Ask The Experts: Retirement

By Reg Jones

Survivor benefit for FEHB coverage only

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Q. I am a CSRS-covered employee nearing retirement. My spouse is a nonfederal employee and has been covered under my FEHB family plan for my entire career. I would like to elect a survivor benefit for an amount to cover her future FEHB premiums only. What amount of survivor benefit should I elect to cover her premiums, no more and no less?

A. First, a reminder. By law, you have to elect a full survivor annuity for your spouse unless he or she agrees to a lesser amount or none.

That agreement must be presented to OPM in a signed and notarized declaration of intent.

Assuming that you have such an agreement, it’s up to the two of you to decide how much is enough. You can start by looking at the self-only monthly premium for your current FEHB plan.

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Government pension offset

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Q. I am a CSRS retiree. My husband still works and is under Social Security. When he dies, will I receive anything from his Social Security? I am aware there is something called the government pension offset, but I don’t understand it. Can you explain?

A. Your Social Security spousal or survivor benefit will be reduced by $2 for every $3 you receive in your CSRS annuity. To better understand the government pension offset and the reason it is a matter of law, go to http://ssa.gov/pubs/10007.html.

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Government pension offset

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Q. I am under FERS with a CSRS component (10 years CSRS, 15-year break, FERS for the past 20 years). If my spouse receives Social Security benefits based on my work history and I predecease him, and he begins receiving an annuity, will his Social Security payments be reduced or possibly eliminated under the government pension offset? He has enough quarters to qualify on his own record and is receiving payments now. However, under my records, his payments would be higher. I will retire in a year, at age 66, and would like to know before we request that his payments be based on my work history.

A. If he receives an annuity from a retirement system where he didn’t pay Social Security taxes, such as CSRS, any Social Security spousal or survivor benefit would be subject to the government pension offset.

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WEP

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Q. I retired in 2011 with 30 years and three months employment with the Postal Service at the age of 56 years and six months with a CSRS pension. I had 32 quarters of paying in to Social Security when I retired. I worked part time from June 2012 to October 2012 for an insurance company and earned about $6,200. How many more quarters do I have to go to receive a supplemental Social Security pension, and is it also true that I will only receive about one-third of what I would normally be entitled to?

A. You have already earned four credits in 2012. If you earn $4,640 in 2013, you’d get four more credits and be eligible for a Social Security benefit.

Yes, it’s true that your Social Security benefit would be less than it would have been if you didn’t receive an annuity from a retirement system where you didn’t pay Social Security taxes. Because you do — and because you’ll have fewer than 30 years of substantial earnings under Social Security — you’ll be subject to the windfall elimination provision.

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Survivor annuity and insurance

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Q. I’m a 53-year-old CSRS employee with 34 years of service. I may have the option of an early-out in May. I would like to carry my Federal Employees Health Benefits into retirement. I will choose no survivor benefit, but I would like to have my wife keep my insurance after my death. Can I do this?

A. No, you can’t. To be eligible to continue her FEHB coverage, she would have to be covered by the self and family option when you die and be entitled to a survivor benefit. Note: You are required by law to provide a full survivor annuity to your spouse unless she agrees in a notarized writing to a lesser amount or none at all.

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Retirement options

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Q. I am so totally lost in all of this early retirement and buyouts and furloughs. I have 33 years of service with the government and am 55 years old under CSRS. Not sure which to apply for or wait until our office gives us reduction-in-force notices if our office is going to reorganize, restructure. Would I be eligible for early buyout with full benefits come May?

A. You really are lost! However, everything should be clearer when I tell you that you can retire anytime you want to. That’s because you have the age (55) and service (at least 30 years) needed to do that. As a result, you can keep working, retire now, wait until your agency offers you a buyout, or wait until you receive a RIF notice. The world is your oyster. Enjoy it.

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CSRS annuity

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Q. I am planning to retire Aug. 15 with 37 years, two months and 12 days under CSRS. I will be 60 years old. I know if I stay more than 40 years, I will get 80 percent of my salary. What I don’t understand, according to my retirement estimates, is that after age 62, I will be getting less of an annuity each year. How can this be?

A. It can’t be. Something is wrong with either the estimator you are using or the data you are putting into it. Part of the problem may be that you misunderstand how long you have to work to receive an annuity that equals 80 percent of your high-3. It isn’t 40 years; it’s 41 years and 11 months.

