Have you ever wondered what would happen to your government benefits and seniority if you found yourself out of federal employment due to a downsizing or an outsourcing decision? Well, as with so many other items dealing with our federal employment, the answer is “it depends”.
If you are eligible for retirement (including early retirement) you may retire and you can continue your health benefits under the same conditions as if you were an employee as long as you had been enrolled in the FEHBP for the last five years. As a retiree, you continue to participate in the annual open seasons.
If you hadn’t been enrolled for the last five years, or you were not eligible for retirement, you could carry over your health insurance for 18 months under the provisions of COBRA. COBRA, the Consolidated Omnibus Budget Reconciliation Act, requires that you pay 100% of your cost and the employer’s cost, plus a 2% administrative charge. This sounds like a lot, but often it is less expensive than purchasing an individual health insurance policy. Often employees who can’t carry their health insurance over when they leave look for group insurance through a spouse’s employment or through a professional or fraternal organization to which they belong.
If you are eligible for retirement (including early retirement) you may retire and you can continue your life insurance under the same conditions as if you were an employee as long as you had been enrolled in the same options in the life insurance program for the last five years. If you are not eligible for retirement, you will have the opportunity to convert your life insurance to an individual policy.
Both CSRS and FERS early retirement have the same criteria. You must be age 50 with 20 years of service, or be any age with 25 years service. Under CSRS you are subject to a 1/6 of 1% per month (2% per year) reduction for each full month you are under age 55. There is no age-based reduction for early retirement under FERS.
FERS MRA+10 Retirement
Under FERS, employees who have reached their minimum retirement age may retire if they have at least 10 years of service. There is a 5/12 of 1% (5% per year) reduction for each full month you are under age 62.
If you are not eligible for immediate retirement you can leave your contributions in the retirement fund and later become eligible for an annuity when you meet the criteria for immediate retirement (FERS) or reach age 62 (CSRS). You are not eligible to carry your insurance over under deferred retirement.
You will be paid in a lump sum for any annual leave you have left.
If you are eligible for retirement, your unused sick leave will be added to your length of service for the purpose of computing your annuity. The rules for crediting sick leave for CSRS and FERS retirement differ.
If you have three years of federal service and left federal service after 1994, your sick leave can be re-credited to your account if you ever return to federal service.
What happens to seniority would depend to a large extent on your agency and any applicable collective bargaining agreement.
John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. The book is written in an easy to understand question and answer format and covers all areas of federal benefits from the perspective of an employee at various stages of their career. Order your copy at shoplrp.com.