Reg Jones Expert's View

I’m ending this series on life events on a more somber note. The inevitable question is this. What happens to your benefits if you die. Well, it all depends. Let me explain.

Survivor annuity

If you were married when you died and had at least 18 months of creditable civilian service, your spouse will be entitled to a survivor annuity. That annuity will be based on a percentage of the annuity you were entitled to (or receiving) when you died. As a rule, that’s 55 percent for CSRS survivor annuities and 50 percent for FERS. However, if you are a retiree whose spouse agreed to a lesser annuity amount (or none at all), that decision will control what happens.

An eligible surviving spouse of a FERS employee is also entitled to a basic death benefit, plus 50 percent of the employee’s final salary (or high-3, if that’s greater). In 2016, that death benefit is $32,326.

Health insurance

If you weren’t enrolled in the FEHB program when you died, any otherwise eligible survivors would be out of luck. The same is true if you were enrolled in the self-only option. However, if you were enrolled is either self plus one or self and family, it would be a different story. The person who shared your enrollment could continue that coverage.

Your eligible survivors would be entitled to the same benefits and government share of the contributions as a current or retired employee enrolled in the same FEHB plan. As a rule, the premiums would be deducted from his or her annuity payment. If the annuity is too small to cover the premiums, arrangements can be made for your survivor to pay them directly.

Life insurance

Assuming that you elected to be covered under the Federal Employee’s Group Life Insurance program and you have a Standard Form 2823, Designation of Beneficiary, on file, any FEGLI benefits will be distributed to those you named on the form. If you don’t, the proceeds 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

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 premiums are paid. The opportunity to enroll in the FLTCIP program for the first time would be limited to a family member who is receiving a survivor annuity.

Any member of your family who was covered by your enrollment in the Dental and Vision Insurance program can continue that coverage. Further, anyone receiving a survivor annuity can enroll in the program.

Thrift Savings Plan

When you die, any money you have in your TSP account will be paid out in the standard order of precedence spelled out above, unless you had filed a valid TSP-3, Beneficiary Election form. If you did, that would take precedence.

It’s important to understand that 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. On the other hand, any other beneficiaries will have to close out the account. They can either do that by taking a withdrawal or transfer the money to an individual retirement account (IRA) or any other qualifying retirement savings plan.