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FEFP: 10 Things You Can Do Outside of an Open Season (EP109)

FEFP: 10 Things You Can Do Outside of an Open Season (EP109)

Think you have to wait for Open Season to make meaningful financial decisions as a federal employee? This episode breaks that myth wide open. John, Ben, and Tommy walk through the most impactful moves federal employees can make any time of year, from optimizing your TSP and HSA to updating insurance, beneficiaries, and retirement strategies.

You’ll learn how to take control of benefits like FEGLI, FEHB, Medicare prescription drug plans, military time buybacks, withholding adjustments, and long-term care. Whether you’re early in your federal career, nearing retirement, or already retired, this episode gives you a practical checklist to help you avoid costly mistakes, spot overlooked opportunities, and make more confident decisions year-round.

Listen to the full episode here:

https://youtu.be/p9EULjiC0v4

What you will learn:

  • What you can change in your TSP anytime. (1:19)
  • How FEGLI can be reduced, dropped, or added year-round. (2:36)
  • Why enrolling in FEGLI doesn’t always require Open Season. (4:00)
  • How to adjust tax withholding strategically. (5:55)
  • When and why to buy back military time. (6:45)
  • How the Medicare Prescription Drug Plan really works. (7:55)
  • What you can change in an HSA outside Open Season. (10:48)
  • Why beneficiary reviews are critical. (13:00)
  • What options exist for long-term care coverage. (14:30)
  • How life events unlock benefit changes. (16:19)

Ideas Worth Sharing:

  • “We are big fans of dialing in withholding to where it should be, whether that’s in retirement or while we’re currently employed.” – Mason & Associates
  • “Thinking all open seasons are created equal is a mistake.” – Mason & Associates
  • “I much prefer to be in control of where the money’s going rather than defaulting back to whatever the government said was in my best interest.” – Mason & Associates

Resources from this episode:

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Read the Transcript Below:

Congratulations for taking ownership of your financial plan by tuning into the Federal Employee Financial Planning Podcast, hosted by Mason & Associates, financial advisors with over three decades of experience serving you.

John Mason: Welcome to the Mason and Associates YouTube channel. Our firm serves hundreds of federal employees across the country who are in or near retirement, typically with 1 million or more of investible assets. In this episode, we’re discussing the 10 things that you can do as a federal employee outside of a federal employee open season.

Today, I have Tommy and Ben with me as well as we go through, again, the 10 things that you can do outside of a federal employee open season. Tommy, Ben, welcome.

Ben Raikes: Thank you, John. I love it–10 things. Let’s get it. 10. We need that good thumbnail.

John Mason: And Tommy, why don’t we go ahead and hit off right from the beginning, at the first thing you can do outside of a benefit open season? Let’s start with TSP.

Tommy Blackburn: All right. Well, TSP really has nothing to do with open season, so we can change our allocation, which funds we’re invested in, how our TSP is positioned outside of open season. We can also change how much we’re contributing. So whether we’re maxing, we’re just getting our match, somewhere in between, we can take out a loan outside of open season. We can switch from how much is pre-tax to Roth, so we can make those adjustments. And we can also, at least we can do this in many places of the benefit systems, but TSP specifically, we can update our beneficiary designations as well. So hopefully, nailed most of those. I guess another one, John, that we can do, TSP, as I think about it, because it is very independent from open season, is we can initiate rollovers as well outside of open season.

John Mason: Well, I love that, Tommy. And then I also put in 2026, you’re going to be able to execute In-plan Roth conversions. So, remember this is the 10 things you can do outside of a federal employee benefit open season. There’s like four or five, six or something within TSP. We’re just lumping those all into one.

And in 2026, Ben, we’re gonna have that In-plan Roth Conversion. Let’s dive right into number two. Let’s talk about what we can do with FEGLI, Ben, outside of that open season.

Ben Raikes: So outside of open season, you are always going to be able to either one, drop your FEGLI coverage, or two, reduce your FEGLI coverage.

So it’s important to know those two things if we’re going to increase FEGLI coverage outside of our initial enrollment period, then there’s some extra hoops that we have to jump through, but you can always reduce or drop your coverage. However, we obviously would not suggest doing that until you’ve had a conversation with a financial advisor, and even if you’re going to acquire new insurance to replace your FEGLI coverage, often your Part B gets a lot more expensive as time goes on. You always wanna have that new coverage in place prior to reducing or dropping your coverage.

John Mason: Like we like to say, Tommy, it’s a license to shop, not a license to drop. So make sure you have the appropriate coverage in place.

