Q&A

Fers Disability Retirement

QI retired with a disability retirement under FERS just over 15 years ago. Upon reaching my 62nd birthday, it’s my understanding that OPM will automatically recompute my annuity as if I had been working the entire time. Can you explain that?

AAs a FERS employee, if you were approved by OPM for a disability retirement and did not meet the age and service requirement to qualify for a full, unreduced age-based retirement upon separation, then you would have received 60% of your high-3 average salary for the first 12 months of your retirement (offset by 100% of any Social Security disability benefits you might have received), and beginning the 13th month, your disability retirement would have been reduced to 40% of your high-3 average salary (offset by 60% of any Social Security disability benefits you might have received).

Upon reaching the age of 62, OPM automatically recomputes your FERS disability retirement using the regular

FERS computation formula by considering the amount of federal service that was already creditable under FERS prior to your separation and then adds the amount of service you would have had if you had continued your federal career up until the day before your 62nd birthday. They also consider your unused sick leave balance upon separation to possibly increase the length of service used in this recalculation. OPM also recomputes your high-3 average salary based on the cost-of-living adjustments that were previously applied to your retirement.

The regular FERS formula states that you receive at least 1% of your high-3 average salary for all years and months of creditable service in the computation of your FERS annuity. But for disability annuitants who have at least 20 years of service credit in the automatic recalculation at 62, they receive 1.1% of their high-3 average salary for all their years and months of creditable service.

THE FOLLOWING QUESTIONS & ANSWERS were compiled by NARFE’s Federal Benefits Institute experts. NARFE does not provide legal, financial planning or tax advice or assistance.

For example, if you only had two years of FERS service upon separation for a disability retirement and 15 years later reached age 62, the automatic recalculation of your annuity would equate to 17% of your recalculated high-3 average salary (i.e., 17 years x 1% = 17%).

But if you had five years of FERS service upon separation for a disability retirement and reached the age of 62 fifteen years later, the automatic recalculation of your annuity would equate to 22% of your recalculated high-3 average salary (i.e., 20 years x 1.1% = 22%).

Note for Special Category employees: An additional annuity accrual rate—1.7%—will generally be included in the computation of the earned annuity if an employee has performed service as a law enforcement officer, firefighter, nuclear materials courier, Customs and Border Protection officer, member of the Supreme Court Police, member of the Capitol Police or air traffic controller. The 1.7% annuity accrual rate will be applied to all such service up to 20 years.

Please refer to chapters 60 and 61 of the CSRS/FERS Handbook for more information about disability retirement. Visit https://www.narfe.org/ csrsfers-handbook

Sick Leave And Retirement

QI’m thinking about retiring soon. How can I determine how many hours of sick leave will be used in the computation of my retirement and how many will be forfeited if I don’t use them before I separate?

AIf you are eligible for an immediate retirement, which is defined as one that begins to accrue no later than one month after you leave federal service, then your service will be increased by the days of unused sick leave to your credit on the date of retirement. OPM will receive your final sick leave balance from your agency payroll office; upon converting your unused hours into years, months, and days, OPM will increase the length of service by this amount in the computation of your annuity.

To determine the number of sick leave hours that will be used in the computation of your annuity, you will need to make a projection of your final leave balance. First, find your current sick leave balance on your most recent Statement of Earnings and Leave (SEL). Secondly, using a payroll calendar and beginning with the very next pay period, count how many full pay periods you have left between the pay period reflected on your SEL and the date of your separation for retirement. Don’t count your final pay period unless you expect to work the full 80 hours; your final leave accrual is not pro-rated. A full-time employee earns four hours of sick leave for every full pay period worked. Multiply the number of remaining full pay periods by four and add that number to your current sick leave balance. This will be your projected sick leave balance (deduct any sick leave that will be used).

Use the Sick Leave chart on page 51 of Chapter 50 of the CSRS & FERS Handbook at https://www.narfe.org/csrsfershandbook to convert your projected sick leave balance into months and days. Keep in mind that 2087 hours equals one year of service credit.

For example, if someone projected to have a maximum of 2,450 hours upon separation, they would subtract 2,087 from 2,450 and take the remaining 363 hours and convert them to two months and three days,

Countdown To Cola

according to the sick leave chart. When the hours fall between two numbers on the chart, round up to the next higher number on the chart and use that to determine the number of months and days. Sick leave of 2,450 hours is equal to one year, two months and three days of service credit.

You won’t be able to determine the “leftover” days until you add your sick leave to your service that you will have on the date of retirement. For example, if you had 21 years, three months and 15 days of creditable service and added one year, two months and three days of unused sick leave, that would equal 22 years, five months and 18 days. The 18 days are “leftover” since OPM will only use whole years and months to calculate your retirement. Using the sick leave chart mentioned above, find the 18 days under the column labeled “DAYS” on the left side of the chart; to the right of 18 days you will find 104 hours. In this example, 104 hours of sick leave could potentially be used before the date of retirement without affecting the computation of their annuity. Of course, there are rules that govern the use of sick leave. Your agency retirement officer should be able to assist you with this calculation when you request your final retirement estimate.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.22%in May 2023. To calculate the 2024 cost-of-living adjustment (COLA), the 2023 third-quarter indices will be averaged and compared with the 2022 third-quarter average of 291.901.

The percentage increase determines the COLA. May’s index, 298.382, is up 2.2% from the base.

The CPI represents purchases of food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services.