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Deferred annuity

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Q. I am almost 62 years old and qualify for a CSRS deferred annuity, even though I left federal service 18 years ago. I have not been able to find anywhere (including the Office of Personnel Management website) how to apply for the deferred annuity. Do I initiate the action? If so, how? Do they initiate the action? If so, when? The only form I can find seems to indicate that OPM will initiate the action by sending me a letter and attached form, but they do not even have my current address, and I certainly do not have all the start and end dates for all of my federal positions (which the form requests). So what do I do?

A. Write OPM a letter telling them that you will soon be eligible for a deferred annuity. Be sure to include your full name, birth date, address, Social Security number, the name of the agency for which you worked and the approximate dates when you worked there. Send the letter to this address:

U.S. Office of Personnel Management

Retirement Services and Management Group

P.O. Box 45

Boyers, PA 16017-0045

Attn: Deferred Annuity

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‘Death benefit’ vs. ‘life insurance’

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Q. My mother is a Postal Service retiree residing in a nursing home. She had to use up all of her own assets to pay the nursing home until she qualified for Medicaid. Now, she has nothing left. I’ve been told that as a retired postal worker, when her time comes, there is a Postal Service “death benefit” that will pay out to her beneficiaries and that Medicaid cannot take that money from her estate because it is technically a “death benefit” as opposed to “life insurance.” Is this true?

A. I’ve never heard of such a death benefit and don’t believe there is one. That leaves only two possibilities. First, your mother has a Federal Employees’ Group Life Insurance policy that, at her death, would be paid to whomever she designated on a Standard Form 2808 (CSRS) or 3102 (FERS). If she didn’t make such a designation, the money would be paid out according to the standard order of precedence. Second, if all of the money she contributed to the retirement system had not been returned to her in her annuity payments when she dies, any residual amount would be paid out according to the standard order of precedence.

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Medicare Part B

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Q. I will be a CSRS retiree soon enrolled on my younger wife’s FEHB family plan. Does it make sense for me to enroll in Medicare part B being on her plan? Will her premiums be affected if I do?

A. Her premiums won’t be affected one way or the other. Whether you should enroll in Medicare Part B is up to you to decide based on your current and projected health needs. Just remember this: If you don’t enroll in Part B and later decide that you want to do that, the cost of those premiums will be 10 percent higher for each full 12-month period you could have enrolled in Part B and didn’t.

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Social Security and CSRS

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Q. I am not eligible for Social Security retirement. I have 35 quarters of coverage and need 40. I was told if I waited until after age 62 and then earned my 40 quarters and became entitled to Social Security retirement, I would not receive a reduction to my CSRS retirement check. Is this true?

A. As a CSRS retiree, you would not have your annuity reduced if you were eligible for a Social Security benefit. However, because you are receiving an annuity from a retirement system where you didn’t pay Social Security taxes, you’d be subject to the windfall elimination provision. The WEP would reduce your Social Security benefit if you had fewer than 30 years of substantial earnings under Social Security.

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Self versus family health insurance

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Q. I have a couple of questions about insurance plan comparisons for single and family options in retirement.

For health insurance in retirement, when or should we change to two self-only plans or stay with the self and family plan in retirement? Are there any major considerations in selecting two single plans or the family plan? My wife and I, no other dependents, are CSRS retirees. We are covered by my self and family BCBS Standard 105 plan.

I have been reading the plan brochure but cannot create a logical comparison of when, or if, to go with two single plans versus the family plan option.

I know each single plan would have its own deductible per year for that persons plan.

Do you know of any way to compare and determine if the choice of two single plans would be better than staying with the family option? The annual difference in premiums is $710.40 for two singles versus the family plan under the BCBS Standard 105 Plan.

For several years after retirement, I worked at a company that offered three BCBS plan options: “Single” “1 Plus” and “Family” plans. The “1 Plus” premium fell between the “Single” and the “Family” premiums, but the government has not negotiated that option yet for retirees benefit.

A. Your question has no single answer. As the saying goes, “It all depends.” You’ve done a good job of identifying the differences between self and family coverage and two single enrollments.

Now you and your spouse have to make the decision.

As for OPM not having negotiated an option for retiree benefits, it can’t. Only a change in the law would allow it to do that, and no one on the Hill or in any administration has shown an interest in doing that.

Whether making such a change would reduce or increase the cost of retiree coverage is unclear. What is clear is that fragmenting the risk pool is rarely a good idea.

