By Reg Jones
Make informed choices during open enrollment
October 31st, 2010 | Uncategorized
The open season for health benefits, dental and vision insurance, and flexible spending accounts will run from Nov. 8 through Dec. 13. Not only will it give employees and retirees who are already enrolled the opportunity to change their health care coverage, but it will also give eligible employees who aren’t enrolled the opportunity to elect coverage.
In this column, I’ll focus on the Federal Employees Health Benefits Program.
Premiums will rise an average of 7.2 percent for employees’ share. That isn’t good news, but at least it’s better than the expected 8.9 percent to 10.5 percent for large-employer health programs in the private sector. Still, that’s small consolation for retirees, who didn’t receive a cost-of-living increase this year and won’t be getting one next year, either.
To put the increases in dollar terms, enrollees with self-only coverage on average will pay $5.53 more each biweekly pay period, while those with family coverage will pay $11.45 more. Since retirees pay on a monthly basis, they can double those numbers to estimate what their increase will be.
Among the changes that can help offset the pain of increased premiums are these. As a result of the recently passed Affordable Care Act, preventive care and screening will be available in all plans with no out-of-pocket costs. Further, enrollees will be able to add their adult children younger than 26 to their family health plan coverage. Also, all FEHBP plans will now be in compliance with the Public Health Services’ clinical substance guide on tobacco cessation. That means that if you need help to stop smoking, you won’t be charged any co-payments for the following: seven Food and Drug Administration-approved medications, four counseling session per quit attempt, and two quit attempts per year.
Of interest to seniors is the news that two plans, Government Employees Health Association (GEHA) and Mail Handlers, will be offering a pilot program designed to coordinate their benefits with Medicare. Those plans will contribute toward the cost of the Medicare Part B premiums of their Medicare-eligible enrollees who participate in the pilot. In exchange, the participants agree to accept the same co-payments or co-insurance for FEHBP benefits as non-Medicare enrollees. Medicare currently offsets some of those costs. The expectation is that overall costs for those who participate will go down.
Because the premiums charged by individual plans will vary widely in 2011, it’s important for you to carefully assess your current plan’s costs and benefits and then compare them with other plans that offer similar benefits and health care quality. You can do that with the help of the Office of Personnel Management’s Guide to Federal Benefits, which also includes consumer satisfaction surveys. Copies of the guide and each participating health care plan brochure are available at OPM’s website, www.opm.gov/insure.
While at OPM’s website, you can also access the federal benefits FastFacts site, compare dental and vision plans, use the flexible spending calculator and, if you are an employee, get agency contact information.
Tags: reg jones, RETIREMENT
Health insurance: overseas and after leaving federal service
October 28th, 2010 | FEHBP and Medicare FEHBP, Tricare and CHAMPVA HEALTH INSURANCE
Q: Is there a Federal Employees Health Benefit provider that provides care in case something happens while traveling overseas? What happens to my insurance if I leave federal service for a year and do something else? Can I still pay and keep my health benefits?
A: Every FEHB plan has a section in its brochure that explains what it will cover if you live or travel outside the U.S. and Puerto Rico. As to your other question, if you were to leave government, you would receive a 31-day extension of coverage at no cost to yourself. During that time, you could elect to continue being covered by that plan (or choose another) under the temporary continuation of coverage provision of law. You would be required to pay 100 percent of the premiums for that coverage, which would last for up to 18 months.
Tags: FEHBP, HEALTH INSURANCE
Social Security benefit will be reduced
October 28th, 2010 | Creditable service: CSRS CSRS annuity computation RETIREMENT SOCIAL SECURITY Windfall elimination provision
Q: I retired at age 55 with 34-plus years of service. I quit after 13 years of civil service and returned to civil service after 3 1/2 years of private employment. I just turned 61. I paid Social Security for over 20 years. If I elect to request Social Security benefits at age 62, how will this affect my civil service pension?
A: Because you are now covered by CSRS Offset, at age 62 your annuity will be offset by the amount of Social Security benefits you earned while covered by CSRS Offset. The net effect will be that you’ll get the same amount of money, but it will come from two different places: the Office of Personnel Management and the Social Security Administration. However, since you will be receiving an annuity partly based on employment where you didn’t pay Social Security taxes and have fewer than 30 years of substantial earnings under it, your Social Security benefit will be reduced through the workings of the windfall elimination provision.
Disability pay will remain intact
October 28th, 2010 | Disability retirement RETIREMENT
Q: I was an Air Force reservist on orders for six months beginning in 2006. I injured myself while on active duty, and the six-month orders turned into two years before it was all said and done. I was put on the Permanently Disability Retired List (PDRL) with a 30-percent disability (non-combat related). I served 29 years in the Air Force Reserve, with a total of four years, eight months of active duty. I was hired in October 2008 as a federal employee. I am in the process of buying back those those four years and eight months of military time. I attended a Federal Employees Retirement System retirement seminar recently, and on one of the slides it said that the government would allow one to “waiver military retirement pay” for those with a “combat-related injury.” My questions are: Will I be able to continue to buy back my military time with a disability retirement check for a non-combat related injury? Is this counted as military retirement? Can I add my military time to my civilian seniority? Do I need to cancel my payment?
A: What you were told in the retirement seminar only applies to those who have retired from active duty and are receiving military retired pay, not reservists. There isn’t any requirement that you waive your disability pay. On the other hand, to get credit for that period of active-duty service, you will have to complete what you’ve already begun — making a deposit to the civilian retirement fund.
