Welcome to the Fall issue of the Retire Federal newsletter! This issue has
topics of interest for retiring and retired federal employees. Retire Federal exists to help prepare federal employees for retirement, provide assistance when applying for benefits, and guidance to those who need direction when navigating the maze of all the parts of your retirement benefits that fit together for financial independence.
What YOU Need to Know
WEBINAR THIS WEEK!!
Sign up now to attend Thursday, October 27, at noon EST,
Micah Shilanski and Tammy Flanagan are presenting:
Learn about the action steps that every Federal Employee should take to ensure their affairs are in order with Federal Employee Benefits Experts
The Latest News:
Increases Coming
The current projection for a salary increase for most employees in 2023 is an average of 4.6%. Typically the exact numbers are not available until the end of the year and the pay increase will be effective the first full pay period in January. If you are retiring on December 31, 2022, you will also see the pay increase reflected in your lump sum annual leave payment.
Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2021 through the third quarter of 2022, Social Security beneficiaries and CSRS (as well as CSRS Offset) retirees will receive an 8.7% COLA for 2023. Eligible FERS retirees will receive the "diet COLA" amount of 7.7%. Under FERS, most retirees will not receive a COLA on their retirement until after age 62. CSRS and FERS COLA's are effective December 1 and reflected in the January payments. If your retirement was effective after December 2021, your first COLA will be prorated based on the number of months in retirement. If you are retiring on December 31, 2022, your first COLA will be granted on December 1, 2023 and be included in your January 1, 2024 retirement benefit (11/12 of the 2023 increase for those eligible for the COLA).
Open Season is coming
Most employees, retirees, and survivors have an opportunity to enroll or change health, dental, and vision insurance plans between November 14 - December 12, 2022. All changes will be effective January 1, 2023 (with the exception of Postal employees). Review the FEHB (health insurance) premium rates for 2023 here and FEDVIP (dental and vision insurance) here. Find your health plan options and begin to run comparisons to be sure that you are in the best health plan for you and your family.
Flexible Spending Accounts
Employees have the opportunity to enroll or reenroll in the Flexible Spending Accounts (FSA) to pay for eligible expenses on a pretax basis. According to Investopedia, diagnostic devices, bandages, and crutches, are covered by FSAs. The Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted in 2020 expanded reimbursable qualified medical expenses for 2020 and later years to include the cost of over-the-counter drugs without a doctor’s prescription. The act also permitted the use of FSA funds to reimburse the costs of menstrual care products. Both of these CARES provisions are permanent.
End of the Leave Year
2022 is the last year in this decade when December 31 is the end of the leave year. Retiring at the end of the leave year can help you maximize your lump sum annual leave payment by getting paid for your carry over leave from the previous year plus the "use or lose" leave from the current year by retiring before the new leave year begins. To earn leave each pay period, you must complete your tour of duty (i.e. full time employees work an 80 hour tour of duty). To review the end of leave years for the rest of this decade visit here. By retiring on December 31, 2022, you have the opportunity to be paid for 26 leave accruals in 2022 plus the carry over leave from 2021. Your first retirement check will be for the month of January and will be dated February 1, however, be prepared to wait up to eight months for your retirement to be finalized... OPM is experiencing significant processing backlogs.
Status of WEP and GPO Possible Changes
According to NARFE (you are a member of NARFE, aren't you?), the bill, introduced on January 4, 2021, by Rep. Rodney Davis, R-IL, H.R. 82, would repeal the unfair Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), which affect nearly 2 million and 724,000 beneficiaries, respectively. The bill has achieved 305 bipartisan cosponsors, surpassing the 290 required per House rules and displaying the strong base of support worthy of House action. If a bill has 290 cosponsors for 25 legislative days and the committee of jurisdiction (in this case the House Committee on Ways and Means) has not acted on it, it can be placed on the House Consensus Calendar. However, on September 20, the House Committee on Ways and Means held a committee business meeting in which the bill was reported, removing it from the House Consensus Calendar and avoiding a floor vote in September. But with committee advancement, House leadership now may bring the bill to the floor for a vote. Over the years many proposals to change the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) have been submitted. For details on this bill, visit H.R. 82 Social Security Fairness Act of 2021. This bill recommends changes to be effective for benefits payable after December 2021.
What is new with Medicare?
The Center for Medicare & Medicaid Services (CMS) posted the Medicare premiums for 2023 and the rates are going down. The Adjusted Gross Income brackets have increased. Visit CMS's website for the details here.
There will be new start dates for Medicare coverage. Beginning January 1, 2023, when you sign up for Medicare the month you turn 65 or during the last 3 months of your Initial Enrollment Period, or during the General Enrollment Period, your coverage starts the first day of the month after you sign up.
