Ask The Experts: Retirement

By Reg Jones

FEHB re-enrollment

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Q. I was a federal employee for 26 years and, from 1987 onward, was under FERS. I left my last federal job in June 2009 at age 58, after having passed the minimum retirement age and having been enrolled in the Federal Employees Health Benefits plan over the entire 26 years of my federal employment. In June 2009, I said that I intended to take a postponed retirement, some time after I reached age 60. It is my understanding that my enrollment in FEHBP was suspended at the time I left my last federal employment, in June 2009.

I had health insurance coverage under temporary continuation of coverage, ending in December 2010.

I applied to the Office of Personnel Management for a postponed retirement on Dec. 28, 2011, by filing Form RI 92-19. OPM acknowledges having received my application in February 2012, and I have been in interim status since that time. I began receiving interim payments in March 2012.

In a phone conversation I had with OPM in February 2012, I was told that I would not be able to re-enroll in FEHBP until my retirement was finalized.

Another year has passed, and my retirement is still not finalized. I am still in interim status. Is it really impossible for me to re-enroll with FEHBP before my retirement is finalized? Does the word “annuity” apply to my interim pay? If so, it seems that I can re-enroll in FEHB now.

An article by Reg Jones on your website says, “…if you were enrolled in FEGLI or FEHBP for the five continuous years before you retired, you may re-enroll in them when your annuity begins.” This suggests that the statement made to me on the phone in February 2012 was incorrect. Could you please clarify this? If I am eligible to re-enroll in FEHBP, what procedure should I follow to re-enroll?

A. You could only have re-enrolled in the Federal Employees Health Benefits program if you retired and postponed the receipt of your annuity to a later date. You didn’t do that. Instead, you resigned from the government and later applied for a deferred annuity. Deferred annuitants cannot re-enroll in the FEHB program.

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Retirement eligibility

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Q. I am 52 years old and have 22 years of federal employment. Can I retire? If so, how soon can I receive monthly payments, and how much would they be reduced by?  How would this affect my Social Security benefits later? Also, how would this affect my medical insurance?

A. Unless you are a special category employee, such as a law enforcement officer or a firefighter, you don’t meet the age and service requirements to retire.

For FERS employees, these are: age 62 with five years of service, 60 with 20, at your minimum retirement age (MRA) with 30, and at your MRA+10, but with a 5 percent-per-year age penalty for every year you are under age 62. Your MRA is 56.

There is an option. Because you have at least 20 years of service, you could resign and apply for a deferred annuity at age 60. After 31 days of free health benefits coverage, you’d be able to continue it for up to 18 months under the temporary continuation of coverage provision of law. However, you’d have to pay the entire premium plus 2 percent.

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Directed reassignment

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Q. I am 46 with 22 years of service, and have been told that I will soon receive a letter of directed reassignment to a job in my same grade far outside my commuting area. When the letter arrives, if I should decline to move to the new position, what are my options for drawing retirement? How about insurance? Severance pay? What about my 401(k) in the Thrift Savings Plan? My performance ratings are not an issue.

A. Reg: Because you wouldn’t meet the age and service requirements to retire, you’d only have one option. If you didn’t take a refund of your retirement contributions, you could apply for a deferred annuity at age 60.

You would be entitled to severance pay only if you lost your job through no fault of your own. However, if you were to resign or decline a reasonable offer, you wouldn’t. A reasonable offer is defined as one that is in the same agency, in the same commuting area, of the same tenure and work schedule, and not more than two grades or pay levels below your current position. Note: If you are covered by a mobility agreement, the reasonable offer exception wouldn’t apply.

You would be given a month of free Federal Employees Group Life Insurance and Federal Employees Health Benefits insurance coverage. At the end of that period, you could elect private life insurance coverage at your own expense. You could also elect to continue your health insurance coverage for up to 18 months under the temporary continuation of coverage provision. For that coverage you would pay 100 percent of the premiums, plus 2 percent for administrative expenses.

Mike: Your circumstances will not affect the usual rules that apply to your TSP account. As long as you remain employed, you will be subject to the in-service withdrawal rules described at https://www.tsp.gov/planparticipation/inservicewithdrawals/basics.shtml. If you separate from service, the rules described at https://www.tsp.gov/planparticipation/withdrawals/accountOptions.shtml will apply. If you separate from service before the calendar year in which you reach age 55, you will be subject to the Internal Revenue Service’s early withdrawal penalty unless you meet one of the exceptions specified on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.

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Changing self-only to self and family

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Q. I know one has to have Federal Employees Health Benefits for five years before one quits or retires to get this benefit. Does it have to be family coverage for five years, or can I change my self-only coverage to family in the last year before retirement? Can I change it after retirement?

A. You can change from self-only to self and family and from self and family to self-only during any open season. The only requirement to carry your FEHB coverage into retirement is that you be covered continuously for the five years before you retire.

