United States 

Office of 

Personnel Management 

The Federal Government’s Human Resources Agency

Benefits Administration Letter

Number: 14-209 Date: October 7, 2014

Subject: Phased Retirement and Federal Employees Health Benefits (FEHB) 

Program Guidelines

Background 

On August 8, 2014, the Office of Personnel Management (OPM) issued the final regulation to

implement phased retirement pursuant to section 100121 of the “Moving Ahead for Progress in 

the 21st Century Act,” or “MAP-21,” Public Law 112-141. This law authorized changes to the 

Civil Service Retirement System (CSRS) and the Federal Employees’ Retirement System (FERS) 

by amending title 5, United States Code, to include sections 8336a and 8412a. 

Phased retirement is a new human resources tool that allows full-time employees to work a parttime schedule while beginning to draw partial retirement benefits. The purpose of this letter is to 

provide guidance to Federal agencies seeking to implement the new phased retirement program as 

it pertains to the Federal Employees Health Benefits (FEHB) Program. 

Federal Employees Health Benefits for CSRS and FERS 

A phased retiree is deemed to be a full-time employee for the purpose of the FEHB Program, and 

the FEHB withholding and employer contribution will be the same as for full-time employees. 

The normal rules governing proration of health benefits premiums for part-time career employees 

do not apply. 

During phased retirement, an employee’s FEHB enrollment will stay with the employing agency, 

and FEHB premiums will be withheld from the employee’s salary. Thus, an employee who is 

currently receiving premium conversion tax benefits may continue to do so. FEHB premiums 

will not be withheld from an individual’s annuity until full retirement. If, at the time of full 

retirement, the employee meets the participation requirements to continue FEHB during 

retirement, his or her FEHB enrollment will be transferred tp OPM. Also, an employee with 

FEHB who is eligible for Medicare will continue to be treated as an employee for Medicare 

enrollment and coordination purposes. 

An employee who enters phased retirement will not be eligible to change his or her FEHB 

enrollment based on this action because it is not an FEHB qualifying life event (QLE) and the 

statutory authority for phased retirement does not authorize enrollment changes. Similarly, 

individuals who change agencies or duty stations during phased retirement will maintain their 

current enrollment unless they become otherwise eligible to make enrollment changes. Eligible 

phased retirees, however, will be able to make enrollment changes in accordance with existing 

FEHB law and regulation. 
Enrollment reconciliation requirements are the same for phased retirees as for all full-time 

employees enrolled in FEHB. Each payroll office must report phased retirees to the FEHB

Centralized Enrollment Reconciliation Clearinghouse, known as CLER, in the same manner as it 

does for all full-time employees. 

Transition from Phased Retirement Back to Full-Time Employment 

After entering phased retirement, a phased retiree may end his or her phased retirement to return 

to being a regular full-time employee, if the employing agency agrees to the change. The phased 

retirement annuity will then terminate. Once an individual has gone back to being a full-time 

employee, the individual cannot elect to go back into phased retirement. 

No additional FEHB forms need to be completed or submitted to maintain the existing FEHB 

coverage. Returning to regular full-time employment after participating in phased retirement is 

not a QLE and the employee will not be eligible to change his or her FEHB enrollment. Similarly, 

individuals who change agencies or duty stations after phased retirement will maintain their 

current enrollment unless they are otherwise eligible to make changes. Eligible phased retirees 

will be able to make enrollment changes in accordance with existing FEHB law and regulation. 

Transition from Phased Retirement to Full Retirement 

A phased retiree may voluntarily apply at any time for full retirement in the same manner as other 

employees. The employee does not have to obtain the permission of his or her agency to fully 

retire. If a phased retiree elects full retirement, his or her FEHB coverage continues unless it is 

cancelled or terminated in accordance with existing law and regulation. 

The period of phased retirement is creditable toward the 5 years of service needed to continue 

FEHB coverage as an annuitant. In the event an employee ends his or her phased retirement for 

full retirement, FEHB coverage will continue if the employee meets all eligibility requirements. 

Transition from Phased Retirement to Part-time Career Employment 

A phased retiree may end his or her phased retirement to become a part-time career employee as 

defined by Federal law and regulation, if the employing agency agrees to the change. The phased 

retirement annuity will then terminate. Once an individual has become a regular part-time 

employee, the individual cannot elect to go back into phased retirement. 

An employee who ends his or her phased retirement to become a part-time career employee must 

pay the applicable (prorated) enrollee share of the FEHB premium as required by Federal law and 

regulation. No additional FEHB forms need to be completed or submitted to maintain the existing 

FEHB coverage. A phased retiree who ends his or her phased retirement to become a part-time 

career employee will be able to make enrollment changes in accordance with existing FEHB law 

and regulation. 