Tammy has presented several webinars that are archived on the NARFE Federal Benefits Institute website that cover the various choices, options, and decision points when contemplating the "to B" or not "to B" Medicare decision. She is giving a few this fall. More information is below in Learning Opportunities.
The Retire Federal Team is available for consultations to assist you in navigating the decision points about applying for Medicare.
Insurance Coverage & Review Time
Life Insurance (Federal Employee Group Life Insurance (FEGLI)
You are automatically covered under FEGLI if your appointment allows for it. The value is based on your current salary rounded to the next thousand plus $2000. You have the option to waive it or elect additional coverage. Block #27 on your Notification of Personnel Action (SF 50) indicates the coverage you elected. Block #20C is your current salary including locality pay. Your agency summary benefits statement may also provide you with the value.
Do you still need all of your coverage? As life goes on and your needs change, you may find that you want to reduce your coverage. Maybe your mortgage has been paid down or perhaps your children have become independent adults (sigh). You can always reduce the coverage by completing the Life Insurance Election (SF 2817) or your agency's electronic system. Some agencies use an electronic method such as the GRB Platform to make this change.
FEGLI is priced fairly for what it is: life insurance that covers all federal employees regardless of their job, their health or the cause of their death. Due to this comprehensive coverage, a private term life insurance may be more affordable for you if it meets your needs and you can qualify for coverage. Be sure to have the policy in effect before you decide to cancel FEGLI.
FEGLI includes a living benefit lump sum payment available to those who are terminally ill and provide medical documentation showing a life expectancy of no more than nine months. This benefit is available to both employees and retirees. The benefit is based on the Basic Life Insurance amount. For more details on this benefit read OPM's Q&A.
Do you still carry Family Option? Do you still have eligible family members? Children's coverage typically ends when they turn age 22. You can request the change to be retroactive back to when you no longer had an eligible family member per 5 CFR § 870.505(b). You would reduce your Family Option coverage also on the Life Insurance Election form mentioned above.
Long Term Care
Have you considered what will happen should you need supervision due to severe cognitive impairment or assistance with things that you hope you never need assistance with such as dressing, bathing, feeding, incontinence, and toileting? Many think this type of care is covered under their FEHB health insurance policies and/or Medicare. Your FEHB and Medicare insurance provides assistance while you are recovering from an accident or illness, but not custodial care when you are no longer showing signs of improvement. Most personal care is provided by family members or private funds. Long Term Care (LTC) coverage is an option to provide a resource to pay for a caregiver. You must pass medical underwriting to be approved, however. Federal employees, retirees, and their eligible family members may apply for the Federal Long Term Care Insurance Program (FLTCIP). The FLTCIP website has several videos explaining the program and why you might want to consider this benefit. You will also find calculators to determine your costs based on the plan elect. Don't wait until you are older to consider this important protection because it might be unaffordable, unavailable or you may be medically uninsurable. There is no time like NOW to plan for your future.
Is it time to review and/or update?
Some Federal Benefits are paid as a lump sum payment to your beneficiary. CSRS and the Basic Benefit portion of FERS may pay a lump sum payment to your beneficiary if you have not received all your contributions to the retirement fund after retirement as long as a survivor benefit is not payable.
Designation of Beneficiary forms are not necessary if the standard Order of Preference works for you. Otherwise you may need to update and/or complete the appropriate forms.
Remember that you may have filed a designation of beneficiary form many years ago and the last valid designation will take precedence. You may want to file a new designation for FERS, CSRS, FEGLI or Unpaid Compensation if you want to "cancel prior designations" to void a prior designation. The TSP does not allow you to cancel prior designations, so in this event, a new beneficiary designation will be required.
You will find the FERS, FEGLI, and Unpaid Compensation (any money the agency owes you, e.g., last salary check and unused annual leave) designation of beneficiary forms in your electronic Official Personnel Folder if they were submitted to their HR Office. Employees under CSRS have their retirement designation form on file with OPM if it was submitted. The best advice is to update the CSRS form if you don't remember if one is on file.
Retirees forms would be on file with OPM if they were completed and submitted. Again, the advice is to update the CSRS, FERS ,and/or FEGLI if you are not certain what OPM has on file.
The TSP recently updated their online system so you can make updates under My Account
It is important for your agency, OPM, SSA and TSP to know your current mailing address:
Employees - submit address changes to your Payroll provider (i.e. MyPay, Employee Express, etc.). My Social Security is where you can update your address with Social Security
Retirees can update addresses on OPM's Services Online TSP uses the address submitted by your Payroll Office of your last employer. Separated employees and retirees can update their address at My Account.
More Learning Opportunities
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Plan your Federal Retirement Podcasts with Tammy Flanagan and Micah Shilanski, CFP, provide fun and informative retirement planning guidance.
Retirement Planning is Tammy's weekly column