FEHB Premiums in Retirement: What Federal Retirees Actually Pay for Health Coverage

One of the most valuable benefits in all of federal employment is the ability to carry your FEHB (Federal Employees Health Benefits) health insurance into retirement. Unlike most private-sector jobs, where employer-sponsored health insurance ends when employment ends, federal retirees can maintain their FEHB coverage for life — as long as they meet the enrollment requirements.

But a common question among employees approaching retirement is: how much will I actually pay? The short answer: less than you might think — and less than most retirees pay for private-market insurance. Here’s what federal retirees need to know about FEHB premiums.

The Government Contribution to FEHB Premiums

The federal government does not pay the full cost of FEHB coverage — for active employees or retirees. Instead, OPM and the employing agency (or, in retirement, OPM alone) contribute a set portion of the premium, and you pay the rest.

For 2026, the government contributes the lesser of:

• 72% of the weighted average premium across all FEHB plans, or
• 75% of the total premium for your specific plan

This formula applies identically to active employees and retirees. In practice, the government typically covers approximately 70–75% of your total FEHB premium cost, depending on the plan you choose. Your share — the “biweekly withholding” as an active employee, or the monthly deduction from your annuity in retirement — covers the remainder.

Important: How Premiums Are Deducted in Retirement

As an active employee, your FEHB premium is deducted from your biweekly paycheck pre-tax (under the Federal Employees Health Benefits Premium Conversion program). In retirement, your FEHB premium is deducted from your monthly annuity payment on an after-tax basis. You no longer receive the pre-tax premium conversion benefit once you retire.

This is an important planning point: your effective premium cost may be slightly higher in retirement because you lose the pre-tax treatment. This is worth accounting for when projecting your net monthly annuity income.

What You’ll Actually Pay in 2026

FEHB premium costs vary widely by plan type and enrollment category (Self Only, Self + One, Self and Family). As a general benchmark using 2026 figures:

• Self Only, lower-cost plan: Employee/retiree share often ranges from roughly $150–$250/month
• Self + One or Self and Family, standard plan: Employee/retiree share often ranges from roughly $400–$700/month or more depending on the plan
• High-option or PPO plans: Premiums are higher, with retirees paying proportionally more

The exact premium for any plan and enrollment category is published by OPM in the annual FEHB premium tables, available at OPM.gov/healthcare-insurance. Premium rates are updated every November/December for the coming plan year.

Eligibility to Carry FEHB Into Retirement

To carry FEHB coverage into retirement, you must meet both of the following conditions:

1. You must be entitled to an immediate FERS annuity (a pension that begins at the time of retirement, not a deferred or postponed one)
2. You must have been enrolled in FEHB for the five consecutive years immediately before your retirement date — or since your first opportunity to enroll, whichever is shorter

If you’ve had a gap in FEHB enrollment in the last five years, you may not be eligible to carry FEHB into retirement. This is a critical issue to verify with your HR benefits counselor before you set your retirement date. If there’s a gap, enrolling immediately and waiting out the required period may be the solution.

Employees who retire under MRA+10 or deferred retirement provisions — where the annuity doesn’t begin immediately — cannot carry FEHB coverage into that gap period. If your FERS pension doesn’t begin right away, you’ll need to find other coverage (COBRA, marketplace, or a spouse’s plan) until your annuity starts and FEHB reinstatement is possible. For more on deferred and postponed retirement, see: FERS Deferred and Postponed Retirement: Your Options If You Leave Federal Service Early

FEHB and Medicare: The Two-Coverage Question

Many federal retirees reach age 65 and face the question: should I keep FEHB, enroll in Medicare Part B, or do both? The answer depends on your situation, but the key facts are:

• Medicare Part A (hospital) is premium-free for most retirees who worked and paid Medicare taxes for 40+ quarters. Federal employees hired before 1983 may not have paid Medicare taxes and should verify their Part A eligibility.
• Medicare Part B (outpatient) costs $185/month per person in 2026 (standard premium; IRMAA surcharges apply for higher incomes).
• When you have both FEHB and Medicare, FEHB is the primary payer and Medicare Part B is secondary. This coordination can virtually eliminate out-of-pocket costs.
• Many federal retirees find that enrolling in Medicare Part B and a lower-cost FEHB plan saves money overall compared to keeping a high-option FEHB plan alone.

For a detailed breakdown of how FEHB and Medicare work together — and strategies for minimizing costs — see our post: Medicare and FEHB: How Federal Retirees Can Get the Best of Both

Changing FEHB Plans in Retirement

In retirement, you can change your FEHB plan only during the annual Open Season (typically mid-November through mid-December) or within 60 days of a qualifying life event (such as a change in family status, loss of other coverage, or a move to a new geographic area).

This means retirement is actually an ideal time to review your FEHB plan selection. As a retiree, your healthcare needs may have changed from when you selected your current plan as an active employee. Some retirees find that a lower-cost HDHP (High Deductible Health Plan) paired with Medicare Part B is the most cost-effective combination. Others prefer to stay with a comprehensive HMO or BCBS plan for simplicity and predictability.

Can You Drop FEHB in Retirement and Re-Enroll Later?

No. If you voluntarily drop your FEHB coverage in retirement, you cannot re-enroll. This is a one-way door — unlike active employment, where you can enroll or re-enroll during Open Season after a gap. Once you cancel FEHB in retirement, it’s gone permanently.

This matters because some retirees are tempted to drop FEHB at 65 when they enroll in Medicare, assuming Medicare will cover everything. Medicare alone has significant gaps — notably no cap on out-of-pocket costs. Many federal retirement experts advise maintaining at least a low-cost FEHB plan to complement Medicare coverage rather than canceling FEHB entirely.

Budgeting for FEHB in Retirement

When projecting your retirement income, treat your FEHB premium as a fixed monthly expense deducted from your annuity. If your FERS pension is $4,500/month and your FEHB premium deduction is $450/month, your net annuity is $4,050 before other deductions like taxes and FEGLI premiums.

Also factor in potential premium increases. FEHB premiums rise annually — typically in the 3–7% range, though increases vary by plan. Over a 25-year retirement, this compounding cost increase is significant. For plans that see larger increases, switching to a comparable lower-cost plan during Open Season can offset premium growth.

What About Dental and Vision?

FEHB does not generally include comprehensive dental and vision coverage. The Federal Employees Dental and Vision Insurance Program (FEDVIP) provides separate elected dental and vision plans. Like FEHB, you can carry FEDVIP coverage into retirement — but unlike FEHB, there is no government contribution to FEDVIP premiums. You pay 100% of the FEDVIP premium in retirement, deducted from your annuity.

The Bottom Line

FEHB in retirement is one of the most valuable benefits the federal government provides — and understanding how premiums work helps you plan your retirement income accurately. The government’s ongoing contribution to your FEHB premium is a meaningful subsidy that few private-sector retirees enjoy. Protecting your eligibility by maintaining continuous enrollment before retirement is the most important step you can take.

Want to make sure your health coverage, pension, TSP, and Social Security all work together efficiently in retirement? Reserve your seat at a free Fed Pilot workshop at fedpilot.com/#register. Our educators walk through FEHB, Medicare, FERS benefits, and more — at no cost to you.