How Part-Time Service Can Affect a FERS Employee’s Benefits – Part II

This is the second of the two columns discussing how a FERS-covered employee’s part-time service affects their employee benefits.

The first column discussed the effect of part-time FERS-covered employment on the FERS annuity and the FERS survivor annuity. This column discusses the effect of FERS part-time employment on employee benefits including annual leave and sick leave accrual rates, the Thrift Savings Plan (TSP), and insurance benefits (health, life, dental and vision, and long-term care insurance).

Part-Time Service Affect on Annual and Sick Leave Accrual Rates

An employee’s Service Computation Date (SCD) for annual leave (as shown in Box 31 of an employee’s SF 50- Notice of Personnel Action) determines how many hours of annual leave a full-time employee accrues every two-week pay period.

During the first 3 years of federal service, an employee accrues (earns) 4 hours of annual leave every two weeks; years 4 through 14 of federal service, an employee accrues 6 hours of annual leave every two weeks (10 hours during pay period 26) and starting in year 15, an employee accrues 8 hours of annual leave every two weeks.

The aforementioned accrual rates for annual leave (4, 6, or 8 hours every two weeks) apply to full-time employees who work 80 hours per pay period. Part-time employees will have their annual leave accrual rates adjusted “pro-rata” according to the number of hours they work in a pay period. For example, an employee working half-time (40 hours a pay period) with 10 years of federal service will accrue 3 hours of annual leave every two weeks.

For sick leave accrual rates, all full-time employees accrue 4 hours of sick leave every two weeks no matter how many years of federal service they have. As is the case with annual leave accrual rates, part-time employees will have their sick leave accrual rates adjusted pro-rata according to the hours they work in a pay period. A part-time employee working ¾ time (60 hours per pay period) will accrue 3 hours of sick leave every two weeks.

Part-time Service Effect on Thrift Savings Plan (TSP) Contributions and Agency Matching Contributions

During 2023, all permanent federal employees are eligible to contribute a maximum of $22,500 to the TSP. Those employees aged 50 and older as of December 31,2023 are eligible to contribute an additional $7,500 in “catch-up” contributions. All employee contributions are made via payroll deduction.

FERS-covered employees receive an automatic 1 percent of gross salary (SF 50 salary) contribution from their agency. FERS employees who contribute at least 5 percent of their salary each paydate will receive a maximum 4 percent matching agency contribution.

The previous discussion regarding maximum employee contributions to the TSP during 2023 and agency automatic 1 percent of gross pay contributions and maximum 4 percent matching contribution applies to both full-time and part-time permanent federal employees. The annual amount of TSP contributions an employee can make annually via payroll deduction and agency contributions are not limited by the number of hours an employee works each year.

Part-time Service Effect on Federal Health and Life Insurance Premiums

Federal Employees Health Benefits (FEHB) Program

Federal employees and annuitants share the premium cost of their health insurance with the federal government. The federal government pays on average 72 to 75 percent of the FEHB insurance premiums for full-time permanent employees.

It makes no difference which type of FEHB program health insurance plan an employee is enrolled in, nor the type of coverage (self, self plus one, or self and family). Full-time employees pay the other 25 to 28 percent of the FEHHB program health insurance plan they are enrolled in. The federal government’s contribution toward a part-time employee’s FEHB program health insurance premium is prorated in proportion to the percentage of full-time service a part-time employee is scheduled to perform.

The following example illustrates:

Example 1. Lawrence is a part-time permanent employee and works half-time (40 hours per pay period). Since Lawrence works half-time, his agency’s FEHB program premium contributions are reduced 50 percent, to 36 to 38 percent of the total FEHB premium cost. Lawrence’s share of the FEHB program premium cost is the remaining 62 to 64 percent.

Note: Assuming that Lawrence participates in the FEHB program for all of the last five years of his federal service, (ending on the effective date of his retirement), Lawrence will be eligible to retain FEHB program health insurance coverage in retirement. Once Lawrence retires, the federal government will then contribute 72 to 75 percent of the FEHB program premium cost, like it does for full-time employees. In other words, the fact that Lawrence paid the higher percentage of the FEHB program premium cost when he was a part-time employee has no effect on what percentage of the FEHB program premiums he will pay as a federal annuitant. He pays the same percentage of the total premium cost as all federal annuitants, whether they worked as a full-time or as a part-time employee.

Federal Employees Group Life Insurance (FEGLI)

Permanent employees are eligible to enroll in the federal government’s group-sponsored life insurance program the Federal Employees Group Life Insurance (FEGLI).

The FEGLI is composed of two parts:

(1) The “Basic Insurance Amount” (BIA) which is the employee’s current year SF 50 salary); and

(2) Optional coverage including Option A – Standard; Option B – Multiply of Salary; and Option C – Family coverage.

In terms of cost, employees pay the full premium cost of Options A, B and C. It makes no difference in terms of premium whether an employee is full-time or part-time. With respect to FEGLI BIA, the federal government pays 1/3 of the premium cost for full-time permanent employees and employees pay the other 2/3 of the premium cost. For part-time permanent employees, the federal government’s contribution towards the BIA premium cost is prorated in proportion to the percentage of full-time service a part-time employee is scheduled to perform. The following example illustrates:

Example 2. Sheila is enrolled in FEGLI BIA. Sheila works half-time (40 hours per pay period). The federal government’s contribution to her BIA premium cost is therefore 50 percent of the total 1/3 that the federal government’s contribution for full-time employees, or 50 percent of 1/3 equals 1/6 of the premium cost. Sheila therefore must pay the remaining 5/6 of the premium cost for her FEGLI BIA life insurance.

Part-time Service Effect on Federal Dental and Vision Insurance Benefits

Permanent employees are eligible to enroll in separate dental and vision insurance offered through the federal government-sponsored Federal Employees Dental and Vision Insurance Program (FEDVIP). Information about the program may be found at https://www.benefeds.com.

Employees pay the full cost of the premium of any dental or vision insurance plan offered through the FEDVIP. There is no federal government contribution toward FEDVIP insurance plan premiums. As such, part-time employees do not pay proportionally more in premiums in FEDVIP insurance plans than do full-time employees.

Part-Time Service Effect on Federal Long-Term Care (LTC) Insurance Benefits

The federal government offers long-term care (LTC) insurance through a group plan called the Federal Long-Term Care Insurance Program (FLTCIP). Information about the FLTCIP can be found at https://www.ltcfeds.com. Federal employees and retirees (and eligible family members including spouses) can apply at any time, although the program is on a moratorium for new applications through December 19, 2024. Applicants must be approved for coverage. Applicants must be approved and can be rejected.

Since the federal government does not contribute to the premium cost for employees who are approved and enrolled in the FLTCIP, it makes no difference in terms of premium cost whether an employee is a full-time or part-time employee.