Let’s imagine the unthinkable: you die, leaving your spouse behind in retirement. What’s left after you’re gone? That depends upon which FERS survivor benefit you and your spouse selected.
If you’re married when you complete your FERS retirement application, you’ll need to elect a survivor benefit option in section D of the form. The survivor benefit option you choose determines how much your spouse will receive from your FERS pension if you pass away first in retirement and his/her benefit eligibility.
It’s easy to understand why many people struggle with the decision because there can be a cost associated with a survivor benefit. There are pros and cons no matter which option you pick.
No. 1 “We weren’t sure what to do.”
The FERS survivor benefit is designed to give your spouse a monthly spousal pension benefit if you pass away first in retirement. However, your FERS pension is reduced during retirement depending upon the option selected. There are three options available:
- Maximum Survivor Benefit: Your spouse receives 50% of your unreduced FERS pension, if you pass away first in retirement. Your monthly FERS pension is reduced by 10%.
- Partial Survivor Benefit: Your spouse receives 25% of your unreduced FERS pension, if you pass away first in retirement. Your monthly FERS pension is reduced by 5%.*
- Waive Survivor Benefit: Your spouse will receive NO survivor benefit if you pass away first in retirement. All FERS pension payments will stop at your death, and eligibility for FEHB terminates. Your monthly FERS pension is not reduced. *
*Your spouse is automatically entitled to the Maximum Survivor Benefit, unless he/she consents to a Partial Survivor Benefit or to waive the survivor benefit in its entirety. If that’s the case, then your spouse must complete form SF 3107-2, Spouse’s Consent to Survivor Election. You will need to attach the form with your retirement application.
No. 2 “Although it’s not the same, this money helps me make ends meet.”
Let’s look at a simple example to illustrate the cost and benefit of the Maximum Survivor Benefit.
Frannie Retiree has an unreduced FERS pension of $1,000 a month, and she elects the Maximum Survivor Benefit for her spouse. This reduces Frannie’s pension by 10% to $900 a month.
If Frannie passes away first, her spouse will now receive 50% of the unreduced FERS pension. This means that her spouse receives 50% of $1,000, or $500 a month.
The Partial Survivor Benefit functions the same way except the percentage of benefit is 25%, and the cost each month is 5%.
No. 3 “I don’t know where else I would be able to get health insurance coverage like this.”
This is where the survivor benefit election can become incredibly important. Continuation in FEHB coverage (health insurance) is only available to a spouse who is eligible to receive a survivor pension.
It’s vital that you and your spouse understand the options clearly because a mistake can cost your spouse FEHB coverage after your death.
Here’s how it works. If you pass away first in retirement and your spouse wishes to continue FEHB coverage, then the spouse MUST:
- Be entitled to receive a FERS survivor benefit (Maximum or Partial Survivor Benefit), AND
- Have been enrolled in FEHB prior to your death
The share of FEHB cost remains the same for the surviving spouse with a FERS survivor pension. This means that the government pays for a bulk of the cost of FEHB coverage for your spouse just like they were doing for you in retirement.
If your spouse elected to waive survivor benefit, their FEHB terminates after your death.
An Exception to FEHB Termination Without Survivor Benefit
If your spouse is either a FERS or CSRS active employee or retiree and elected no survivor benefit, upon your death the spouse can elect their own FEHB coverage.
No. 4 “I know that if I remarry before age 55, I’ll lose my FERS survivor pension benefit.”
The FERS survivor pension is a lifetime benefit for your surviving spouse. Your spouse receives the monthly payments until they die, UNLESS they remarry before age 55. If your spouse does remarry before age 55, the FERS survivor pension and any FEHB coverage terminates.
No. 5 “I know I can apply for a FLCTIP policy when I’m ready.”
If you pass away first in retirement, and your spouse wishes to apply for the Federal Long Term Care Insurance Program (FLTCIP), they can only do so if he/she is entitled to a FERS Survivor Pension. If your spouse has waived the survivor benefit, they cannot apply for FLTCiP after your death.
However, if your spouse already has a FLTCIP policy, then their coverage continues for as long as they pay their premiums, regardless of the FERS survivor pension option you selected.
Common Question: “I’m retired; what happens if my spouse passes away first?”
If you have elected a survivor benefit and your spouse passes away first, you’ll need to contact OPM as soon as possible to report their death and complete the forms so that OPM will stop taking out the survivor benefit reduction from your FERS pension. You will not receive a refund of the monies deducted during your retirement.
It’s a Tough Decision
Many people struggle with this decision. Admittedly, it’s often a balancing act between living with a reduced retirement income and providing for your spouse in the future. Weigh the options carefully because it’s a permanent decision. Your spouse may live with the outcome for a very long time.
Will you be ready to retire? As a FERS employee, you have 7 powerful and distinct benefits that can help you stay secure in retirement. Get this benefit guide The 7 Superheroes of FERS Retirement Benefits, to use as a handy one-page reference guide for retirement planning.
