Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

Service Interruption


The Iraq War has caused many civilian federal employees who serve as military reservists and National Guard members to be called up to active duty. Since the war started in 2003, I've received lots of questions regarding how such military service is treated when a veteran returns to the civilian job.

The 1994 Uniformed Services Employment and Reemployment Rights Act prohibits discrimination against people because of their military service and also protects their rights to re-employment in the private sector and the federal government.

USERRA made two key changes to the way civilian federal employees called to active duty are treated:

  • It made some National Guard service creditable that hadn't been allowed before.
  • It set up a structure for allowing service credit deposits for military service that interrupts a civilian federal career.

Later, USERRA was amended to allow civilian federal veterans continued coverage under the Federal Employees Health Benefits Program. It also contains certain provisions related to the Thrift Savings Plan.

In addition to these USERRA rules, veterans who return to civilian service should be aware of certain Federal Employees Group Life Insurance provisions that pertain to their military service.

National Guard Service

What exactly does USERRA say about National Guard Service? To keep things simple, I'll provide some basic guidance, but if you see your situation described in the list below, you still may need to seek help from your agency's benefits office.

Here are the requirements that all must be met to allow credit for National Guard service that interrupts your federal career:

  • The service must be performed after you are already covered under CSRS or FERS (not prior to your federal career).
  • You must return to federal service after you complete your military service.
  • The service must be full-time, not inactive duty.
  • The service must be performed by a member of the Army or Air National Guard of the United States in the member's status as a member of the National Guard of a state or territory, the Commonwealth of Puerto Rico or the District of Columbia.
  • The individual must be entitled to pay from the United States for the service (or have pay waived).

Prior to the change in the law, National Guard "state" service would not be subject to a military service credit deposit if the employee was placed on leave without pay status, because such status is not considered military or civilian employment.

Any employee who is on LWOP is entitled to up to six months of LWOP credit toward both eligibility and computation of their CSRS or FERS basic retirement benefit. Employees do not have to pay a civilian or a military service credit deposit for up to six months of LWOP in any calendar year.

But under USERRA's provisions, such National Guard service is now treated as military service, and the employee is considered on military furlough, rather than LWOP. Military service that is performed while on military furlough is subject to a military service deposit. And that brings us to the second change that USERRA caused for civilian federal employees.

Military Service Credit Deposit

Under federal law, if you performed active military service after 1956, you can, under certain circumstances, make a deposit to your retirement system to receive retirement credit for the service. USERRA changed the amount of the deposit that is owed to cover the period of service. Prior to the enactment of the law, the military deposit was computed as 7 percent of military base pay if the service was being credited towards CSRS and 3 percent if the employee was in FERS. (For more information on military service deposits, see my Feb. 24, 2006, column.)

Under USERRA, the amount of the deposit is subject to a limit that may not exceed the amount of CSRS or FERS deductions that would have been withheld from basic pay if the employee had not been called to active military service.

After a period of military service, an employee should inquire about paying the military deposit within 3 years of reemployment. The deposit must be paid prior to retirement, but interest begins to accrue on the third anniversary after discharge from military active service when the service interrupts a civilian career.

Two calculations need to be made by the agency before collecting the deposit:

  • The civilian retirement deposit that would have been paid on the civilian wages if the employee didn't interrupt his or her civilian career for military service.
  • The normal 3 percent or 7 percent deposit based on the military basic pay.

An employee who uses military leave or annual leave to cover part of the period of separation will not owe a military service deposit for this period of time. Also, if the employee was working on an intermittent appointment, then the average rate of basic pay from the previous 12-month period should be used to determine the civilian retirement deposit amount. (Click here for more information about using military leave to perform active service.)

Agency benefits offices are equipped to provide guidance on computing the deposit. But it is the employee's responsibility to request this information and make the payment. Payment can usually be made by payroll allotment or by check. (Click here for more information about computing a military deposit.)

Health Benefits Coverage

A subsequent amendment to USERRA allows federal employees to continue FEHBP coverage for 24 months when called to military duty. If you choose to do so, you're responsible for the enrollee share of the premium during the first 12 months, and your agency will pay its share. For continued FEHB coverage of up to another 12 months, you are responsible for paying both the employee and agency shares of the premium, plus an additional 2 percent administrative fee. (Click here for more information about FEHBP and military service.)

There is a separate authority for your agency to pay premiums available to employees who meet certain requirements, including serving in support of a contingency operation.

TSP Issues

USERRA contains several provisions regarding the Thrift Savings Plan:

  • You may make up TSP contributions missed as a result of your military service.
  • If you were not vested when you separated from civilian service, and 1 percent agency automatic contributions and earnings for these contributions were removed from your TSP account; you are entitled to have these funds restored to your account.
  • If you separated from civilian service and your TSP account was paid to you as an automatic cash-out, you may return the funds and, if applicable, re-establish a TSP loan.

Click here for more information on TSP issues.

Life Insurance

If you are put in a leave without pay status while on military duty, you can keep your Federal Employees' Group Life Insurance coverage for up to 12 months. This coverage is free. Being called up to active duty does not affect the amount of your FEGLI coverage. At the end of 12 months in LWOP status, the coverage terminates. But employees get a free 31-day extension of coverage and have the right to convert to a nongroup policy.

If a federal employee with FEGLI is called up to active military duty and is killed, regular death benefits are payable to the employee's beneficiaries. Accidental death benefits are also payable under basic insurance (and Option A, if the employee had that coverage) unless the employee was in actual combat (or unless nuclear weapons were being used) at the time of the injury that caused the employee's death. (Click here for more information on FEGLI and military service.)

So there you have it: A whirlwind tour of how your civilian benefits are affected by being called up to active duty military service during your civilian career. If you have any specific questions that were not answered in this column, please share them in the comment section and I will address them in a future column.

Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.


Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement and the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on

Close [ x ] More from GovExec