Note: I need to correct a misunderstanding on your part. If you were to quit, you would only be able to continue your coverage  for 18 months under the temporary continuation of coverage provision, for which you’d pay 100 percent of the premiums, plus a 2 percent administrative fee.

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Deferred annuity

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Q. I reach my minimum retirement age on Jan. 3, but I will only have credit for 29 years, which would give me a 25 percent reduction by taking retirement at this time. If I do a deferred retirement and retire at age 60, will that eliminate the penalty and allow me to collect the special retirement supplement at 60 also? Can I buy health insurance between 56 and 60 by taking a deferred annuity at 60? I have enough in the Thrift Savings Plan to collect about $36,000 a year for four years and still have well over $200,000 at 60. Is this a good plan or not?

A. If you leave government before being eligible to retire, you could apply for a deferred annuity at age 60. However, you wouldn’t be eligible for the special retirement supplement. No one who applies for a deferred annuity is.

When you resign, you’d receive 31 days of health benefits coverage at no cost to you. You’d also be able to continue that coverage for up to 18 months under the Temporary Continuation of Coverage provision, for which you’d have to pay the entire premium plus 2 percent. When you finally retired, you wouldn’t be able to re-enroll in the Federal Employees Health Benefits program.

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Resignation vs. retirement

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Q. The person who processes retirements at my agency told me that I could not retire with 32 years at 51 years. I am an offset employee under CSRS. I thought the Office of Personnel Management indicated that if you retire before 55 years of age, you are penalized 1/6 (no more than 2 percent for the first year and 2 percent for every after for being under 55.

So, I resigned. It’s only been a few days. The agency person said I could only retire at this age if they were offering a buyout. That seems right because I was offered a buyout about 15 years ago.

Can I file for retirement, get my benefits and health care, dental and vision care.  I think this person has it wrong. Can you explain to me?

My start date was January 1979 and I had a break of one year in 1983, but I had already worked more than four years when they put me in CSRS Offset.

Can I change my resignation from this agency to file formal retirement to Boyers, Pa.?

A. You could only retire before age 55 if you were offered either early retirement or a buyout. Anyone offered early retirement may do so if he is age 50 and has 20 years of service or at any age with 25. The annuity of that employee would, as you pointed out, be reduced by 1/6 percent for every year he was under age 55.

Any employee who is offered a buyout can accept it, regardless of whether he is eligible to retire. If he qualifies under the early retirement age and service requirements, he can do so. If he doesn’t, he can simply take the money and resign.

Because you resigned before being eligible to retire and had at least 20 years of service, you could apply for a deferred retirement at age 60. For the present, you would be able to continue your health and life insurance for 31 days at no cost to you. After that, you could continue your health insurance coverage under the temporary continuation of coverage provision for 18 month by paying 100 percent of the premium cost plus 2 percent.

Your life insurance would expire unless you decided to convert to an individual policy. Deferred retirees may not re-enroll in the health or life insurance programs.

Since you weren’t eligible to retire, you may want to approach your agency and ask if they would be willing to reinstate you.

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FEHB after involuntary separation

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Q. I was released from the Postal Service involuntarily after about 6½ years. My steward informed me that my health benefit continues for one year after separation. Also, she told me that if I am reinstated, any back premiums will be repaid from any back pay I may receive or they will make up for them during this time by taking it from my paychecks. I was hired with a 10-point veterans preference (under 30 percent) compensation.  Is this correct?

A. Unless your steward knows something that I don’t know, here’s what will happen: You’ll get a 31-day extension of health benefits coverage at no cost to you. After that, you’ll be able to continue that coverage under the Temporary Continuation of Coverage provision of law for up to 18 months. However, you’ll be required to pay 100 percent of the premiums for that coverage — both your own and your agency’s — plus 2 percent for administrative expenses. You’ll pay those premiums to your agency.

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Self-only vs. self and family

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Q. I am currently retired (CSRS) and have single coverage under the Federal Employees Health Benefits plan. My spouse is still employed by the federal government (FERS) and has single coverage under FEHB. We were both under my family plan until our youngest child became ineligible. We then went to self-only plans because the premiums were less together than the family plan. She will be eligible for retirement in three years. She is also considering simply quitting before then and taking a deferred retirement when she is eligible.

I am not covering her for spousal annuity, nor will she be covering me. We plan to put her on a family plan with me when she retires. If she retires (or quits) before she has established five consecutive years as self-only under FEHB, will she eligible to gain self-only under FEHB in case of my death? If not, can she continue self-only into retirement (or deferred) and then join me later under the family plan?

