OPM Offers Early Retirement Incentives to Health Care Employees

The Office of Personnel Management (OPM) is providing an opportunity for many employees in the health care and insurance sectors to accept voluntary incentives and retire before the busy season begins.

On Monday, OPM informed employees within its health and insurance (H&I) sector that most of them will have a chance to participate in the deferred retirement program again. Those who apply and receive approval will enjoy six months of paid administrative leave before officially leaving OPM.

Furthermore, many in OPM’s health insurance division can qualify for early retirement. Federal employees can opt for this if they have served 20 years by age 50 or 25 years at any age. Eligible individuals can retire voluntarily and start receiving an immediate pension.

Employees must accept a deferred retirement program (DRP) or Voluntary Early Retirement Authority (VERA) offer by 5:00 PM ET on July 13th. Approved OPM employees will begin their paid administrative leave on August 31, 2026, and will officially separate from OPM by March 1, 2027.

OPM has noted that these voluntary separation incentives are aimed at facilitating “organizational changes” within the health and insurance sector. This announcement follows the recent voluntary resignation of Shane Stevens, the former top official at OPM.

These changes are happening ahead of OPM’s busy open season— a crucial time from November through December when federal and postal workers can modify their health care plans, with these updates taking effect in January.

James Mutzel, OPM’s senior health and insurance advisor, emphasized in an email that offering these voluntary separation incentives comes before any consideration of involuntary action.

“These programs are meant to provide meaningful choices for employees and assistance for those who decide to transition as H&I undergoes reorganization,” Mutzel shared in an email obtained by Federal News Network. He added that while a deadline for the final restructuring of H&I remains undetermined, necessary steps will be taken in the upcoming weeks.

Employees who accept the DRP will be insulated from potential layoffs during the severance deferral period. They will continue to receive their paycheck and benefits until their separation date on March 1.

“Our agencies must ensure alignment of structures, staffing, and resources with the administration’s priorities and our legally required duties,” Mutzel stated. “To accomplish this, we are meticulously reviewing the H&I sector to ensure we can effectively meet these obligations both now and in the future.”

Notably, employees in OPM’s Office of Actuaries (OA) and Systems Development and Implementation (SDI) are not included in these voluntary retirement options, as indicated by an email obtained by Federal News Network. An OPM spokesperson refrained from commenting on the matter. Those who choose the DRP will take leave before the evaluation period concludes and will not receive performance awards for the fiscal year 2026.

OPM is also considering regulatory updates to ensure proper use of administrative leave in government, particularly for “workforce realignment” efforts. In its proposed rule, OPM highlighted that using administrative leave alongside retirement deferral programs is crucial for facilitating restructuring while maintaining a more efficient federal workforce.

A recent report from the nonprofit organization Public Citizen stated that during the Trump administration, at least $11 billion was spent on paid leave for approximately 140,000 federal employees involved in the deferred resignation program.

OPM’s proposed rule indicates that agencies have full discretion to accept or deny an employee’s request to rescind their resignation prior to it taking effect. It also notes that receiving benefits under a severance agreement could justify denying a request for withdrawal.

Last year, the IRS canceled numerous deferred retirement offers to fill crucial vacancies and has rejected requests from employees wanting to cancel their resignations before they take effect.

Not only OPM but also the Small Business Administration (SBA) has been encouraging employees to consider retirement, offering another opportunity to accept a DRP. According to a representative from the American Federation of Government Employees, eligible SBA employees have until June 22 to participate in the offer.

An SBA spokesperson confirmed that employees are being given a second chance with the DRP for early retirement as part of recent organizational restructuring announcements.

Earlier this year, OPM urged federal health insurers to explore cost reductions while promoting a model of “well-care” in the federal insurance market. In a call letter from March, OPM stressed the need for participants in the Federal Employees Health Benefits and Postal Service Health Benefits programs to take a more proactive stance regarding their health care.

With health insurance costs continuing to rise, in 2026, FEHB and PSHB enrollees faced premium increases of 12.3% and 11.3%, respectively. OPM is motivating carriers to find innovative solutions to manage costs while providing comprehensive coverage, including strategies to guide members toward lower-cost medical facilities.

What’s interesting is that OPM’s call for action, released on March 31, came out later than usual— typically, this is done in January or February.