Issue Briefs

DoD, which recently sent out notices to most employees telling them they will have to take 11 unpaid furlough days in the July-September period, has produced the following summary of the impact on benefits, a summary that applies to furloughed employees of other agencies, as well.

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Civil Service Retirement System (CSRS)/Federal Employees Retirement System (FERS)In general, retirement annuity benefits for CSRS and FERS will not be affected during an administrative furlough. Your annuity computation is based on the amount of creditable servicean employee performs and the employee’s high 3 average salary. Since CSRS and FERS allow for credit of up to 6 months of nonpay status in a calendar year, the days you are furloughed will generally count toward the total amount of creditable service for both CSRS and FERS. (An exception would be if you accumulate a total of 6 months of nonpay status in the calendar year due to other reasons and your furlough time causes you to exceed 6 months in a nonpay status.) Likewise, your high 3 average salary will not be affected by your nonpay furlough time. This is because it is computed based on your annual rate of basic pay. For instance, if your annual rateof basic pay has been $85,000 for the last three years and you are furloughed a period of 6 months during the calendar year, your high 3 salary for retirement purposes will be based on your rate of pay of $85,000 for the furlough months rather than your actual earnings during tha tperiod. Although there is a loss of actual pay (or earnings) during the furlough period, furlough does not result in a change in rate of basic pay and therefore does not affect your high 3 salary computation.

Federal Employees Health Benefits (FEHB)Your FEHB coverage will continue as long as your salary is sufficient to withhold premiums. If, as a result of the furlough, your salary becomes insufficient to withhold FEHB premiums, your Benefits Office will notify you by letter. It is important that you read this letter because it willexplain your options and provide instructions on how to notify the Benefits Office of your decision. You must respond to this letter within 31 days of receipt (45 if you live overseas) or your coverage will be terminated and cannot be reinstated until the next FEHB open season. It should be noted, however; that employees subject to court order or administrative court order may not have coverage terminated and will have to incur a debt.

If your pay is insufficient to cover your FEHB premiums, you may opt to pay the premiums directly to your payroll office, incur a debt, or terminate coverage. If you choose to incur a debt, you must agree to pay the resulting debt in full and make arrangements to have the debt collected from your pay once you return to a full pay status. If you terminate coverage, you may reenrollwithin 60 days after the end of the first pay period in which your pay becomes sufficient to cover the premium. If you don’t reenroll within 60 days, you must wait for the next Open Season to enroll or until you experience another qualifying life event.

Federal Employees Group Life Insurance (FEGLI)Your FEGLI coverage will continue as long as your salary is sufficient to withhold premiums.

If, as a result of the furlough, your salary becomes insufficient to withhold FEGLI premiums, your Benefits Office will notify you by letter. It is important that you read this letter as it willexplain your options and provide instructions on how to notify the Benefits Office of yourdecision. You must respond to this letter within 31 days of receipt (45 if you live overseas) or your coverage will be terminated.

If your pay is insufficient to cover your FEGLI premiums, you may opt to pay the premiumsdirectly to your payroll office or terminate some or all coverage. If you elect to terminate coverage, your coverage will be reinstated when pay again becomes sufficient to allow premium withholdings. If you opt to make premium payments directly to your payroll office and fail tomake payments on time, coverage will be cancelled and will not be reinstated when your paybecomes sufficient.

Flexible Spending Accounts (FSAFEDS)If an insufficient salary prevents the deduction of your FSAFEDS allotment, reimbursements foreligible health expenses will stop, but you will continue to be reimbursed for dependent care expenses up to the balance of your dependent care account as long as the expenses incurred allowed you (or your spouse, if married) to work, look for work, or attend school full-time.

Once you return to sufficient pay, your allotment will restart and the remaining balance due on your account will be recalculated to coincide with the remaining pay periods to match yourannual election amounts. Reimbursement of health care expenses will also resume when you return to sufficient pay.

Federal Dental and Vision Insurance Program (FEDVIP)When FEDVIP premiums cannot be withheld due to insufficient pay, payments will accrue and, once you return to full pay status, your payroll office will collect premiums for twice the biweekly amount to make up any missed premium deductions. However, because the administrative furlough is expected to last for more than two consecutive pay periods, continued insufficient funds will prompt BENEFEDS to mail a bill directly to you for payment in order tocontinue coverage. Direct payments should be mailed to BENEFEDS, P.O. Box 797, Greenland,NH 03840-0797.

Federal Long Term Care Insurance Program (FLTCIP) Your eligible FLTCIP claims will continue to be paid. However, coverage will terminate if premiums are not paid. If no premium is received for two or fewer pay periods, future premium deductions will be adjusted, increasing by no more than $50 per pay period to recover the missed premiums. If no premium is received for three consecutive pay periods, you will be billed directly. If premiums are not received within a 30 day grace period, FLTCIP will send you atermination letter.

KEY POINTS TO REMEMBER:All employees must read and respond to correspondence received from your servicing agency to avoid the termination of FEHB and or FEGLI coverage in the event of insufficient funds.

* Employees have 60 days, following the return to sufficient pay status, to reenroll in FEHB.

* If FLTCIP premiums are not paid within the 30 day grace period, your coverage will be cancelled.

* TSP loans that are delinquent more than 2 ½ payments will be reported to the IRS as a taxable distribution

* Your Agency Benefits Counselors are available to assist you.

* If you agree to make direct payments of certain benefits, untimely payments could resultin the cancellation of benefits or other unintended consequences.