Ben, you set it perfectly. Before you drop it, have something in place and maybe even before you drop it, even if you don’t need it, you should go through medical underwriting just to prove to yourself that you’re healthy enough to be dropping that coverage.

Ben Raikes: Not a bad idea.

Tommy Blackburn: Completely agree, John.

And as I think about if you are following the advice to shop before you drop, you should most likely go through underwriting for that other policy to confirm. We hopefully have no issues that we need to be concerned about.

John Mason: So moving into number three. Number three, we’ve already talked about dropping or reducing FEGLI.

Number three is going to be enrolling in new FEGLI. Oftentimes, and it’s overlooked. You need to have FEGLI basic for five years leading up to retirement, so that way you can either do the 100% reduction, the 75% reduction, I’m sorry, 75%. The 50% or the no reduction is your options there, but you have to have it for the five years, guys.

And when we encounter a federal employee who doesn’t have it, it’s often a mistake thinking, “Well, I have to wait for that open season to apply for FEGLI.” This does get confusing because there have been FEGLI open seasons in the past. The difference between a FEGLI open season and enrolling in new FEGLI is when you enroll in new FEGLI, guys, as you know, we have to go through medical underwriting. We submit an application, we’re enrolling in basic or one to five times B, for example. You can do that any as long as you’re insurable. We had an open season not that many years ago, where it didn’t matter your health status at all. You could enroll in federal employees group life with no medical underwriting.

Tangent alert. We were very vocal about that federal employee group life open season, because they titled it ‘Open Season,’ and that makes you think, “Well, this is gonna come around every year. I’ll just do it next year.” Well, there are two different types of open seasons. There’s the military SBP open season, that’s a once in a lifetime opportunity.

There’s the FEGLI Open Season that was a once in a lifetime opportunity, and then there’s your normal open season that happens every year. So I guess a mistake here, if we just wanna highlight that quick, is thinking all open seasons are created equal. So again, summarizing, this one is enrolling in new FEGLI.

You can do that anytime. Tommy, why don’t we head into number four, which would be withholding changes?

Tommy Blackburn: So we can update our withholding anytime throughout the year. That’s just a payroll adjustment, which has, yeah, nothing to do with an open season. We are big fans of dialing in, withholding to where it should be, whether that’s in retirement or while we’re currently employed.

One of the–withholding is very powerful. One of the reasons is we can have a lot withheld in December and it’s gonna count as if it was withheld evenly throughout the year, so we can make up for any underpayments in January, February, et cetera. So can always make those withholding updates, no open season required.

John Mason: Moving on to the next one, Ben. What do we do with this military time? Should we buy it? Should we not buy it? Is that an open season requirement?

Ben Raikes: Number one is if you are a former military and you are currently fed and you haven’t retired military, you have less than 20 years, I’m not gonna go out on a limb and say 100% of the time, but about 99% of the time you should certainly buy your time.

Count that toward your federal service that you’re currently employed with the federal government. Secondly, John, to your point, there is no open season for buying that time. There’s no gotta wait till the end of the year or wait until you’re about to retire as a federal employee. You can do this literally at any time, and it’s one of the most powerful planning techniques that we have out there for those that haven’t taken advantage of it yet.

John Mason: To purchase your military time, folks, it’s 3% of your base pay while you are active. If you don’t do it quick enough, they’ll start charging you interest, even if it’s been 20 years since you were eligible to buy that time. The original cost plus the interest is well worth it as it’s going to stack onto your retirement annuity and give you eligibility in many different ways for a bigger annuity or maybe an early annuity, or a 1.1% threshold.

So there’s a lot of things to unpack there, but definitely buying your back, your military time is a good thing. And like Ben said, you do not have to wait for that open season. How about everybody’s favorite, Tommy? This new MPDP or the Medicare Prescription Drug Plan, that if you’re 65 you’re auto enrolling in this. And oh, by the way, if you’re hit by aunt IRMAA, you actually have an additional premium that you’re paying for this, too.

Tommy Blackburn: Yes, everybody’s favorite, because they didn’t really have much of a choice. The default is that you are going into it. So it is the FEHB in retirement, drug plan, that coordinates with Medicare. It fits the definition of a Part D type policy. Most clients, honestly, that we’ve interacted with prefer their old coverage better. One of those being that this new one, the MPDP, the Medicare Prescription Drug Plan through the FEHB, is affected by your income. So Aunt IRMAA, as we love to call her, if your income is high enough, you start paying higher premiums.

Most folks have been happy with their normal FEHB prescription coverage and are happy to remain on it. There are some benefits to this Medicare prescription drug plan. One is out of pockets are capped. So, in circumstances, you could find that it’s advantageous, but most of our folks seem to like the non-IRMAA tested prescription drug plan.