Death in Service During Phased Retirement 

As with other employees who die in service, if a phased retiree dies in service while enrolled in 

an FEHB Self and Family plan, and at least one family member is eligible for a survivor annuity, 

the employing office will tentatively determine the survivors' eligibility for continued health 

benefits enrollment. The retirement system will make the final determination of eligibility. 
For additional information, please refer to the Survivor Annuitant section of the FEHB Handbook 

at http://www.opm.gov/healthcare-insurance/healthcare/reference-materials/reference/annuitantsand-compensationers

Employees Who Separate From Federal Service During Phased Retirement 

FEHB enrollment will terminate for a phased retiree who separates from Federal service for more 

than 3 days and who does not enter full retirement. The phased retiree will be entitled to a 31-

day temporary extension of coverage, and can convert to an individual policy with his or her 

insurance carrier. He or she may also be eligible to enroll for Temporary Continuation of 

Coverage (TCC) in accordance with the requirements of FEHB law and regulation. 

Detailed information concerning termination, conversion, and TCC is in the FEHB 

Handbook at: www.opm.gov/healthcare-insurance/healthcare/referencematerials/reference/termination-conversion-and-temporary-continuation-of-coverage. 

Other Benefits Programs 

The statutory authority for phased retirement and OPM’s final rule do not pertain to other benefits 

programs for which Federal employees are eligible. These programs include the Federal 

Employees Dental and Vision Insurance Program (FEDVIP), Flexible Spending Account 

(FSAFEDS) Program, and Federal Long Term Care Insurance Program (FLTCIP). A phased 

retiree will continue to be eligible to enroll for coverage under these programs or make 

changes to existing coverage based upon existing law and regulation. Agencies should 

continue to withhold applicable premiums and FSAFEDS contributions in the same manner 

as for full-time employees. 

Please visit www.opm.gov/insure for the most up-to-date information on phased retirement and 

the FEHB Program. We appreciate your assistance in informing employees of these changes to 

benefits. 

If you have any questions regarding this Benefits Administration Letter, please contact your 

headquarters-level agency human resources office. Agency headquarters-level human resources 

offices may contact the appropriate OPM office found on the point of contact listing in 

Attachment 1. 

Sincerely, 

John O’Brien 

Director for Healthcare and Insurance 
ATTACHMENT 1 

FEHB PHASED RETIREMENT BAL – Point of Contacts 

For general information on Phased Retirement, agency field offices should contact their 

appropriate headquarters-level agency human resources office. Agency headquarterslevel human resources offices may contact the following OPM offices:

Pay and Leave 

202-606-2858 

pay-leave-policy@opm.gov

U.S. Office of Personnel Management 

Pay and Leave, Employee Services 

1900 E Street, NW Room 7H31 

Washington, DC 20415 

Internal Placement, Promotions, Reduction in Force, Details, and Outside Employment 

202-606-0960 

employ@opm.gov

U.S. Office of Personnel Management 

Employee Services 

Recruitment and Hiring, Hiring Policy 

1900 E Street, NW Room 6500 

Washington, DC 20415 

Mentoring 

 202-606-0913 

gwmentoring@opm.gov 

 U.S. Office of Personnel Management 

1900 E Street, NW Suite 7439

Washington, DC 20415 

Partnership and Labor Relations, Employee Relations 

202-606-2930 

plr@opm.gov 

U.S. Office of Personnel Management 

Partnership and Labor Relations, Employee Services 

1900 E Street, NW Suite 7H28 

Washington, DC 20415 

Retirement Services, Benefits Officers Liaison and Development 

202-606-0788 

benefits@opm.gov

U.S. Office of Personnel Management 

Benefits Officers Liaison and Development, Retirement Services 

1900 E Street, NW Room SB 427 
Washington, DC 20415 

Planning and Policy Analysis, Federal Employee Insurance Operations 

202-606-0004 

Ronald.Brown@opm.gov

U.S. Office of Personnel Management 

Planning and Policy Analysis (FEIO) 

1900 E Street, NW Room 4312 

Washington, DC 20415 

Office of the Chief Financial Officer (OCFO), Financial Services 

202-606-0606 

FinancialBALs@opm.gov

U.S. Office of Personnel Management 

Chief Financial Officer, Financial Services 

1900 E Street, NW Room 5478 

Washington, DC 20415 

Office of the Chief Information Officer (OCIO), Records Management 

202-606-1162 

Larry.Wells@opm.gov

U.S. Office of Personnel Management 

Chief Information Officer, Records Management 

1900 E Street, NW Room 2336 

Washington, DC 20415