Ask The Experts: Retirement

By Reg Jones

Spousal annuity

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Q. I retired almost three years ago from a nonappropriated fund instrumentality of the Defense Department, at which time I was advised not to set up a spousal annuity for my husband because he worked for the Department of Veterans Affairs and would be getting his own retirement. It was explained to me that a person could not receive his or her own government retirement and a spousal annuity from a government agency at the same time. Is this true? My husband is planning to retire this summer and he has been advised that he can set up a spousal annuity for me and that I will be able to receive my own retirement in addition to that annuity payment.

A. What you were told was 100 percent untrue. You can receive your own annuity and a survivor annuity based on your spouse’s annuity.

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Government pension offset

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Q. Will I benefit from my husband’s Social Security pension once he applies for benefits at full retirement age? Beginning Jan. 3, I will begin collecting CSRS retirement. My husband (a retired lieutenant colonel) indicated that once he reaches full retirement age, he’ll apply for Social Security benefits and that I will be entitled to a spouse’s pension from his benefit. I think that, because my CSRS pension is so high ($75,000), my benefit will offset any benefit I would be eligible to receive from him.

A. Because you are receiving an annuity from a retirement system where you didn’t pay Social Security taxes, you’ll be subject to the government pension offset. The GPO will reduce your Social Security spousal benefit by $2 for every $3 you receive in your CSRS annuity.

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Early retirement and FEHB

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Q. I am a combination CSRS/FERS 32-year employee of the Postal Service, age 54. I did not have health insurance through the post office because I was always covered by my husband’s health insurance. I only took my own health insurance because I was told I had to be in the program for five years to be eligible to keep the insurance after I retire (in case something happened to my husband or the place he worked at).

I have been in the program for four years as of January and did not plan on retiring until January 2014, at which time I would be 56 and would be in the insurance program for the full five years.

Upon talking to the human resources department, I was told in all likelihood that the five-year requirement would be waived as the Voluntary Early Retirement Authority is a “qualifying life event.” I am hoping that is the case but have not heard back from the Office of Personnel Management yet. I will need that in writing before I decide to retire.

I also heard that there is some type of Social Security payment to postal employees that is not going to exist after next year. Do you know anything about this?

Lastly, I have been told the maximum amount of vacation (annual leave) the post office will pay at the time of retirement is 440 hours, and that any earned annual leave above 440 hours is lost. Can you help?

A. While taking early retirement offered by your agency isn’t a qualifying life event, you would be entitled to carry your Federal Employees Health Benefits coverage into retirement because you were enrolled in the program before the offer was made to you. Your agency would attach a statement to that effect when your retirement package went to OPM.

That “some type of Social Security payment” is the special retirement supplement, which approximates the amount of Social Security benefit you earned while a FERS employee. You would be entitled to that as soon as you reached your minimum retirement age. MRAs range between 55 and 57, depending on your year of birth. P.S. The SRS will continue beyond next year unless legislation is passed to change it.

As I understand it, you will lose any accrued and unused annual leave you have above the annual limit, which is 440 hours.

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Applying for Social Security

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Q. As I am about to start receiving Social Security benefits, I find myself confused in regards to Medicare.

I am fully covered under my wife’s medical coverage for at least 10 more years, including dental, eye, etc.

Can I refuse the government Medicare Part A and all of the other options if I choose to? If so, is the correct form CMS-1763?

I have not received any payments thus far, as I opted to wait for full retirement at 66.

A. While you can refuse Medicare Part A coverage, I’m not sure why you’d want to do that. It won’t cost you anything, because you already paid for it through payroll deductions. You can turn down Part B, for which you’d have to pay the premiums. And CMS-1763 is the form you’d use to do that.

Just remember this: If you decline to be covered by Part B and later decide you want it, your premiums would be higher, much higher if you delayed that decision for a long time.

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Medicare

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Q. I just turned 65 and have already applied for Social Security at 64. I am covered by my 64-year-old wife’s Blue Cross/Blue Shield through her employer. She plans to work until age 70, and we will both be covered by BC/BS until that time. Should I refuse Medicare A and B for now until she retires at 70? What are the consequences?

A. Enrollment in Medicare Part A is automatic unless you decline that coverage. And it’s not clear to me why you’d do that because you have already paid for it through payroll deductions while you were working and will receive it free of charge. On the other hand, because your wife is currently employed and you are covered under her Federal Employees Health Benefits plan, you can postpone a decision about enrolling in Part B until she retires.