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Rehired annuitant and supplementing retirement

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Q. I retired from the Department of Defense in 2007 under CSRS. I began employment in 2008 as a re-employed annuitant with another government agency. Since I make no retirement contributions as an annuitant, will I be able to buy this time to supplement my retirement?

A. Yes, you can make a deposit to get credit for that time. If you have between one and five years of additional service, you’ll receive a supplemental annuity. If you have at least five years of service, you’ll receive a supplemental annuity. Note: If you were hired into a position where you received both your annuity and the full salary of your new position, you won’t get any credit for that time and cannot make a deposit to do so.

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Rehired annuitant’s retirement

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Q. I’m a rehired annuitant paying into CSRS.

The first time I retired, I had 44 years of service and received a refund of the overpayment I had paid into CSRS. I have been re-employed for the last 10 years and have paid into the CSRS again. Upon my next retirement, will I get a refund of the money I have paid into the system or just a recalculation of my pension?

A. What would happen is controlled by the 80 percent limit on the amount of annuity you can receive based on your highest three consecutive years of basic pay. If there hasn’t been any change, you’ll receive a refund of your retirement contribution, just as you did when you first retired.

However: If, in the recomputation of your annuity, you would be entitled to an increase to reach the 80 percent limit, you’d receive a new annuity amount and a refund of any contributions above that level.

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Retiree increasing life insurance

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Q. I am a former CSRS employee who retired in 2000. I have life insurance. Can I increase my death benefits?

A. Assuming you are talking about Federal Employees’ Group Life Insurance, no.

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CSRS pension, Social Security and employment

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Q. I retired from the Social Security Administration in 2002 with 32 years of service under CSRS. I didn’t work long enough in the private sector to qualify for Social Security at age 62. I’m 63 now and would like to work part-time. Am I still subject to possible offset of my pension if I qualify for Social Security, and are there limits to how much I’m allowed to earn?

A. Going to work would not affect your annuity, regardless of how much you earned.

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CSRS coverage change

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Q. Is there a change in CSRS coverage if a person was first hired May 3, 1982, but left service for 55 days from June 19, 2007, and returned Aug. 13, 2007?

A. No.

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Remarriage and survivor annuity

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Q. I have been a CSRS retiree for six years. I am getting remarried shortly. I want to ensure my Federal Employees Health Benefits continue to be available to my spouse after my death. I understand I have two years from date of marriage to elect a survivor annuity. May I select either a full survivor benefit or a reduced survivor benefit and still retain the FEHB from my surviving spouse? If reduced is an option, how much can it be reduced and still retain the FEHB?

A. Because you are a CSRS retiree, with your spouse’s written and notarized consent, you can elect any amount from $1 a year on up. If the amount of your survivor spouse’s annuity isn’t sufficient to pay the premiums, he or she can pay them directly to the Office of Personnel Management.

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Waiver for mandatory retirement age?

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Q. Are there any situations and/or waivers that would allow someone under FERS to continue to work after reaching mandatory retirement age?

A. CSRS and FERS law enforcement officers and firefighters are subject to mandatory retirement at age 57 if they have 20 years of service. An agency head can retain an LEO until age 60 if he finds that the employee’s continued service is in the public interest. The FBI has limited authority to raise the age to 65. While a CSRS LEO can be retained above age 60, it may only do so with the Office of Personnel Management’s permission. A FERS LEO may only be retained with the permission of the president.

Air traffic controllers must be separated from the service on the last day of the month in which they become age 56. However, that requirement doesn’t apply to someone appointed as an ATC by the Department of Transportation before May 16, 1972, or by the Defense Department before Sept. 12, 1980.

Foreign service officers are mandatorily retired at age 65.

There isn’t any mandatory retirement age for regular CSRS and FERS employees.

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Retirement date

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Q. I submitted a retirement application under CSRS because I have more than 30 years and am over age 55. I chose Aug. 31 as my retirement date because it is the last day of a month. I am aware it is not at the end of a pay period, so it isn’t as good as retiring on June 1 or 29, or Nov. 2 or 30.

Would a retirement date of Sept. 3 be better than Aug. 31? It seems that I would be paid for the Labor Day holiday, and since I must have a duty day to retire, then the 3rd would be the day to come in to work.

A. Same old question; same old answer. You would gain two days’ pay and lose three days of your first month’s annuity. The decision is up to you.

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