A. She doesn’t have to have been enrolled in a self-only option for five years to take that coverage into retirement; she only needs to have been covered by or enrolled in the FEHB program for that long. If she were to leave the government before being eligible to retire, she would receive a 30-day extension of her coverage at no cost to herself and, if she chose, enroll in her current plan or another for up to 18 months under the temporary-continuation-of-coverage provision. If she did so, she’d be required to pay 100 percent of the premiums plus 2 percent for administrative costs. Alternatively, and a much more sensible choice, during a health benefits open season before she resigns from the government, you could switch to a self-and-family option of your plan. During the next open season after she began receiving her deferred annuity, the two of you could switch back to self-only options.

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Keeping health care after early-out

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Q. I am 56 years old with five years in FERS and government health care. If I left early on a buyout or a reduction in force, would I be able to keep government health care? Would I be restricted from working for a government contractor?

A. You wouldn’t be able to keep your coverage under the Federal Employees Health Benefits program. However, you would receive 30 days of free coverage in your plan. You would then have the option of extending your coverage for up to 18 months under the temporary continuation provision of law, for which you’d pay 100 percent of the premiums plus a 2 percent administrative fee.

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Career status and temporary position

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Q. I am considering taking a State Department full-time temporary excepted appointment NTE 13 months with no re-employment benefits. I am a career-status employee with the federal government. State requires a four-day break between my current position and beginning service with them. How does this affect my retirement benefits and my career status? Will I not be considered career status when I apply for new jobs after my temporary position comes to an end?

A. When you separate from the government, if you are covered by the Federal Employees Health Benefits and/or Federal Employees Group Life Insurance programs, you will receive a 31-day extension of coverage at no cost to you. You will then have the option of enrolling in a health benefits plan under the temporary continuation of coverage provision for up to 18 months. For that coverage, you’d pay the full premiums plus 2 percent. You could also elect to have private life insurance coverage, for which you’d pay the full cost.

As long as you didn’t take a refund of your retirement contributions when you left, you’d be eligible for a deferred annuity at either age 60 or 62, depending on your total years of service.

As a rule, if you returned to work for the government, you would be considered a career employee and would get credit for your prior service in determining your eligibility to retire and in your annuity computation.

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Resignation

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Q. I want to resign from my civil service position. I believe the work environment is hostile and want to leave before I have even fewer options. I have accumulated 24 years of retirement time and am 18 months short of my minimum retirement age. I have also been reading about the many different ways one can leave (other than retiring), or be forced to leave federal service under Chapter 31, and it is very confusing and intimidating. So I have a couple of questions:

1. Is resignation immediate, meaning, can I walk in, say “I resign” and be gone the same day? (I’ve heard of people doing this. Did they resign or retire?)

2. When (and if) I can do that, what kind of paperwork do I have to fill out? (Alternately, what kind of paperwork should I fill out in before resigning?)

3. How does resignation affect my ability to have any benefits?

a. When I reach my MRA, will my resignation then be seen as a deferred retirement in the eyes of the Office of Personnel Management, or will the resignation have screwed me up?

b. Must I begin receiving my annuity immediately (if I even get one) when I resign, or do I have the option to use RI 92-19 to delay it so I can avoid the 5 percent-per-year penalty for each year below 62?

c. I am in the middle of a divorce. If it is not finalized by the time I resign, can I notify OPM when it is done and they make necessary changes without affecting my annuity when I am eligible to start receiving it?

4. Are there third-party, legitimate sources (besides Federal Times) where I can feel I am getting safe and trustworthy advice on what to look out for and what questions to ask (federal employee unions, etc.) in advance of my resignation?

A. Yes, you can resign at any time. And although you could simply walk out the door without saying a word, it would be a mistake to do so. You need to inform both your supervisor and your personnel office so that: 1) your resignation can be made official, and 2) the standard checklist required of every departing employee can be completed. Included on that checklist would be your agency’s requirement to inform you of your future rights.

If you are enrolled in the Federal Employees Health Benefits and/or Federal Employees Group Life Insurance programs, your coverage would continue for 31 days at no cost to you. You would then have the option of continuing your FEHB coverage for up to 18 months under the temporary continuation of coverage provision, for which you would pay the entire premium plus 2 percent, or elect to be covered under a private life insurance policy at your own expense.

Since you haven’t reached your MRA, you aren’t eligible for an immediate annuity. However, because you have at least 20 years of service, you could apply for a deferred annuity at age 60.

We aren’t qualified to answer any questions about divorce. However, if the court order ending your marriage results in your former spouse having any entitlement to a portion of the benefits you earned while an employee, he or she would have to notify OPM of that fact.

If you are an employee who is covered by collective bargaining agreement, you can ask your union representative to assist you. You can also consult a private attorney if you think that is necessary.

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Coverage for 23-year-old son

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Q: My son is 23 and is currently on Temporary Continuation of Coverage. Last open season we changed our insurance plan but our son continued with the old plan. It’s my understanding he is eligible to come back onto our plan January 1st. Does he need to change to our new insurance company/plan? Or can he stay where he is?

A: He would have to be covered by your plan.

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