Some of your federal benefits are incredible!
But I wouldn’t go that far about your Dental/Vision (FEDVIP) insurance.
Is it worth having now and into retirement?
Or is there a better way?
Is It Worth Having At All?
In a nutshell, here is how your dental/vision insurance works.
When you are first hired as well as every year in open season (Nov-Dec), you are able to enroll in a dental and/or vision plan.
The good news is that it is easy to get signed up and paying the premiums through your paychecks is convenient.
The bad news is that the government doesn’t cover any part of the premiums like they do for your FEHB (health insurance) so the price you pay isn’t always better than what you could get on your own on the private insurance market.
So if I was you I’d shop around just to see what a private policy in your area would cost you.
Ignore The Price
But regardless of the price you might find on the private market, some people simply don’t need dental or vision insurance.
1st of all, many FEHB (health insurance) plans cover basic dental/vision things already like dental cleanings/xrays/exams and eye exams/glasses.
2nd, most Dental/Vision plans don’t pay 100% of the cost of larger ticket items like dental crowns. They usually only pay for a portion of the cost.
You’ll just want to make sure you do your homework on the plan you have/are looking at so you know what it covers and if it really makes sense for you.
For some, the government plans are the best deal but you’ll want to make sure that is the case for you.
And later in this article I talk about the most common ways people replace their dental/vision plans and save money.
Can You Keep it Into Retirement?
Most feds can keep their dental/vision insurance into retirement.
Here is the only eligibility requirement to do so:
-
You must with an immediate retirement/pension
As a traditional FERS (non-special provisions) that means you can retire with any of these age/service combinations:
-
MRA (minimum retirement age) and 30 years of service
-
Age 60 with 20 years of service
-
Age 62 with 5 years of service
-
MRA (minimum retirement age) and 10 years of service (but your pension may be reduced with this type of retirement
The only type of retirement that would not allow you to keep your dental/vision into retirement is a deferred retirement.
What About the 5 Year Rule?
Many people think that you have to be covered under a dental/vision plan for the 5 years before retirement to be able to keep it into retirement.
But that is not true!
The rule only applies to your FEHB (health insurance) and FEGLI (life insurance).
There is no 5 year rule for dental/vision.
You can even enroll for the first time in a dental/vision plan in retirement if you wanted to.
How Dental/Vision changes in Retirement
Your dental/vision insurance only has one major change in retirement.
The Cost!!
But not in the way most people think.
The premiums do not go up just because you retire. You have access to the same prices that active employees do.
However, while you are working you have access to a fancy benefit called Premium Conversion.
It is a fancy way of saying that you pay the premiums with pre-tax dollars.
For example, if you make $80,000/year but you pay $1,000/year in dental/vision premiums then you’ll be taxed as if you only made $79,000.
But this benefit goes away in retirement…
So while the premiums won’t go up when you retire the after-tax cost will.
3 (Possible) Better Options
Here are the most common alternatives to the government’s dental/vision plans that might save you money.
-
FEHB Has You Covered
Like I mentioned above, many FEHB plans cover basic dental/vision care and many feel that they don’t need more coverage than that.
-
Private Market
If you are sure you want a dental/vision plan but just want to make sure you get the best price then I would go talk to a private sector insurance broker to see what rates they can find for you.
Or you can shop around online as well.
-
FSA/HSA
If you didn’t know already, FSAs and HSAs are awesome! They allow you to get a tax deduction to save money that you can then use for medical expenses.
Even for those that have a dental/vision plan a FSA/HSA can still make a ton of sense to cover any out of pocket expenses like copays, deductibles, etc.
Here is a full guide on the pros/cons between FSAs and HSAs.
Don’t Believe Me
Please don’t blindly follow my advice before thinking deeply about what makes sense for you.
Every situation is different and you need to find a solution that works best for you.
