage permanently. First, you need an immediate annuity, not a deferred one. If you separate from federal service before retirement eligibility and defer your pension to start at 62, FEHB ends when you leave, not when your pension begins.

Second, you must have been continuously enrolled in FEHB for the 5 full years immediately before your retirement date. Enrolled under a spouse's plan doesn't count. You have to be the enrollee. The only exception is if you became eligible to enroll less than 5 years before retirement, in which case you need to have been enrolled since your first opportunity.

Third, you need to be actively enrolled on your last day of federal service.

If you miss the 5-year window, there's no way to get back in. VERA (Voluntary Early Retirement Authority) retirements count as immediate annuities, so VERA retirees who meet the 5-year rule keep their FEHB coverage. Deferred retirements (MRA+10 where you separate but delay the pension) do not qualify, even if you eventually receive an annuity.

What FEHB costs in 2026

The government pays roughly 72% of the weighted average FEHB premium for both active employees and retirees. You pay the difference. That split is set by statute and hasn't changed in decades, though the underlying premiums that determine the dollar amount rise every year, typically 5-7% annually.

In 2026, three of the most widely used plans break down like this for self-only coverage:

The premiums above are what you pay. The government's share is about 2.5 times larger. That's not obvious when you see a $240/month deduction from your pension, but the full cost of BCBS Basic self-only coverage in 2026 is over $850/month. You're getting $610 per month subsidized.

Kaiser and other regional HMOs are often cheaper than GEHA in areas where they operate, sometimes under $150/month for self-only coverage. Plan options vary by zip code, so it's worth checking OPM's plan comparison tool each open season.

Medicare and FEHB coordination

At 65, two things change. Medicare Part A (hospital coverage) kicks in with no premium for most retirees who worked enough quarters, and you become eligible for Medicare Part B (physician and outpatient coverage) at $185.50/month in 2026.

Almost every federal retiree enrolls in Part A. It costs nothing and it's automatic if you're already drawing Social Security. There's no reason not to have it.

Part B is a different decision. Most federal retirees skip it, at least initially. FEHB alone provides good coverage, and adding Part B costs over $2,200 per year at the standard premium, more if your income is high enough to trigger IRMAA surcharges. With FEHB as your only coverage at 65, there's no Medicare coordination, but FEHB plans are designed to handle this. You're not uninsured.

When Part B makes sense: if you have significant ongoing medical costs, Part B becomes primary payer, FEHB fills in the gaps, and your out-of-pocket costs can drop substantially. At that point, some retirees also switch to a lower-cost FEHB plan, since FEHB only needs to cover what Medicare doesn't. The GEHA High Deductible Health Plan, for example, becomes very inexpensive when Medicare is primary. Running the combined math matters because the Part B premium plus a cheaper FEHB plan can come out better than FEHB alone if you actually use the coverage.

FEHB vs. ACA marketplace coverage

This is where keeping FEHB really shows its value. A retiree purchasing comparable coverage on the ACA marketplace, without any employer group subsidy, faces premiums in the range of $950-$1,300 per month for self-only coverage in most parts of the country. Family coverage runs $2,000-$2,500 or more.

Federal retirees don't deal with this. The government subsidy that kept your premiums manageable during your career follows you into retirement. On the low end, that's a savings of $700-$800 per month over marketplace alternatives. Over a 20-year retirement, compounded with the fact that marketplace premiums have historically inflated faster than FEHB premiums, the total value of the subsidy is easily $150,000-$200,000 for a self-only retiree.

People who leave federal service before 5 years and lose FEHB eligibility often don't realize what they're giving up until they price out coverage on healthcare.gov.

FEHB and IRMAA

If your income in retirement is high enough, Medicare's Income-Related Monthly Adjustment Amount adds surcharges to your Part B (and Part D) premiums. In 2026, IRMAA starts when your modified adjusted gross income exceeds $103,000 for single filers, or $206,000 for married filing jointly.

At the first IRMAA tier, Part B costs $259.00/month instead of $185.50. At the highest tier, over $500,000 in income, it reaches $594.90/month. These numbers matter for the Medicare enrollment decision. A retiree with a substantial FERS pension plus TSP withdrawals plus Social Security can easily cross IRMAA thresholds, which changes the Part B math significantly.

IRMAA is based on income from 2 years prior. If your income drops substantially in retirement, you can appeal IRMAA surcharges using a life-changing event form (SSA-44). Federal retirees transitioning from full salaries to pension-only income often qualify.

The interaction between IRMAA and the FEHB decision is one of the more complex pieces of federal retirement planning. It's genuinely worth a conversation with an advisor who knows the federal benefits system before you turn 65.