John Mason: And you can run–

Tommy Blackburn: And we don’t–

John Mason: to go ahead.

Tommy Blackburn: I was gonna say, we just, we don’t need to do this during open season. We can make these changes outside of open season.

John Mason: That’s absolutely right and the Federal Employee Blue Cross Blue Shield website has a nice prescription drug tool. Maybe if we’re good, we can link that in the description below, but where you can actually see, like, are your drugs more expensive or cheaper?

Sometimes your drugs get more expensive under the MPDP. So you’re getting hit there and you’re getting hit with maybe an IRMAA surcharge on your Part D. But again, like you said, Tommy, you have some caps and maybe, like looking back at your Blue Cross Blue Shield standard coverage, maybe you never reached your out-of-pocket max on that one where you would’ve reached your out-of-pocket max on the MPDP.

Tommy Blackburn: Yeah. I guess the odd thing there about the coverage or things costing more is I believe it was really billed as this is just as good, if not better, but then there’s always the cases. It’s like, “I’m paying more.” So that’s why it is important to keep your eyes open, know you have options. You don’t have to go into that plan.

John Mason: Audience, if we’re great, we’ll try to link this. We did an episode with Bryan Gay, not that long ago, from Boomer Insurance in Richmond, and he kind of talked about what was happening with Medicare Part D drug plans across the country. So that may be an interesting take if you want to go back and listen to that episode.

Ben, let’s move into the next thing that we can do outside of this open season. And then, oh, caveat, we probably know this, but open season is in November of every year. How about HSA changes? I think not a lot of people utilize the federal employee HSA plan under federal employee health benefits, but there are some things we can do there, too.

Ben Raikes: Yep. I mean, very similar to your thrift savings plan. You’re gonna be able to update or change those allocations at any time within the year. You’re gonna be able to change the actual investment options within your plan at any time during the year. You have a lot of flexibility on what you can do with those health savings accounts.

And, John and Tommy, I know you all are big proponents of HSAs and maybe you all should, in 30 seconds or less, touch on some of the benefits they have over traditional tax-deferred savings.

John Mason: We love the HSA, one, because you’re getting the pre-tax going in. Then if you invest your money, you get tax-deferred growth and then when you withdraw it in retirement for qualified medical expenses, you’re getting tax-free distributions.

It’s the only investment vehicle that you went three times, which is pretty sweet. I personally am storing all my receipts for my HSA plan so that one day I can reimburse myself for expenses that happened 30 years ago. And a mistake here is enrolling in an HSA plan, two mistakes. And one, not fully maximizing the HSA, the government’s putting in some money for you. You should put in more money and max out that plan.

And mistake number two, which is probably the biggest mistake is not investing the money and leaving it in cash because you are, the coolest part of the HSA you’re not using. And then, mistake number three, if we want to go there, would be reimbursing yourself for Tylenol from your HSA, where you should have let it grow for 30 years completely tax-free, and maybe use it as a retirement vehicle. So HSAs are super powerful.

Tommy Blackburn: Yeah, the big caveat there, it’s just situational, right? So you have to be able to cover those medical costs, carry more of it. You’re gonna be on that high deductible, so you get to carry 100% of the freight for the first few thousand to many thousands. But it’s a powerful tool if it fits your situation. And as John said, biggest mistake, I would agree, is not investing those funds.

John Mason:  All right. Next thing we can do outside of a federal employee, open season, we talked about beneficiary changes within TSP. We’re gonna throw in beneficiary changes to your federal employees group life or your FERS. Doing this, coordinating with your estate plan, thinking about it, is your life changes. For instance, you’re approaching retirement. We can update your beneficiaries. You just had a child. We can update your beneficiaries. We just got to this beautiful revocable living trust. We can update your beneficiaries to coordinate with those documents. There’s a lot of reasons that one, you should consider updating your beneficiaries throughout your career when life happens.

And then two, I would just say, and I think y’all agree, that although there is a statutory list of beneficiaries, if you don’t fill out the form, we know where the money’s going. I much prefer to be in control of where the money’s going rather than defaulting back to whatever the government said was in my best interest.

Ben Raikes: That’s a great point, John. It wasn’t that long ago that they changed some of the ways that the beneficiaries are listed in some of the default settings to where if you had a charity or a trust named, now what you thought was in place is completely different. So not only is it good because those rules change, but we also want to double-check and triple-check these beneficiaries every year.

