Expert's View

Reg Jones

I know this isn’t a topic you’ve been eagerly waiting for. After all, who wants to think about dying while still a federal employee, not even reaching retirement? Still, it happens more often than you might think. Therefore, for your financial planning for your family, it’s important to know what benefits would be payable if it happened to you.

Retirement benefits

ADVERTISEMENT

If you were a CSRS employee, your survivor spouse would be eligible for a survivor benefit. The same is true if you were a FERS employees, but only if you had a least 18 months of creditable service at the time of your death and, with one exception, your spouse had been married to you for at least nine months when you died. The exception is that if your death was accidental.

The amount of the survivor benefit depends on your retirement system. If you were covered by CSRS, it’s 55 percent of the average of your highest three consecutive years of basic pay, your “high-3.” If you were covered by FERS and had at least 10 years of covered service, it’s 50 percent of your “high-3.”

In either case, those survivor annuities would be increased by any annual cost-of-living adjustments (COLAs) that occur after the date of your death.

Further, if you were covered by FERS, your survivor would receive a lump sum death benefit of $34,991 (in 2021), plus a lump sum of the higher of 50 percent of annual basic pay at the time of your death or 50 percent of your high-3, plus any Social Security survivor benefit

Your children may also be entitled to benefits if they are unmarried and under the age of 18 (or 22, if attending school) or any age if disabled before age 18.

Health insurance

If you were enrolled in the Federal Employees Health Benefits (FEHB) program in either the self plus one or self and family option and a survivor annuity is payable to your spouse, he or she can continue coverage and have the premiums deducted from his or her annuity. The same is true if benefits are payable to any eligible children.

ADVERTISEMENT

Life insurance

If you were enrolled in the Federal Employees’ Group Life Insurance (FEGLI) program, any benefits would be paid out according to the standard order of precedence established in law, unless you have a Standard Form 2803, Designation of Beneficiary form on file. The odds are that you do because it’s one of the first pieces of paper you had to sign when you were hired. Of course, you may have later updated that form to reflect changes in your life, such as marriage or divorce. In the latter case, a valid court order may take precedence.

Thrift Saving Plan

Just as is true of life insurance, any money you have in your TSP account is payable according to the standard order of precedence, unless you had a valid TSP-3, Beneficiary Election form on file. Assuming that you did, your spouse can keep the account open and exercise the same management and withdrawal rights you had. If there are any other beneficiaries, they would have to close out the account, either by withdrawing the money or transferring it money to a qualifying IRA.

Long-term care insurance

ADVERTISEMENT

If your spouse or any other eligible family member was enrolled in the Federal Long-Term Care Insurance Program (FLTCIP), that coverage can continue as long as the premiums continue to be paid. However, eligibility to enroll for the first time generally would be limited to someone who is receiving a survivor annuity.

Dental and vision insurance

Any member of your family who receives an immediate survivor annuity is eligible to enroll in the Federal Employees Dental and Vision Insurance Program (FEDVIP) or to continue that coverage if covered by your enrollment when you died.

Next week I’ll fill you in on a few other benefits of which you might not be aware. Although you wouldn’t be able to enjoy them, those you care about would.

FERS & CSRS: What Happens to Your Annuity if You Come Back?

Special Retirement Policies for Law Officers and Firefighters

The Most Common Questions on FEHB

The Most Common FERS Retirement Questions

The Most Common Questions About CSRS

2021 Federal Employees Handbook