What You Should Do Five Years from Federal Retirement

Federal employees are advised and encouraged to begin planning for retirement several years before the date they have tentatively set to retire from federal service. This planning is done among other reasons in order for employees to know what is required in order for them to continue certain employee benefits into retirement. There are many factors related to when an employee retires from federal service. It is never too early to begin planning for retirement from federal service, but at a minimum employees should start at least five years out.

Planning for a retirement five years in the future is especially important because an employee must be enrolled in the Federal Employees Health Benefits (FEHB) program and the Federal Employees Group Life Insurance (FEGLI) program for at least the last five continuous years of federal service (ending on the day that the employee retires) in order to keep their health and life insurance coverage throughout their retirement. This column explains this and other reasons why planning five years ahead for retirement is important.

SEE ALSO:

• The Importance of Keeping Your Personnel File Up-to-Date
• What Is Your Service Computation Date?

Keeping FEHB Health Insurance Benefits After Retiring from Federal Service

A federal employee may continue his or her FEHB program health insurance benefit in retirement if the employee meets the following conditions:

1. The retiring employee’s CSRS or FERS annuity must begin within 30 days of the effective date of retirement. If an employee is retiring under the “MRA + 10” or “MRA + 20” provisions but the employee decides to postpone the start of his or her FERS annuity (in order to avoid a 5 percent per year reduction to the FERS annuity), then FEHB and FEGLI coverage is suspended until the FERS annuity begins.

2. The retiring employee must be enrolled in the FEHB program on the day he or she retires.

3. The retiring employee must have been continuously enrolled in the FEHB program, TRICARE, or the Civilian Health and Medicare Program for Uniformed Services (CHAMPUS):

a. For five years immediately before retiring, or
b. During all of the retiring employee’s federal employment since the employee first had the opportunity to enroll in the FEHB program.

4. If a federal annuitant (CSRS or FERS) enrolled in the FEHB program decides to cancel his or her FEHB program enrollment, then the annuitant should be aware of the consequences of canceling FEHB enrollment:

a. The annuitant cannot re-enroll in the FEHB program.
b. The annuitant and enrolled family members (spouse and children under the age of 26) will not be eligible to enroll in temporary continuation of coverage or convert to a nongroup contract. In addition, the 31-day extension of coverage does not apply to cancelled enrollments, and
c. When the annuitant dies, surviving family members will not be eligible to be enrolled in Self and Family enrollment, even if the surviving spouse is eligible for a CSRS or FERS survivor annuity.

Keeping FEGLI Life Insurance Benefit After Retiring from Federal Service

A federal employee may keep his or her FEGLI “Basic” life insurance in retirement if all of the following conditions are met:

1. The employee is insured in FEGLI “Basic” life insurance when he or she retires.

2. The employee has not converted his or her individual FEGLI insurance to an individual whole life insurance policy.

3. The employee’s CSRS or FERS annuity begins within 30 days after retirement, and

4. The employee was insured in FEGLI “Basic” life” for the five continuous years ending on day the employee retires, or the full periods of service when coverage was available.

The employee can keep options FEGLI life insurance (Option A – Standard; Option B – Multiple of Salary; or Option C – Family Coverage, if the following conditions are met:

1. The employee is eligible to keep FEGLI “Basic “ life insurance in retirement, and

2. The employee was enrolled in Option A, Option B and/or Option C for the five continuous years ending on the day employee retires, or the full periods of service when coverage was available, if less than five years.

Reviewing One’s Federal Service History

An employee should review his or her Official Personnel Folder (OPF) to ensure that there is verification of all of the employee’s federal (civilian) and military service. If any of the records are missing, the employee’s Human Resources or Personnel Office should help the employee document the service and obtain any missing records. If the employee has any federal service for which a deposit must be made (temporary service), or for which a redeposit (repayment of withdrawn CSRS or FERS contributions) must be made, the retirement specialist in the Human Resources or Personnel Office should explain to the employee about the impact payment or non-payment has on the employee’s eligibility to retire and on the amount of the employee’s CSRS or FERS annuity.

If an employee owes a deposit for military service the employee performed after 1956, the military deposit, including any interest charges, must be paid in full before the employee retires. Those employees who are receiving military retirement active duty should discuss with the Retirement Specialist whether it makes financial sense to waive the military retirement in order to make a full military deposit. In so doing, all military active-duty years will be credited to the employee’s federal service, thereby increasing the CSRS or FERS annuity when the employee retires. The retirement specialist can also tell the employee about receiving credit in the employee’s annuity computation for several types of service.

Checking Eligibility for Social Security Benefits

If an employee has not set up his or her own Social Security account on the Social Security web site (www.ssa.gov), the employee should go to: https://www.ssa.gov/myaccount/ in order to set up an account. By having an online Social Security account, an employee is able to view at any time their eligibility for Social Security disability and retirement benefits and estimate these benefits at specified dates. Included with these benefit estimates are family benefits for spouses, children and dependent parents, and survivor benefits. These estimates do not reflect any reduction for the Government Pension Offset or the Windfall Elimination Provision.

Government Pension Offset (GPO)

Some of an employee’s spousal Social Security benefits may be offset if the employee is receiving a government pension (federal, state or local government), and the employee was not covered by Social Security while contribution to the pension. The GPO does not apply to the employee’s own Social Security benefits. Rather, the GPO applies to a spousal Social Security benefit that comes from a spouse’s employment. If the GPO applies, then the spousal Social Security benefit will be reduced by two-thirds of any government-based pension not covered by Social Security.

The only federal annuitants who are affected by the GPO are married, or formerly married CSRS annuitants. CSRS Offset, FERS and “Trans” FERS employees are not affected by the GPO.

Windfall Elimination Provision (WEP)

CSRS annuitants who are also eligible for a Social Security benefit based on their own employment record – “fully insured” under Social Security – have a different formula used on their Social Security benefits. This formula results in a reduction, not an elimination, of their benefits. WEP affects CSRS annuitants born after December 31, 1923, or are eligible to receive a CSRS annuity after December 31, 1985.

The WEP does not apply if:

1. A CSRS annuitant was eligible to retire before January 1, 1986.

2. A federal employee hired into federal service for the first after December 31, 1983, or

3. A CSRS annuitant has 30 or more years of “substantial” earnings under Social Security.