Many qualifying life events can have significant effects on your retirement benefits, such as marriage, divorce, or reemployment. This post will look at how reemployment (in the private and public sectors) affects your retirement benefits after retirement, under FERS.
Reemployment will cause your FERS annuity to stop if:
- You are receiving a disability annuity from the Office of Personnel Management and they have found you recovered or restored to earning capacity prior to reemployment.
- You are a disability annuitant who was medically disqualified for continued membership in the National Guard.
If your annuity stops upon reemployment, your health insurance coverage as an annuitant stops. If you are eligible for FEHB coverage with your new position, you can enroll in the program when re-employed.
Your life insurance stops without a right to convert it to an individual policy if your annuity stops upon reemployment. You can have life insurance coverage as an employee under the same conditions as any other employee who is rehired in federal service.
No longer receiving annuity—coverage an annuitant ends if you are no longer receiving an annuity. If your new position gives you eligibility for FEHB coverage, you may enroll in the FEDVIP when re-employed.
Still receiving annuity—if you are reemployed in a position giving you FEDVIP eligibility, you must contact BENEFEDS if you want those premiums deducted from your paycheck. Most reemployed annuitants choose to make that change because retirees pay FEDVIP premiums with post-tax dollars and employees pay with pre-tax dollars. If your new position doesn’t convey FEDVIP eligibility, you may retain the coverage as an annuitant.
When your annuity stops, you have the same status as any other fed employed in an equivalent position with a similar history. When you again leave service, you will be entitled to either an immediate or deferred annuity based on the new separation.
If you are reemployed with a Department of Defense agency, you are subject to a dual compensation waiver allowing receipt of both annuity and salary. However, under this waiver, you will not be entitled to future retirement benefits.
If you retired under a discontinued service position, you may elect to no receive this waiver and become subject to FERS reemployment provisions, which will apply an offset to your salary based on the monthly amount of your annuity. Reemployment service can be applied to your retirement depending on the amount of service you perform.
The following applies if you are a FERS disability annuitant considering federal reemployment:
- If you are reemployed on a permanent basis in a position equivalent in grade and pay to the position from which you retired, OPM may find you recovered from your disability.
- If you are reemployed subject to medical and physical qualification standards equal to those of the position from which you retired, OPM may have found you recovered.
- The pay of the position in which you are reemployed, prior to the offset of annuity, will be included as earnings in determining whether disability annuity will stop due to the restoration of earning capacity.
- Receipt of, or continued receipt of full or partial Workers’ Compensation benefits, when those benefits are based on the same injury or medical condition that is the basis of OPM’s award of disability retirement, is evidence you have not recovered from your disability.
- If you are over age 60, your annuity can’t be stopped because of the earnings cap and OPM can find you recovered only if you ask to be found recovered.
Employment in the Private Sector
Effect on FERS Basic Benefit
Your employment outside the federal government won’t affect your basic FERS annuity payments unless you’re receiving a disability annuity under the age of 60. If that’s the case, you are subject to the 80% earnings limit. You can reach this by, if in any given year, your income from wages and self-employment is at least 80% of the current rate of basic pay for the position from which you retired.
FERS Annuity Supplement
If you are receiving an annuity supplement, it will be reduced based on how much you earn over the Social Security earnings limit.