Tags: military buyback, RETIREMENT
Social Security earnings limit
October 28th, 2010 | Creditable service: FERS RETIREMENT SOCIAL SECURITY
Q: I know that I can draw my Federal Employees Retirement System annuity and my Social Security benefits. My question is, will my Social Security benefits be reduced if my annuity is more than the yearly limit of $1,480?
A: The Social Security earnings limit only applies to earnings from wages or self-employment, not what you receive in your annuity. In 2010 and 2011, the earnings limit is $14,160.
Tags: FERS, SOCIAL SECURITY
Part-time work and annuities
October 27th, 2010 | EMPLOYMENT RETIREMENT Work scheduling
Q: I recently had my retirement pay calculated. I was a part-timer during my first three years of employment — approximately 25 hours per week. I subsequently have had 13 years of full-time federal employment. It appears that I will incur a 10 percent penalty in my retirement pay because of those part-time years. Do you know if that will always be true no matter how long I stay as a federal employee?
A: The longer you work, the smaller the reduction in your annuity will be.
Tags: annuity, part-time employment
Annual leave buyout
October 27th, 2010 | Annual leave Annual pay adjustments LEAVE PAY RETIREMENT
Q: How is an annual leave buyout calculated? Is it “accumulated hours x current hourly wage”? Is this considered unearned income? I have also heard they take 40 percent in taxes for this.
A: Lump sum annual leave payments are calculated using the hourly rate of basic pay you would have received had you remained on the agency’s rolls. Therefore, if you were to retire before the annual pay adjustment becomes effective, any hours before that will be computed at the old rate and those after on the new rate. Any step increase that would have occurred after you retired won’t be included; you have to actually be on the job to receive that. For tax purposes, lump sum payments are treated as earned income. Check with your agency to find out what it will deduct from your payment.
Tags: annual leave, lump-sum payment
Time needed to draw retirement
October 26th, 2010 | Creditable service: CSRS Creditable service: FERS Deferred retirement RETIREMENT
Q: I am 70 years old. I was in the military for three years, from 1981 to 1984, then worked 2.5 years for the Army as a civilian. In 2009, I worked for a VA hospital for 16 months. While at the VA hospital, I bought in my military time. Do I have enough time to draw any retirement? Or, how much additional time would I need in the federal system?
A: If you had at least 20 years of service, you would have been eligible for a deferred retirement at age 60; if at least five years of service and fewer than 20, age 62. To apply for a deferred annuity, go to http://www.opm.gov/forms and download a copy of OPM Form 1486A (CSRS) or RI 92-19 (FERS). After filling it out, mail it to OPM, Retirement Services and Management Group, P.O. Box 45, Boyers, PA 16017-0045.
Will COLA, locality pay be used to compute annuity?
October 26th, 2010 | Cost-of-living adjustments PAY POST-RETIREMENT RETIREMENT
Q: I work in Alaska as an Army civilian police officer. Where I am stationed, we receive specialty pay. For example, I am a GS 08 about to move up to GS 09. My current GS 08 step 4 pay is $54,633. On top of this, we still get cost-of-living allowance here, which for me turns out to be $11,440.15. A normal GS-scale employee as an GS 08 step 4 receives $41,393. Does my specialty pay count toward my Federal Employees Retirement System annuity? In other words, is my retirement based on the $54,633, or is it based on $41,393? If I transfer to a different location in the U.S., does my gaining employer have to base my pay off of the specialty pay base of $54,633 or off the $41,393? My leave and earnings statement shows my base pay in block 7 as: Basic pay $41,393 + $13,240; Locality Adjustment = Adjusted Basic pay of $54,633. My SF50 shows this, as well. As I stated earlier, we also receive COLA (transitioning to locality pay) and my COLA is $11,440.15. With this, my real earnings are a base of $66,073.15 but I know that COLA does not count toward retirement. Can you explain this? And finally, when we do get transitioned to full locality pay, will it count toward retirement? I have heard it will, and it that will be taxed as income unlike COLA, but our base pay will then read as $66,073.15.
A: If you are referring to special salary rates, like locality pay they are considered to be a part of base pay and will be used in the computation of your high-3 when you retire. Non-foreign area cost-of-living allowances until recently weren’t considered to be a part of base pay and couldn’t be included. However, P.L. 111-84 changed all that. These COLAs are being phased out, with a guarantee that employees won’t lose ground financially during the transition from non-taxable COLAs to taxable locality pay. However, to get credit for that, employees will have to make additional contributions to the retirement system. Your own payroll office can give you the details. Note: If you transfer to a different area of the country, your salary would be based on your grade and pay at that location, not what you previously received somewhere else.
Tags: COLA, locality pay, RETIREMENT
Teaching and creditable service
October 26th, 2010 | Creditable service: CSRS RETIREMENT
Q: I have 30-plus years as a federal employee. I worked as a temporary teacher with D.C. public schools, which I understand to be creditable service. How much creditable service is permitted under the Civil Service Retirement System for a teacher who taught for 10 months (academic year) in Defense Department schools or in D.C. public schools? I taught for 10 months and was paid on a 12-month basis. I have read the statutes and regulations and Office of Personnel Management guidance. However, I cannot find anything that pertains to how teacher employment is credited. Surely, OPM has some sort of policy on this.
A: Assuming you were first hired in the D.C public schools before Oct. 1, 1987, that period of service is creditable. The amount of time that would be creditable is the months and days that you were actually employed, not the length of your contract. As a CSRS employee, you would need to make a deposit for that time in order to get credit for it in your annuity computation. As far as I can determine, employment in the DoD school system isn’t considered creditable service.
Tags: creditable service, CSRS