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When you need to get the most out of your benefits: part one

The first in a series on dealing with desperate situations.

Unless you are a federal employee who is actively preparing for retirement, you might think there’s little need for a person like me, who specializes in helping people understand and get the most out of their benefits. But the federal retirement benefits system can be complicated. And in certain situations, people desperately need help. Over the next few weeks, we'll look at three such instances. Here’s the first:

My beautiful friend has almost 40 years of federal service and has just been diagnosed with terminal cancer. She is still on the rolls and using sick leave. Things are taking a turn for the worse. I’m trying to find advice and solutions for her and her husband. What should or needs to be done? Should she retire immediately? Can she? The process usually takes three to five months. I stayed on hold for three hours to try to get information from her human resources office and the Office of Personnel Management. I want to help but I don’t know how.

In communicating with this correspondent, I determined that the employee’s age and 40 years of service was more than enough to make her eligible for immediate retirement. That meant she wouldn’t have to apply for disability retirement, a longer and more involved process. 

However, in a situation in which an employee is terminally ill and has a large balance of sick leave, the best course of action is generally to stay on the payroll as long as possible, and continue to use sick leave if they have accrued it.

An employee is entitled to use sick leave when he or she:

  • receives medical, dental, or optical examination or treatment;
  • is incapacitated for the performance of duties by physical or mental illness, injury, pregnancy, or childbirth; or
  • would, as determined by the health authorities having jurisdiction or by a health care provider, jeopardize the health of others by his or her presence on the job because of exposure to a communicable disease.

There is no limit on the amount of accumulated sick leave an employee can use for his or her own medical needs.

By remaining on the agency rolls using her earned sick leave hours, this employee can continue to receive her full salary. She will earn additional leave as she uses the leave that she has on the books. And most importantly, she won’t need to worry about applying for regular retirement or providing documentation for supporting a disability retirement. 

If the employee is running short of sick leave, she has additional resources available, including using the living benefit of Federal Employees Group Life Insurance or taking a financial hardship in-service withdrawal from her Thrift Savings Plan account. If she has personal resources, she may be placed in leave without pay status until her retirement application is approved. 

When I teach classes for new or mid-career employees, I make a point of emphasizing the true value of sick leave. It serves as short-term disability insurance, available should you need time to recover from a lengthy illness or a serious injury. After 10 years of federal service, an employee who is fortunate enough to stay healthy will have earned six months of paid sick leave.

Federal employees who don’t have a large balance of sick leave can consider the purchase of short-term disability insurance. But most federal agencies don’t offer this as a benefit, so it must be purchased privately. Most agencies also sponsor leave bank or leave transfer programs. 

In the case of an employee who dies while in federal service, survivor benefits are payable to their surviving spouse and dependent children. In addition, lump sum payments will be made to the beneficiary of the employee’s FEGLI coverage, TSP balance, unpaid compensation (such as their last paycheck and a check for unused annual leave), and retirement contributions if there are no survivors eligible to receive a survivor annuity.

To learn more about survivor benefits payable to the spouse and children, visit OPM’s Retirement Center.