Whether you’re a CSRS or FERS retiree, life events can have a significant impact on your retirement annuity. This post will focus on retirees under FERS.
First, let’s look at what qualifies as a life event. Life events are anything that changes your situation or circumstance. In this case, an event that changes your situation after retirement. For example, marriage, divorce, and re-employment would all qualify. Let’s look at each one of these in detail.
If you are married after retirement, you can elect a reduced annuity to provide a survivor benefit for your spouse. This election must be made to OPM within two years of the date of marriage. Under FERS, you can either elect a full survivor benefit (50 percent of unreduced annual basic benefit) or a partial survivor benefit (25 percent of unreduced annual basic benefit).
If you remarry the same person you were married to at retirement, you cannot elect a survivor annuity greater than what you elected at retirement. The reduction in your annuity is either 10 percent of your basic annuity (for the full survivor benefit) or 5 percent of your basic annuity (for the partial survivor benefit).
To change your FEHB plan, you may call OPM anytime from 31 days before the marriage to 60 days afterward. Otherwise, you must wait until the next FEHB Open Season to make changes.
If you get a divorce during retirement and your annuity is currently being reduced to provide a survivor benefit for your spouse, that reduction is eliminated unless the divorce decree says otherwise.
Your spouse is no longer considered a family member when you divorce, therefore, they no longer have coverage under an FEHB plan. The only exception is if the divorce decree states differently.
A survivor benefit can still be provided for a former spouse if you elect a reduced annuity. You must notify OPM within two years of the date of divorce.
An FEHB plan can still cover children after a divorce.
In both the marriage and divorce cases, OPM will need a copy of the marriage certificate or divorce decree.
The FERS basic benefit will stop if:
- You’re a disability annuitant whom OPM has found recovered to your earning capacity prior to employment.
- You are a disability annuitant who was medically disqualified for continual membership in the National Guard.
If your annuity stops upon re-employment, your health insurance coverage as an annuitant stops. If your re-employed position gives you eligibility for FEHB coverage, you may enroll in that when you become re-employed.
Much like health insurance coverage, your life insurance coverage as an annuitant would stop if your annuity stops upon re-employment. Also, you will lose the right to convert your plan to an individual policy. You may, however, acquire life insurance coverage under identical conditions as any other employee rehired in federal service.
FEDVIP (Dental and Vision)
If you are no longer receiving an annuity, your FEDVIP coverage ends. You may enroll in coverage when hired if your current rehired position gives you eligibility.
If you are still receiving an annuity when re-employed in federal service and your new position allows eligibility, you must contact BENEFEDS if you want those premiums deducted from your paycheck. Most re-employed annuitants want to make this change because retirees pay FEDVIP premiums with post-tax dollars and employees pay premiums with pre-tax dollars. If your new position doesn’t make you eligible for FEDVIP coverage, you may retain the coverage you had as an annuitant.
When your annuity stops, you have the same status as any other federal employee employed in an equivalent position with similar service history. If you leave service again, you are entitled to an immediate or deferred annuity based on the new separation. However, you will continue to receive your FERS annuity while working if your annuity does not stop.
If Annuity Continues After Re-Employment
Your FEHB coverage is withheld by your agency if your annuity continues after re-employment. This is so you can take advantage of the premium conversion of health benefits. OPM will suspend your coverage as an annuitant until you have separated from your re-employed position.
If your annuity continues after re-employment, you retain the life insurance you had as a retiree. If your re-employment makes you eligible for FEGLI coverage as an employee, the insurance you had as an annuitant is suspended and you have coverage as an employee.
Re-employment may increase your retirement and death benefits. You can either earn a supplemental or redetermined annuity.
- A supplemental annuity is added to your present annuity. If you work as a full-time re-employed annuitant continuously for one year, you may be entitled to receive this. If you work part-time, you must work proportionately longer.
- A redetermined annuity is a recomputed annuity that takes the place of your present annuity. If your re-employment continues for at least 5 years or the part-time equivalent, and you qualify for retirement at separation from your re-employment service, you may elect a redetermined annuity.
If you die while re-employed, after establishing eligibility for either annuity, your surviving spouse may have his or her survivor benefit increased of recomputed, whichever is more beneficial.
Disability Annuitants Considering Federal Re-Employment
OPM may find you recovered from your disability if you are re-employed on a permanent basis in a position equivalent to the grade and pay of the position you retired from. They may also find you recovered if you’re re-employment is subject to medical and physical qualification standards equivalent to that of the position you retired from.
The pay of the position in which you are re-employed, prior to the offset of an annuity, is included as earnings in determining whether your disability annuity will stop due to the restoration of earnings capacity.
The receipt of full or partial injury compensation from OWCP during re-employment is evidence that you have not recovered from your condition.
Finally, if you are 60 years of age or older, your annuity cannot be stopped because of your earnings. Further, OPM can find you to be recovered only if you request to be found recovered.
Employment in the Private Sector
Employment in the private sector will not affect your basic FERS annuity payments unless you are a disability annuitant under the age of 60. If that’s the case, you are subject to the 80 percent earnings limit. If you are receiving an annuity supplement, it is reduced based on how much you earn over the Social Security annual earnings limit.
As you can see, there are many rules that apply to your annuity and life events. This is especially important to federal disability retirement annuitants. If you fall into this category, please give us a call, or fill out this inquiry form to find out how we can help you with these decisions. These decisions have an impact on your annuity and could affect your survivor benefits. We have helped thousands of federal employees with this process and we are confident we can help you as well!