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Advice on how to prepare for life after government.

Don’t Believe Everything You Read

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Nick Youngson CC BY-SA 3.0 Alpha Stock Images

By now, all of us have come into contact with false information, especially when it’s spread via social media. Sometimes, this happens in the federal retirement world.

A client recently wrote to me in a panic because she had read that if she retired under the postponed MRA+10 retirement provisions of the Federal Employees Retirement System, she wouldn’t be eligible to continue her health insurance. This is simply not true. The article she had read was written by a financial adviser who was most likely sincerely trying to be helpful. However, he may not have understood that under FERS rules, a “postponed” retirement actually is considered an “immediate” retirement.

On the Office of Personnel Management’s Federal Employee Health Benefits Program website, there’s a Frequently Asked Questions section that includes the following language:

As long as the following conditions are met, you may continue your FEHB coverage into retirement:

  • You must have retired on an immediate annuity (that is, an annuity which begins to accrue no later than one month after the date of your final separation); and
  • You must have been continuously enrolled (or covered as a family member) in any FEHB Program plan (not necessarily the same plan) for the five years of service immediately preceding retirement, or if less than five years, for all service since your first opportunity to enroll.

That sounds like you can’t postpone your retirement if you want to keep your health insurance. But if you dig a little deeper and read the FEHBP Handbook, you’ll find the following clarification:

If you are a separating employee covered under FERS and you qualify for an immediate annuity under the Minimum Retirement Age (MRA)+10 provision, you can continue your enrollment when your annuity starts, as long as you meet the requirements for continuing coverage.

If you postpone receipt of your annuity, your enrollment will terminate when you separate from your employment. You will be eligible for temporary continuation of coverage (TCC) or to convert to an individual contract. You may choose to resume FEHB coverage on the date you select for your annuity to begin.

So, a postponed annuity is considered an immediate annuity if you were eligible to receive it immediately after your separation from federal service—even if you chose to postpone receiving it. That makes sense—sort of. No wonder there’s confusion about this provision.

Here are two other things to remember about separating truth from fiction regarding your benefits:

  • It’s not always easy to check the facts regarding federal benefits. Sometimes it requires in-depth research.
  • When doing your research, make sure that the source of the information is valid or that the author is a subject matter expert with a long history of experience. General financial planners do not always have specific knowledge of federal retirement benefits.

This is why I encourage questions at the seminars and webinars that I present. I love the challenge of answering questions and I never hesitate to say when I don’t know the answer.

Here are some tips to help make sure you’re getting accurate information about your federal retirement.

  • Go to the agency that administers a particular benefit. For federal retirement benefits, that’s the Office of Personnel Management. For Social Security, it’s the Social Security Administration. Although you enroll in Medicare through SSA, you can find answers to most questions on the Medicare website.
  • Your agency can usually provide answers to specific questions about your individual retirement benefit.
  • Be careful when using outside resources. Make sure the information you’re getting is accurate and applies to your situation.

My motto has always been the the one coined by Sy Syms, the retailer and broadcaster:  “An educated consumer is our best customer.” The more you understand your retirement situation, the more confidence you’ll have in the decisions you make.

Photo:  Nick Youngson CC BY-SA 3.0 Alpha Stock Images

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 www.retirefederal.com 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 NITPInc.com.

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