John Mason: All right, Tommy, your favorite. Next one. So we’ve got two more to cover in our list of 10 things you can do outside of the open season. Long-term care changes, updates. Tommy, I know you love this one, so let’s have it.

Tommy Blackburn: Yeah, I love long-term care. That’s, if our audience ever gets to know us well, we’ll know that that is very much a love-hate relationship there.

But long-term care, we can enroll in that. Typically, we don’t need an open season. The caveat there, why I say typically, is the federal long-term care insurance program is currently in a blackout freeze, which I think we’ve been here a couple years now, where we’re not accepting new applications.

I suppose at some point that will open back up. At which point we can apply and go, we can look into getting that coverage and we don’t need an open season to do that. We can also make changes. So if you currently have it, you can always dial down your coverage. And this is true as well for those with private policies in place, which that’s probably a topic for another day.

But many of long-term care policies out there in general are getting hit with some very extreme premium increases. And so, as folks think about what to do there, don’t just take the options they’ve given you as your only options, and don’t just make a rash decision. Let’s put some analysis and see what other options might be there.

John Mason: Alright, moving on to the last one. This one’s a lot to unpack, so it’s number 10. We left it for the end because there’s a lot that we can unpack here. So during a federal employee health benefit or federal employee open season, guys, we know that’s a great time to look at changing your coverage.

Switching from a Sentara Health Plan to a Blue Cross Blue Shield, maybe looking at a Medicare Advantage plan, but basically just looking at all of those things, or enrolling an FEHB coverage brand new. And again, there’s a five-year rule for that. But there’s a lot of things that could happen throughout the year outside of an open season.

Most of these happen when we have life events. So let’s highlight some life events and then again, what we could do with those life events, probably is good just to summarize, you know, out with these life events, we could reduce your coverage, get new coverage, maybe even switch a plan. So there’s a lot of things that we can do, but let’s highlight the life events and how that opens up this opportunity.

Tommy Blackburn: Okay, well, one of the first that comes to mind here is retirement. Since we often are focused with folks nearing or in retirement, so that is a qualifying life event. So as we retire, we can change that FEHB coverage. Another one that to me somewhat dovetails with that is Medicare, going on to TRICARE for life. Those are qualifying events where we can make some adjustments.

Ben Raikes: Another one would be your child aging out. You have some options to make some adjustments there as well whenever your child turns 26. I want to caveat this. You have the ability to make the change at the time. It will not automatically happen for you. So a lot of people think, “All right, well, I’m on the, family plan, I’ll automatically switch down to the plus one when they’re 26 and they age out.” That is not the case at all. We’ve seen a lot of times where new clients or new prospective clients are coming to us and we say, “Well, why are you on this FEHB family plan?” And they say, kind of scratch their head, their youngest son or daughter’s 45 years old. They’ve been paying those extra premiums for odd on 20 years. So please make sure when your child ages out, this is something that you’re paying attention to and that you are making any adjustments if necessary.

John Mason: Good call. And then child born would be another thing. So on the opposite end of the spectrum, a child is born, we have death, we have divorce, we have marriage, we have retirement, we have a spouse losing coverage, which could be for retirement or just be loss of a job. So there are several things we probably left off a few, guys, but there are several things here that would qualify or trigger you to make some change inside of your health insurance plan that does not require that open season.

Ben, I thought you hit it nicely. Switching from single to self plus one or single to family or family to single. These are really the things that we’d be looking at throughout the year during these qualifying life events. So guys, I think we hit the 10 things that you can do. Any closing thoughts?

Tommy Blackburn: I think we crushed it. I hope it’s helpful. For all those who are watching the channel, hope you send us some questions as well. And I think the major theme is everything needs to be customized to you. Keep your eyes open. There’s a lot of things you can do not inside of an open season.

John Mason: All right. Well, audience, thanks for being on this journey with us. We’ve been producing over a hundred episodes of the Federal Employee Financial Planning Podcast. We started doing YouTube videos back in 2022, and you’ve been on this journey with us for quite some time.

If you’re brand new here, we’re financial planners first, and we do this content creation second. And unlike many people. We actually do real financial planning with hundreds of folks across the country, helping them feel educated and empowered as they make positive changes in their financial plan.

Thanks again for being with us. Please do all the things for us. Like, subscribe, hit that bell notification, but most importantly, be somebody’s hero by sharing this episode and our other content with people who can benefit from it, federal employees across the country, just like you.

The topics discussed on this podcast represent our best understanding of federal benefits and are for informational and educational purposes only, and should not be construed as investment, financial planning, or other professional advice.

We encourage you to consult with the office of personnel management and one or more professional advisors before taking any action based on the information presented.

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