By Reg Jones
More 2012 benefits changes explained
February 6th, 2012 | Uncategorized
In my Jan. 9 column, I wrote about 2012 changes affecting employees’ pay, retirees’ cost-of-living adjustments and Social Security benefits. In this column, I’ll describe other changes.
Medicare
At age 65, you’re eligible for Medicare Part A (hospital insurance), which is free because you have already paid for that benefit through payroll deductions. You’re also eligible for Medicare Part B (medical insurance), which isn’t free. If you decide to enroll in Medicare Part B, you have to pay the premiums.
If last year’s individual taxable income was $85,000 or less, your 2012 monthly premium is $99.90, an increase of $3.50 for those whose rates, along with COLAs, had not gone up for two years, and a decrease of $15.50 for those who were paying higher rates last year.
Following are Part B monthly premiums for those with higher individual taxable income last year (the dollar thresholds are double for those who filed joint tax returns):
• $139.90, up from $134.90 in 2011, if income was $85,001 to $107,000.
• $199.80, up from $192.70, if income was $107,001 to $160,000.
• $259.70, up from $250.50, if income was $160,001 to $213,000.
• $319.70, up from $308.20, if income was greater than $213,000.
Thrift Savings Plan
Employees’ 2012 elective deferral limit for TSP contributions is $17,000 of basic pay, up from $16,500 in 2011.
Unchanged, however, is the additional tax-deferred “catch-up” contribution of up to $5,500 you can make if you are age 50 or older.
If you are planning to take out a TSP loan in 2012, the interest rate is determined at the time your loan application is processed. As of Jan. 3, the interest rate is 1.5 percent.
Interest on TSP annuities varies monthly. If you purchased an annuity in January, the interest rate you’ll receive is 2.15 percent, down from 2.25 percent for annuities purchased in December. Current interest rates are posted on the Thrift Savings Plan website.
Survivor benefits
Death benefit rules differ under the Civil Service Retirement System and Federal Employees Retirement System.
Under CSRS, there is no specific death benefit; however, if you die while still employed, your widow or widower is entitled to a survivor annuity.
If you have been an employee covered under FERS for at least 18 months, your surviving spouse would receive a lump-sum payment of $30,792.98, up from $29,722.95 in 2011, plus a lump-sum payment equal to the greater of half of your annual basic pay or half of your highest three consecutive years of average salary (your high-3), plus any Social Security benefit to which he or she may be entitled.
If you had 10 or more years of service, your surviving spouse would also receive a survivor annuity equal to half of what your basic annuity would have been based on your years of service, but without any age-based reduction if you were under age 62 when you died.
There is also a special death benefit for public safety officers. In 2012, it is $323,035, up from $318,111 in 2011. This benefit is payable to the survivors of officers who died as the result of a personal, traumatic injury involving external force and sustained in the line of duty.
In 2012, the children’s survivor annuity rate when one parent is still alive is $487 per child, up from $469 in 2011, or $1,460 divided by the number of children, up from $1,409. If there is no surviving parent, the rates are $584 and $1,762, up from $563 and $1,619.
To be eligible for these benefits, a child must be unmarried and under age 18. The age limit is increased to 22 if the child is attending school full-time, and there is no age limit if the child is disabled under age 18, incapable of self support and unmarried.
Disability and VSIP
February 3rd, 2012 | Disability retirement RETIREMENT
Q. If I receive and/or apply for disability retirement, how does this affect an incentive to retire? If I apply now for disability retirement and an incentive is announced, will I be able to get the incentive?
A. No, an employee who has a disability such that he would be eligible for disability retirement may not receive a Voluntary Separation Incentive Payment.
Temporary appointment poses annuity question
February 3rd, 2012 | Creditable service: FERS FERS annuity computation RETIREMENT
Q. I have 27 years of service, but two years of that is credited to me for a temporary appointment I had from 1980 to 1982. I’m under the Federal Employees Retirement System and my EOD is 1984. How will this affect my retirement, and should I or can I buy back those two years?
A. For service before Oct. 1, 1982, you have a choice. If you make a deposit for that time, plus accrued interest, it will be used in the computation of your annuity. If you don’t, your annuity will be reduced by 10 percent of the amount you owe, plus accrued interest. For any period of non-deduction service on or after Oct. 1, 1982, you have to make a deposit for that time to be used in your annuity computation.
