When you retire there are two important things that you want to know you have covered – a healthy retirement account with adequate money to support you throughout your retirement years, and medical/health coverage that will protect you throughout the years of aging that can often bring on increased medical expenses.

Fortunately, for federal employees, your federal retirement savings and FEHB (Federal Employee Health Benefits) coupled with Medicare work together to provide those two things.  The United States Office of Personnel Management elaborates on the important role of the FEHB, “The FEHB Program can help you and your family meet your health care needs. Federal employees, retirees and their survivors enjoy the widest selection of health plans in the country. You can choose from among Consumer-Driven and High Deductible plans that offer catastrophic risk protection with higher deductibles, health savings/reimbursable accounts and lower premiums, or Fee-for-Service (FFS) plans, and their Preferred Provider Organizations (PPO), or Health Maintenance Organizations (HMO) if you live (or sometimes if you work) within the area serviced by the plan.”  FEHB and Medicare work well together to provide a more comprehensive coverage and fill any gaps that may exist.  When you retire, Medicare will be you and your spouse’s primary health insurance coverage and your FEHB will be secondary coverage.  So, if Medicare covers 80 percent of a bill, FEHB will then kick in and most likely cover the other 20%.  However, if you are a federal employee that continues to work beyond the age of 65, FEHB will remain your primary coverage and Medicare your secondary until you retire.

Medicare provides health insurance coverage for people that are age 65 or older (or for some with disabilities that are under the age of 65).  Original Medicare has two parts: Part A & Part B which provide hospital insurance and medical insurance.  There is also Medicare Advantage which has parts C & D and offers those enrolled private sector Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs) coverage.  Because federal employees have both Medicare and FEHB, they typically enrolled in Original Medicare.  Medicare Part A has no premium associated with it and covers hospitalization so most people will choose to enroll in it.  Medicare Part B does have a monthly premium and determining whether or not you need Medicare Part B is a more difficult decision that may be best discussed with your physician and your federal retirement planner.  Ultimately, deciding what is best for your retirement is a personal decision and one that should be discussed with your federal retirement planner but it is important to note that you should never cancel your FEHB, regardless of what you decide.  If you want to explore using Medicare instead of your FEHB, simply suspend it for a period of time so that, should you choose to, you can reactivate it at a later date.  If you completely cancel your FEHB you cannot get it back at a later date.

Retirement planning is one of the most important ways to provide you and your family a safe and secure financial future.  It can be difficult to anticipate just how much you will need for retirement because of things like inflation, cost of housing, preparing for things like potential health problems that could arise, etc.  The sooner you start saving for your retirement, the better.  Because of this, the sooner you contact an experienced federal retirement planner, the better.  A federal retirement planner will be able to assist you in anticipating future needs and saving enough money for a good retirement.

Many people put off retirement planning assuming they have time to figure it out, particularly if they are young and other expenses seem more pressing.  It is never too soon to start saving for retirement because the decisions you make now with your money will dramatically impact your retirement savings.  CNBC explains just how important making smart decisions with your money now is and how it will impact your retirement savings in the future, “This is amply demonstrated by a 2012 survey of retirees by Bankers Life and Casualty’s Center for a Secure Retirement. When asked to give younger people just one piece of advice, 39 percent of survey participants said “Save for the future”…And when asked about the most important piece of financial advice they’d give, 93 percent of those retirees said start saving early, and 84 percent urged younger people to contribute to their workplace retirement plan…Here’s an illustration showing why that’s true: Suppose you’re 30 years old and for the next 35 years you contribute $5,000 a year (well below the maximum), earning 8 percent per year. At age 65 your account will be worth $861,584. But if you delay your participation just one year, starting instead at age 31, your account will be $68,451 less! If you contribute $1,000 a month and wait a year to start, your loss will be more than a quarter of a million dollars!”

Armed with retirement saving goals you can make choices now about how you spend your money.  If you go out to frequent, expensive dinners with your spouse and consider eliminating 1 or 2 of those dinners per months you could be able to contribute an additional $100 – $200 dollars which translates to an additional savings of $1,200 – $2,400 per year which then compounds over time to dramatically increase your retirement savings down the road.  Small changes with how you spend your money now can mean the difference between a retirement spent scrimping and saving and a comfortable retirement spent relaxing, traveling, and enjoying life.

When it comes to federal benefits there are a lot of acronyms and it can be a little confusing to understand what each one means and how it impacts your benefits.  One such acronym is FEGLI which stands for Federal Employees’ Group Life Insurance.  It is important for any adult to consider life insurance because you cannot anticipate the unexpected and you do not want to leave your spouse or family stranded without a safety net.

Federal life insurance is unique and a bit confusing which means that many federal employees have no idea how their life insurance actually works.  With FEGLI, the government pays a portion of the cost of your life insurance.  Every eligible federal employee is automatically enrolled in FEGLI’s basic insurance program unless you waive your coverage.  Your coverage is based on your annual income which is then rounded to the nearest $1,000 and then added to that is $2,000 which is called the BIA or Basic Insurance Amount.  The government pays 1/3 of the total cost of your federal life insurance.  Generally speaking, FEGLI functions similarly to non-federal life insurance but there is one difference, as noted by the United States Office of Personnel Management, “Unlike many other employer-sponsored life insurance programs, FEGLI coverage can be continued into retirement. The FEGLI retirement benefit is prefunded by premium costs so that after age 65 (or at retirement, if later) some coverage can be continued by retirees at no cost. The net effect of the level premium and post-65 benefit is that younger enrollees’ premiums cover the cost of coverage they currently have, and also pre-funds a portion of the costs related to coverage they will have later in their careers and in retirement. Since the government contributes a share of the Basic premium, the employee share remains relatively competitive with the cost of private term insurance.”

There are 3 types of options insurance if you choose to enroll in optional insurance: Option A-Standard, Option B-Additional, and Option C-Family.  It is challenging for anyone to determine how much life insurance they need.  Fortunately, if you work with an experienced federal retirement planner they can assist you in calculating your FEGLI needs.  Life insurance needs calculator can be found on www.lifehappens.org.