FEHB coverage continues during a shutdown, with the employee share to be paid retroactively later. Image: Mark Van Scyoc/Shutterstock.com
Although many federal employees have become so accustomed to threats of agency funding lapses and partial shutdowns that they tune them out, that attitude would not shield them from the impact if the threat turns to reality.
Employees who are required to work without pay always have been guaranteed by law to be paid later for that time since the government had incurred an obligation to them. That traditionally was not guaranteed for employees put on unpaid furlough—although in practice, they always were paid—until the law was changed to add that guarantee for them. That change occurred during the most recent shutdown, which was the longest ever at more than a month over late December 2018-late January 2019.
For both categories, exactly when they would be paid depends on the length of the closing and how its end coincides with payroll cycles. If a shutdown starts and ends within the same cycle, there could be no disruption.
FEHB coverage continues during a shutdown, with the employee share to be paid retroactively later if an employee’s pay for a pay period would not be large enough to cover it. Premiums under FEDVIP and FLTCIP insurance similarly would accumulate and would be paid from back pay once pay resumes. FEGLI insurance continues without cost to the employee.
The change in law in early 2019 also added several protections against potential loss of coverage in insurance programs due to shutdown-induced furloughs, and further assured that changes such as adding coverage for a new spouse or child still would be processed.
Furlough time counts for purposes of annual and sick leave accrual and within-grade waiting periods, so long as the employee later is paid. It also is creditable as time worked in a later retirement benefit calculation.
Furlough time counts for purposes of annual and sick leave accrual and within-grade waiting periods, so long as the employee later is paid. It also is creditable as time worked in a later retirement benefit calculation.
Employees may invest in the TSP only when they are in paid status; missed investments would be made up from back pay. Account holders in non-pay status can shift money among the investment funds and also can change allocations of ongoing investments, although the latter change would not apply until personal investments restart. They also can request a loan (so long as the furlough is expected to last less than 30 days) and those with outstanding loans can suspend payments so long as the agency provides documentation of the non-pay status. In-service withdrawals can be requested during non-pay status, either age-based (after age 59 ½) or financial hardship-based (standard rules requiring proof of a hardship continue to apply).
Annuity payments to retirees would go out as usual because they are funded by a trust fund, which also pays salaries of the employees needed to operate that system. However, processing of new retirement applications could be slowed because those applications first go through individual agency HR and payroll offices which could see their own employees put on furlough.
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See also,
Legal: How to Challenge a Federal Reduction in Force (RIF) in 2025
The Best Ages for Federal Employees to Retire
Alternative Federal Retirement Options; With Chart
Primer: Early out, buyout, reduction in force (RIF)
Retention Standing, ‘Bump and Retreat’ and More: Report Outlines RIF Process