For FECA COLA updates, visit narfe.org and search for FECA.

Retirement

Changing Voluntary Withholdings With Opm

QHow do I change the voluntary withholdings from my annuity payment?

AIf you use a computer and have access to the internet, the easiest method for making any changes to your voluntary withholdings from your annuity payment would be to access your account via OPM’s Services Online at https:// www.servicesonline.opm.gov/

Access to Services Online requires enrolling in Login.gov, which is the government’s secure login tool. Once you register your Services Online account with Login.gov, you will use your Login.gov credentials to sign-in to Services Online. To learn more about Services Online and how to log in using Login.gov, review the steps at https://narfe.org/qa-sol-login.

You can use OPM’s Retirement Services Online to:

• Start, change, or stop Federal and State income tax withholdings.

• Request a duplicate tax filing statement (1099R).

• Change your Personal Identification Number (PIN) for accessing OPM’s automated systems.

• Establish, change, or stop an allotment to an organization.

• Change your mailing address.

• Start direct deposit of your payment or change the account or financial institution to which your payment is sent.

• Establish, change, or stop a checking or savings allotment; and

• View a statement describing your annuity payment. You may also contact OPM by phone if you can’t find an answer to your question on OPM.gov or if you can’t sign in to OPM Retirement Services Online to manage your annuity account. Phone:1-888-767-6738

TTY: 711

Hours: Monday through Friday, 7:40 a.m. to 5 p.m. ET Closed on federal holidays. The busiest time is between 10:30 a.m. and 1:30 p.m. ET. Near the middle of the month, OPM generally authorizes payments that are due for the first business day of the following month. Therefore, if you want a change to be reflected in your next payment, you will need to submit your request as early in the month as possible.

Reduction To Annuity At Age 62

QI’m a retired CSRS Offset employee. When I reach 62, OPM will apply a reduction to my annuity because I’ll be eligible for Social Security at that time. Since I have less than 30 years of substantial earnings under Social Security, my SSA benefit will be reduced by the WEP. When OPM computes the offset to my annuity, will they use the unreduced SSA benefit amount payable OR will they use the SSA benefit amount payable after it’s reduced for the WEP?

AAs a CSRS Offset annuitant, you are correct that OPM will apply an offset (reduction) to your annuity when you become eligible for Social Security at 62, whether you decide to claim your Social Security retirement benefit at that time or not. It will be up to you to decide if you want to begin Social Security payments at age 62. It is important to consider all the factors that may influence your decision to file for Social Security including:

• The permanent reduction for filing for Social Security before your full retirement age or FRA (65 to 67, depending on your year of birth; 67 for those born in 1960 or later).

• The delayed credits available for claiming Social Security retirement benefits after reaching your FRA.

• Dependents who may be eligible to receive benefits based on your work record.

• Your health and life expectancy.

• Whether you plan to continue working or become reemployed. There is an earnings limit until you’ve reached your FRA.

The information that OPM obtains from the Social Security Administration (SSA) is used to compute the offset to your annuity and it should be based on the amount of Social Security potentially payable after it has been reduced by the Windfall Elimination Provision (WEP). Learn more about the WEP on at www.narfe.org/ssa-wep.

Although OPM will apply the offset reduction to your annuity at age 62, OPM will not apply any further reduction to your annuity once you begin drawing the larger benefit from Social Security later should you decide to delay your application for Social Security benefits. Use the WEP Online Calculator to estimate your Social Security benefit with using the modified WEP formula at www.narfe.org/wep-calc.

If you have provided a spousal survivor benefit, keep in mind that your spouse’s survivor annuity may also be subject to a reduction due to the offset unless they are entitled to a larger Social Security benefit based on their own work record or unless they are affected by the Government Pension Offset (GPO). If affected, the GPO may have eliminated their right to a Social Security survivor benefit based on your work record. To learn more about the GPO, visit www.narfe.org/ssa-gpo.

MEDICARE, FEHB AND TRICARE

QI’m a civil service annuitant and a military retiree. TRICARE requires enrollment in Medicare Parts A & B to qualify for TRICARE For Life at age 65. I’m thinking about canceling my

FEHB coverage. If I cancel FEHB, will I have the option to reenroll later if desired?

AYou may permanently cancel your FEHB coverage as an annuitant at any time, but unless you’re canceling to be covered under a spouse’s FEHB plan, you won’t be able to reenroll into the FEHB program later. The option you should use if you have TRICARE coverage is to suspend your FEHB enrollment, rather than canceling your coverage. If you want to reenroll into the FEHB program, you can do so later during any future open season. You are permitted to suspend FEHB coverage at any time.

You would use option D on the RI 79-9 form (Health Benefits Cancellation/Suspension

Confirmation), which allows suspension of FEHB to use TRICARE, TRICARE for Life, Peace Corps, or CHAMPVA. Find the form at www.narfe.org/ri79-9

Return the form to OPM using the address below:

U.S. Office of Personnel Management, Retirement Benefits Branch, P.O. Box 17, Washington, DC 20044

If you don’t have access to the internet, you can also call OPM’s Retirement Information Office at 1-888-767-6738 and request that they mail the form to you.

To obtain an answer to a federal benefits question, NARFE members should call 800-456-8410 and select option 2 for the Federal Benefits Institute; send the question by postal mail to NARFE Headquarters, ATTN: Federal Benefits; or submit it by email to fedbenefits@narfe.org.