Expert's View

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Reg Jones

With this article, we come to the end of a series on life events and how they may affect your benefits as a federal employee or retiree. In the first article, I focused on marriage, in the second on children, and in the third on divorce. This time I’ll explain what happens to your benefits if you die.

Survivor annuity benefit
Your spouse will be entitled to a survivor annuity if you had at least 18 months of creditable service when you die. That annuity would be a percentage of the one you were either entitled to as an employee or were receiving as an annuitant. For a CSRS spouse, that’s 55 percent of the amount you would currently be entitled to if you hadn’t elected a survivor benefit. For a FERS spouse it’s 50 percent. However, if your spouse agreed at your retirement in writing to a lesser annuity amount (or none at all), that agreement would determine the amount of his or her annuity.

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Note: If you were currently employed under FERS when you died, your spouse would also be entitled to a “basic death benefit”—in 2022, about $37,000—plus 50 percent of the larger of your final or high-3 salary.

Health insurance benefit
If you were enrolled is the self plus one option when you died, the person who shared your enrollment could continue that coverage if eligible for a survivor annuity. The same is true of any eligible survivors if you were enrolled in the self and family option.

In addition, your survivor would be entitled to the same benefits and government share of the contributions as any current or retired employee enrolled in that same FEHB plan. The premiums for that coverage would be deducted from the survivor annuity unless the annuity was too small to cover the cost. In that case, your survivor could arrange to pay the premiums directly to the plan.

Life insurance benefit
If you elected to be covered under the Federal Employee’s Group Life Insurance program and filled out a Standard Form 2823, Designation of Beneficiary, any FEGLI benefits will be paid to the person or persons you named. If you don’t have a designation on file, the proceeds of your insurance will be distributed according to the standard order of precedence:
• first, to a surviving spouse;
•second, if none, to your child or children, with the share of any deceased child distributed among the descendents of that child, if any;
•third, if none of the above, to your parents in equal shares or in its entirety to the lone survivor;
•fourth, if none of the above, to the executor or administrator of your estate; and
• fifth, if none of the above, to your next of kin as determined under the laws of the state where you lived.

Other Insurance benefits
If your spouse or any eligible family member was enrolled in the Federal Long-Term Care Insurance Program when you die, that enrollment would continue as long as the family member(s) pay the premiums. Note: The opportunity to enroll in the FLTCIP program for the first time would only be available to a family member who is receiving a survivor annuity.

Any family member who was covered by your enrollment in the Federal Dental and Vision Insurance Program can continue that coverage if eligible for a survivor annuity. And anyone receiving a survivor annuity can enroll in the program if they want to.

Thrift Savings Plan benefits
Any money you have in your TSP account will be paid out according to the name(s) you designated on a TSP-3, Beneficiary Election form. If you didn’t make such a designation, the payout will follow the standard order of precedence spelled out above.

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A surviving spouse who is the sole beneficiary can either close out the account or keep the account open and enjoy the same account management and withdrawal rights that you did. If there are any other beneficiaries, the account will have to be closed out.

Closing an account can either be done by withdrawing the money (which could have substantial tax consequences; warn them to check with their tax adviser first) or by transferring it to an individual retirement account or other qualifying retirement savings plan (maintaining its tax-favored status).

Life Happens: Separation or Divorce and Federal Benefits

Life Happens: Covering Children under FEHB

Life Happens: Effects of Marriage on Your Benefits

When Should a Federal Employee Apply for Social Security Benefits?

Claiming Death Benefits under Federal Employment Programs

Spouse Survivor Benefit Elections Under FERS & CSRS

The Value of a Survivor Annuity

No Time Like the Present to Review Beneficiary Designations

FERS Retirement Guide 2022