When you first came on board, you were asked to designate a beneficiary for any survivor benefits. These include your life insurance and TSP account. Image: fizkes/Shutterstock.com
By: Reg JonesWhen you were first hired by the government, you immediately had a number of decisions to make about your benefits.
If you are like most employees, you voluntarily enrolled in the Federal Employees Health Benefits and Federal Employees’ Group Life Insurance programs. You may have, but are less likely to have, enrolled in the Federal Dental and Vision Insurance Program and/or the Federal Long-Term Care Insurance Program. You were automatically given an account in the Thrift Savings Plan—and if you were hired after mid-2010, part of your salary was invested by default, unless you opted out.
Many federal employees treat those decisions as “file and forget.” They let them ride from year to year, without giving much thought to the fact that they can change those decisions to better meet their needs as they go along in their careers and in their lives.
Let’s take a look at those decisions with an eye on whether they are still right for you.
FEHB
When you enrolled in the FEHB program, you had a choice. You could enroll in one of the fee-for-service plans or an HMO. The choices were wide, and the costs varied according to the coverage you chose. If you make no change, those decisions carry forward automatically to the next year (except in the rare situation of a plan dropping out).
And you discovered a highly desirable feature of the program. If you hadn’t enrolled in the FEHB program when you came on board, you could do that during any annual Open Season, which is held at the end of every year. If you were already enrolled, you could change from one plan or option to another during the annual Open Season. And you could change plans or options on the spot if a life event, such as marriage, the birth of a child or divorce occurred.
FEGLI
When you enrolled in the FEGLI program, you had the option of selecting different levels of coverage. Basic, which equals the amount of your salary rounded to the higher thousand dollars, plus $2,000, with the premium cost shared by you and the government.
And, if you enrolled in Basic, three other options for which you’d pay the entire cost: Option A – Standard Optional – which allowed you to buy an additional $10,00 of coverage; Option B – Additional Optional Insurance – which allowed you to buy additional insurance in an amount equal to one, two, three, four or five times your annual rate of Basic pay; and Option C – Family Optional Insurance – where you could elect coverage for eligible family members.
Unlike the FEHB program, if you didn’t enroll in the FEGLI program when you were first hired, you wouldn’t be able to do that now unless one of the following was true: you were found to be medically insurable, because of a qualifying life event, or – and this is rare – during an open enrollment period. The latter only occurs when actuarial data showed a change in the population’s life expectancy.
FEDVIP and FLTCIP
The FEDVIP program offers the opportunity to purchase vision and/or dental coverage. Like in the FEHB, you have an opportunity each Open Season to choose a different plan or a different type of coverage. If you make no change, the election will roll over from one year to the next.
The FLTCIP program is not health insurance but rather covers at-home, assisted living or nursing home care for those unable to handle certain “activities of daily living” on their own. New enrollments have not been allowed since last December, and won’t be allowed at least through December 2026, but coverage previously elected continues so long as you pay the premiums.
Thrift Savings Plan
When you entered government, you were automatically enrolled in the TSP and had an amount equal to 1 percent of your basic pay put in your account. For those hired in mid-2010-2020, 3 percent of salary was withheld by default to invest in the TSP; for those hired since then, it’s 5 percent. The first level produced additional government matching contributions equal to 3 percent of your salary, the second level equal to 4 percent.
Those investments went, again by default, into a target-date fund containing a mix of stock and bond investments deemed appropriate for your age—a mix that will change to become more conservative over time.
You can change any one of those aspects (except the automatic 1 percent agency contribution) at any time. The TSP recently reported, though, that many employees never take any action, regarding the level of investment or the investment choices. More employees make personal investments—and get matching contributions—before default investment started, but of those who do invest, the average amount actually is lower than before.
Designation of Beneficiary
When you first came on board, you were asked to designate a beneficiary for any survivor benefits. These include your life insurance and TSP account. If you are like most employees, you named someone (or ones) who were close to you, like a spouse, a sibling or your parents. While that original designation may not be the one you’d want now, it will be the one in effect if you die without changing it.
Too many times the life insurance beneficiary has turned out not to be the one you would have chosen if you’d made a timely change. For example, would you have wanted that money to go to your ex-spouse rather than your current one?
Your retirement benefit is a different matter. If you are married when you die, the full amount of that benefit will automatically go to your spouse, unless he or she has agreed in writing to a lesser amount or none at all. In addition to any spousal benefits payable, any eligible children will receive benefits in a set dollar amount established by law. If you had neither a spouse nor children, your retirement contributions would be paid out according to a standard order of precedence in law.
So, those are the decisions you made, or were made for you by default, possibly many years ago. They may still be right for you, they might not. Since all of them can be changed, you should at least review them regularly. And by “regularly,” I mean how about starting today?
Former head of retirement and insurance policy at the Office of Personnel Management, and longtime FEDweek contributor, Reg Jones is known throughout the federal workforce community as an authority on pay and benefits.
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