Health insurance and annuity reduction


Q. I am a Postal Service employee under the Federal Employees Retirement System who will have eight years of service in April. If I decide to retire with 10 years of service in 2014 at the age of 58½, would I receive health benefits from the USPS, and could I receive a full annuity if I waited to draw the annuity at age 67, or would this affect insurance benefits?

A. If you retire with 10 years of service, your annuity would be reduced by 5 percent for every year you were under age 62. Assuming that you were enrolled in the Federal Employees Health Benefits program for the five consecutive years before you retired, you’d be able to carry that coverage into retirement. You could retire and delay the receipt of your annuity until a later date to reduce or eliminate the age penalty. If you did, your FEHB coverage would end after 31 days, but you’d be able to continue that coverage under the temporary continuation of coverage provision for up to 18 months. However, you’d be responsible for paying the entire premium, plus 2 percent for administrative costs. When that coverage ended, you’d have no coverage until your annuity begins, at which point you’d be able to re-enroll in the FEHB program.


About Author

Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to

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