Does reserve service warrant retirement credit?
February 3rd, 2012 | LEAVE RETIREMENT
Q. Do veterans receive any credit for reserve time they have served in the military? If so, would the credit go toward leave or retirement? In addition, would the military have to verify the reserve time as being creditable?
A: No credit of any kind is given for reserve time.
Counting military time toward retirement
February 3rd, 2012 | RETIREMENT Uncategorized
Q. If I chose to serve my country in another capacity, would my active-duty military time count toward my retirement? I have a master’s degree, an IT background and a top secret clearance. I believe I could make a positive impact and would welcome a return to service. What programs would be available to someone like me?
A. Your active-duty service would count toward setting your annual leave accrual rate, but wouldn’t go toward determining your length of service, nor would it be used in your annuity calculation — unless you made a deposit to the retirement system. That deposit would equal 3 percent of your basic military pay, not including allowances of differentials. No interest would be charged if you paid the entire deposit within two years.
You are on your own when it comes to finding a job that would match your capabilities. I suggest you start by going to http://www.usajobs.gov.
Retirement credit for active-duty and reserve service
February 3rd, 2012 | RETIREMENT
Q. I have spent over seven years on active duty in the military. I currently have 10 years in the reserves. I’m looking at working at the Veterans Administration. I can buy back my active-duty time and have seven years toward retirement at the VA. But what about my reserve time? If I stay in the reserves, do I still get a retirement at the age of 59? If I buy back my seven years, does that count against my years in the reserves for retirement?
A. Making a deposit for your seven years of active-duty service won’t have any effect on your entitlement to a reserve retirement. You would get credit for those years in both systems.
No refund for military deposit
February 1st, 2012 | Creditable service: CSRS CSRS annuity computation RETIREMENT SOCIAL SECURITY
Q. I am 61 years old and in the Civil Service Retirement System. I have paid back my military deposit, and don’t have enough quarters/credits under Social Security to qualify. I am anticipating retiring when I am 62-plus, and don’t plan on working to earn quarters/credits under Social Security. I have heard that I can request a refund of my military deposit after I retire; is this correct? If so, who handles that request?
A. You were misinformed. You can’t get a refund of the deposit you made for your active-duty service. What’s done is done. If you retire at age 62 and aren’t eligible for a Social Security benefit at that time, you’ll never have to worry about losing those years and having your annuity recomputed. OPM only checks once with the Social Security Administration: at age 62, if you are already retired or when you retire, if it’s after you reach age 62. Note: The “no refund” rule doesn’t apply to employees who resign from the government and ask for a refund of all their retirement contributions or to those who have retired from active duty, make a deposit to get credit for that time, and, at retirement, decide not to waive their military retired pay.
Part B requires premium payment
February 1st, 2012 | Benefits HEALTH INSURANCE Medicare SOCIAL SECURITY
Q. My mother just came to me and showed me her Social Security statement. She asked: “Why are they deducting $96.50 for monthly Medicare insurance when I have full medical coverage from the Navy?” She is an 86-year-old Navy veteran, and my father, who passed away three years ago, was retired from the Navy. Is this something she should be paying?
A. She appears to have signed up for Medicare Part B (medical insurance), for which she would be required to pay the premiums.
Agency-to-agency sick-leave transfer
February 1st, 2012 | Annual leave LEAVE Sick leave
Q. If someone was to transfer from one federal agency to another (Postal Service to Federal Aviation Administration), would his annual leave and sick leave carry over?
A. Yes.
Can military time count as creditable service?
February 1st, 2012 | Creditable service: FERS FERS annuity computation RETIREMENT
Q. My question is regarding federal pensions. I know you must complete five years of federal service to be vested in the federal government’s pension program, and three years to be vested in the Thrift Savings Plan. According to the Federal Employees Retirement System handbook, military years bought back are treated as creditable years of civilian service, and therefore would count toward retirement. Does that mean if you only had three years of federal service and bought back seven years of military time, you would have 10 years of creditable service? If I leave the federal government after this year, prior to serving five actual years of civilian employment, am I already vested for the pension (reduced)? I have already bought back my military time.
A. To be vested, you must have five years of actual FERS service. Active-duty service for which you’ve made a deposit cannot be used to meet that requirement.