Expert's View

In the last three articles on life events, I focused on marriage, children, and divorce. I’ll conclude this series by explaining what happens to your benefits if you die.

Although this series focuses only on insurance, there also are important implications for survivor annuities and Thrift Savings Plan accounts that your survivors should be aware of, to put the insurance considerations in their proper context.

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Health insurance

If you were enrolled is the Self Plus One option when you die, 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.

Your survivors 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’s annuity unless the annuity was too small to cover the cost. If that was the case, your survivor could arrange to pay the premiums directly to the plan.

Life insurance

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 those 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 descendants of that child, if any;

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• third, if none of the above, to your parents in equal shares or in its entirety to the lone  survivor;

• fifth, if none of the above, to your next of kin as determined under the laws of the state where you lived.

Other Insurance

If your spouse or any eligible family member was enrolled in the Federal Long-Term Care insurance program when you die, that enrollment can continue as long as the family member(s) pay the premiums. Note: The opportunity to enroll in the FLTC 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 Dental and Vision Insurance program can continue that coverage if eligible for a survivor annuity. And anyone receiving a survivor annuity can newly enroll in the program if they want to.

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Survivor annuity

If you have at least 18 months of creditable service when you die, your spouse will be entitled to a survivor annuity. That annuity will be a percentage of the annuity you were either entitled to as an employee or were receiving as an annuitant. For a CSRS spouse, the standard is 55 percent. For a FERS it’s 50 percent.

However, if your spouse agreed to a lesser annuity amount (or none at all), that agreement will determine the amount of the annuity. Note: While retiring CSRS employees can designate any amount of annuity between $1 and the full amount, FERS retirees have only one option other than 50 percent—25 percent; in both cases, the spouse’s written consent is required.

If you are a FERS  employee, your spouse would also be entitled to a basic death benefit, plus 50 percent of either your final salary or your high-3, if that’s higher. That death benefit currently is just below $35,000; it is indexed for inflation each year.

Thrift Savings Plan

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.

If your survivor spouse is the beneficiary, he or she can keep the account open and enjoy the same management and withdrawal rights that you did. If there are any other beneficiaries, the account will have to be closed out. They can do that either by withdrawing the money or by transferring it to an individual retirement account (IRA) or other qualifying retirement savings plan.

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