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Spousal Social Security benefits

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Q. I have been a retired NSA employee since 2000 and have a CSRS annuity paid to me monthly. My husband, age 62, and is now collecting Social Security. I also have enough quarters of private-sector employment to permit me to collect Social Security. Am I eligible to collect spousal Social Security monthly?

A. Because you are receiving an annuity from CSRS, a retirement system where you didn’t pay Social Security taxes, any Social Security spousal benefit to which you are entitled will be affected by the government pension offset provision of law. The GPO will reduce that benefit by $2 for every $3 you receive in your annuity. Note: As a CSRS annuitant, your Social Security benefit will be affected by the windfall elimination provision. The WEP reduces but does not eliminate that benefit if you have fewer that 30 years of substantial earnings under Social Security.

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Spousal Social Security

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Q. I will turn 62 in September. My husband is drawing $2,000 a month in Social Security.  I have retired from the Postal Service with a monthly pension of $1,803. Can I draw off his Social Security, as well as my pension?  I was a CSRS employee, but I also have 40 credits, which will enable me to draw a small amount of Social Security on my own. Can I defer my Social Security and draw on his at 62?

A. While you will be entitled to a spousal Social Security benefit, that benefit will be affected by the government pension offset. The GPO will reduce that spousal benefit by $2 for every $3 you receive in your CSRS annuity. Your earned Social Security benefit will be affected by the windfall elimination provision. The WEP reduces the Social Security benefit of anyone who receives an annuity from a retirement system where he didn’t pay Social Security taxes and has fewer than 30 years of substantial earnings under Social Security.

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Spousal benefits twice

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Q. Can my wife and I use spousal benefits twice? I am a much higher earner and 3½ years older than my wife. My wife starts collecting benefits on her earnings at age 62. I simultaneously start collecting spouse benefits at age 65½. I start collecting benefits on my earnings at age 70 and my wife switches to spouse benefits at that time. Does this work? Will the earlier benefits based on wife’s earnings reduce the benefits based on my earnings at age 70?

A. You’ll need to ask the Social Security Administration. Call them at 1-800-772-1213 and talk to one of their benefits specialists.

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CSRS Offset and Spousal Benefits

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Q. I am a CSRS Offset employee. I worked full time with the Defense Department under CSRS from 1976 to 1984 and took my retirement with me when I left. That $6,100 has grown to over $33,000 that I will NOT be paying back. I have worked from 1995 until now (July 2011) in a permanent part-time position with the Labor Department. I am 56 years old with 24 years of service (eight not paid back and16 part-time) and am eligible for an early retirement currently being offered. I think that I will be hit with the CSRS Offset and also the windfall elimination provision since I don’t have 30 years of substantial earnings. I checked on working until age 60 and it would add only $114 a month to my annuity. Also, there is the possibility of this job no longer being available in this town and I don’t want to relocate for a part-time job.
My spouse is not Civil Service, is still working, and is eight years older than me. Retiring and being able to keep insurance benefits is important. Will I be able to get spousal benefits from Social Security when I turn 62 and will they affect my annuity? At this point, I would get more from spousal benefits at 62 than from my annuity. Does retiring CSRS Offset affect spousal benefits? Working part time never gave me a good “high three.”

A. If you retire, at age 62 your CSRS annuity will be offset by the amount of Social Security benefit you earned while a CSRS Offset employee. If your husband is still working, you wouldn’t be eligible for a spousal Social Security benefit, You could receive that only when he applies for his own Social Security benefit. At that point, you’d receive the larger of the two Social Security benefits, your earned benefit or a spousal benefit based on his benefit.

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CSRS and spousal Social Security benefits

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Q: I understand that because I am a Civil Service Retirement System retiree, if my spouse should die I cannot get any of his Social Security. At one time I heard there was a law Congress was trying to pass to reverse this. Can you please explain this to me and let me know if there is anything being done about this law?

A: Because you will be receiving an annuity from a retirement system in which you didn’t pay Social Security taxes, you will be subject to the government pension offset provision of law. The GPO will reduce any spousal Social Security benefit to which you may be entitled by $2 for every $3 you receive in your CSRS annuity. While bills have been introduced in Congress to modify or eliminate the GPO, they haven’t gone anywhere.

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