Office of 

Personnel Management

The Federal Government’s Human Resources Agency 

Benefits Administration Letter 

Number: 04-208 Date: 2004 

United States 

 September 8, 

Subject: Federal Employees Health Benefits Program: Participation Requirements 

for Employees Retiring During a Period of Voluntary Separation Incentive 

Payments or Voluntary Early Retirement Authority 

Purpose 

The purpose of this letter is to update our policy on waivers of the Federal Employees Health 

Benefits (FEHB) participation requirements for employees who retire during a period of 

Voluntary Separation Incentive Payments (VSIP) and Voluntary Early Retirement Authority 

(VERA). 

Background 

The FEHB law (5 U.S.C 8905(b)) specifies that a retiring employee must have been enrolled in 

the FEHB Program for the 5 years of service immediately before retirement or, if less, for all 

service in which the employee was eligible for FEHB. The law gives the Office of Personnel 

Management (OPM) authority to waive the 5-year requirement when, because of exceptional 

circumstances, it would be against equity and good conscience not to allow the retiring 

employee to continue coverage. 

OPM published procedures in 1994 and 1996 enabling employees retiring with a buyout 

(VSIP) to have pre-approved waivers of the 5-year participation requirement for continuing 

their FEHB coverage in retirement. These procedures were updated and amended in Benefits 

Administration Letter (BAL) 00-220, dated November 7, 2000. 

As a result of recent legislation, OPM now has authority to approve agency requests to offer 

VSIP or VERA, or both, for the purpose of either downsizing or workforce restructuring. This 

BAL sets out new procedures for employees retiring with a VSIP or a VERA, or both, to have 

pre-approved waivers of the 5-year participation requirement. 

Waiver Policy and Procedures 

Those retiring in conjunction with a VSIP or VERA authority must have been covered under 

the FEHB Program (1) for the last 5 years of their Federal civilian service in order to continue 
such coverage in retirement, or (2) if less than 5 years, for all service since the employee was 

eligible for these benefits unless these requirements are waived. 

OPM will grant pre-approved waivers to employees who have been: 

• Covered under the FEHB Program continuously since the beginning date of the 

agency’s latest statutory VSIP authority, or OPM-approved VSIP or VERA authority; 

and 

• Retire during the statutory VSIP or OPM-approved VSIP/VERA period; and 

• Receive a VSIP; or 

• Take early optional retirement; or 

• Take discontinued service retirement based on an involuntary separation due to RIF, 

directed reassignment, reclassification to a lower grade, or abolishment of position. 

Employees who meet these requirements do not need to write a letter requesting a waiver. 

Instead, agencies must attach a memorandum to the employee’s retirement application 

stating that the employee meets the requirements for a pre-approved waiver by OPM as set 

forth in OPM’s specific instructions to the agency. If your VSIP authority is based on a 

public law, please provide the public law number. Otherwise, provide the VSIP authority or 

VERA approval number that OPM assigned to your agency. Also include the beginning and 

ending dates of your agency’s VSIP or VERA period. 

Policy and Procedures for Employees of the Department of Defense (DoD). Section 9902(i) 

of title 5, United States Code (U.S.C.), as enacted by section 1101 of the National Defense 

Authorization Act for Fiscal Year (FY) 2004, Public Law 108-136 (November 24, 2003), 

provides authority for the Secretary of Defense to establish a permanent VSIP and VERA 

program within DoD. Since the DoD VSIP and VERA authority is permanent, the 

VSIP/VERA period is renewed each fiscal year and lasts from October 1 to September 30. 

For FY04, the beginning date of the VSIP/VERA period was November 24, 2003 (the date of 

the VSIP/VERA statutory authority), and the ending date is September 30, 2004. 

OPM will grant pre-approved waivers to DoD employees who: 

• Have been covered under the FEHB Program continuously since November 24, 2003, 

for FY04 waivers, and October 1 for each succeeding fiscal year for subsequent 

waivers; and 

• Retire during the DoD VSIP/VERA period; and 

• Receive a VSIP; or 

• Take early optional retirement; or 

• Take discontinued service retirement based on an involuntary separation due to RIF, 

directed reassignment, reclassification to a lower grade, or abolishment of position. 

DoD employees who meet the above requirement do not need to write a letter requesting a 

waiver. Instead supporting Human Resources Offices must attach a memorandum that 

provides: 

• A statement that the employee meets the requirements for a pre-approved waiver by 

OPM; 

2 
• The beginning and ending date of the VSIP/VERA period during which the employee 

retired (i.e., for FY04, November 24, 2003 and September 30, 2004; for subsequent 

years the beginning and ending date of the applicable year); and 

• A statement that the employee was enrolled in the FEHB Program on the beginning 

date of the VSIP/VERA period during which he or she retired and that he or she was 

enrolled continuously to the date of retirement. 

When Employees Do Not Qualify for a Pre-approved Waiver 

Some employees who retire during a VSIP or VERA period may not be eligible for a preapproved waiver. These include employees who retire on a regular optional retirement but do 

not qualify for a VSIP. Employees who do not qualify for a pre-approved waiver may request 

a waiver on a case-by-case basis by asking OPM to waive the participation requirement in their 

case. While we may eventually grant waivers to some of these employees, we will consider 

each case on its own merits, based on the criteria that are applied to all other retiring 

employees as outlined in the FEHB Handbook in the section entitled Annuitants and 

Compensators. 

NOTE: OPM will make a decision only within 3 months before the retirement date, not 

earlier. 

These employees should send OPM the following information: 

• Explanation of why the employee believes OPM should consider granting a waiver 

(e.g. why employee cannot meet the 5-year requirement or why meeting it would be 

harmful). (This point should be first not last.) 

• All health benefit enrollment forms (SF 2809’s and SF 2810’s) or electronic 

enrollment verification 

• Service history SF 2801-1 for CSRS or SF 3107-1 for FERS 

• Proof of coverage under CHAMPUS/TRICARE 

• Copy of agency VSIP or VERA authority letter from OPM, if applicable 

• Exact date the employee plans to retire 

• If an employee or a family member has a medical condition that is a factor in the 

decision to retire, include any medical documentation the employee wants OPM to 

consider. 

The employee should send the waiver request with documentation to the following address: 

Office of Personnel Management 

Retirement Benefits Branch 

1900 E Street, NW 

Washington, DC 20415-3532 

Fax: 202-606-1640 or 202-606-4931 

3 
ADDITIONAL INFORMATION 

If you have any further questions about these procedures, please call our information staff on 

(202) 606-0745. You may also send e-mail about this issue to Nataya Battle at 

nbattle@opm.gov.

 Abby L. Block 

 Deputy Associate Director 

 Employee and Family Support Policy 

4