Questions & Answers

Q&A

EMPLOYMENT

FLEXIBLE SPENDING ACCOUNT

QSeveral colleagues have encouraged me to use a flexible spending account. I read that they have a “use it or lose it” clause and decided not to set up an account. Could you explain the benefits of this program?

AFlexible Spending Accounts (FSAs) offer a way for current employees to save money by paying for qualified expenses with earnings that are not subject to federal, state, FICA or Medicare taxes. Simply put, the allotment for FSAs comes out of your paycheck before taxes. For a Health Care FSA (HCFSA) or a Limited Expense Health Care FSA (LEX HCFSA), you can be reimbursed for eligible claims incurred up to your annual allotment (plus any carryover, if applicable). For the Dependent Care FSA (DCFSA), you can only be reimbursed up to the amount in your account at the time your claim is processed. The 2021 minimum was $100 for health care, with a maximum of $2,750 per individual. The DCFSA limit was $5,000 per household. The IRS will soon publish the limits for 2022.

Typically, a DCFSA is used to pay for care of children under age 13, including before- and after-school care, babysitting and other daycare expenses. A DCFSA can also be used for care for your spouse or a relative who is physically or mentally incapable of self-care and lives in your home. Be sure to review all eligible expenses at https://fsafeds.com/explore/ dcfsa/expenses.

An HCFSA helps pay for health, dental, and vision expenses for you and your family that are not covered by insurance. Eligible expenses include the usual out-of-pocket expenses for your deductible, copays and coinsurance, but there are other expenses that can be reimbursed that you may not have considered. You may be reimbursed for chiropractic care, acupuncture, counseling and even massage therapy. Continuous

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.

Positive Airway Pressure (CPAP) equipment and supplies, crutches, canes, defibrillators, hearing aids and orthotics are also considered eligible expenses, as well as vision care, including eye exams, contact lenses and supplies, prescription eyeglasses and laser eye surgery.

Over-the-counter items such as acne, allergy and sinus medicines; antacids; pain relievers; cough drops; eye drops; hand-sanitizers; insulin testing materials; and sunscreen can be covered. Transportation to and from medical, dental and vision office visits are also covered. Be sure to review all eligible expenses at https://fsafeds.com/ explore/hcfsa/expenses.

Employees who use a Federal Employees Health Benefits (FEHB) high-deductible health plan (HDHP) and a Health Savings Account (HSA) can also use a LEX HCFSA for reimbursement of dental and vision expenses only. This option is also available if your spouse is enrolled in a non-FEHB HDHP and has an HSA.

You may sign up during Open Season, which is November 8 to December 13 this year, at www.

fsafeds.com. Your election will be effective January 1, 2022.

Many of the FEHB plans and Federal Employee Dental and Vision Insurance Plans (FEDVIP) participate in a paperless reimbursement system. You can find the list of plans at www.fsafeds.com/ support/faq/all/635. Learn more about reimbursements at www.fsafeds.com/support/ reimbursementsandpayments.

Be sure to take full advantage of this benefit while you are employed, as FSAs are not available after you leave federal service. When surveyed by OPM, FSAFEDS participants noted that they preferred carryover, and OPM determined that carryover provided the best protection against forfeitures for most participants. Rather than only having 2½ months to incur expenses to deplete your prior year balance, you have a full year. In addition, if you do not use the funds, you can continue to carry the balance forward, as long as it does not exceed $550 in total and you reenroll for the following year.

TSP CONTRIBUTIONS

QWhen should I set up TSP contributions for 2022?

AYou can elect your TSP contributions in the last pay period of the year for the following year. For many, this will be December 19 – January 1, 2022. The 2022 IRS contributions limits are generally announced by the TSP near the end of November. Once you have reached the elective deferral limit, your contributions will be stopped for the rest of the year. This means that Federal Employees Retirement System (FERS) participants who reach the limit before the year’s final pay date will also miss out on matching

FEDS MUST BE VACCINATED BY NOVEMBER 22

On Sept. 9, President Joseph R. Biden Jr. signed an executive order requiring that all federal employees be vaccinated against COVID-19. Federal employees will have until November 22 to receive both vaccinations (one vaccination if receiving the Johnson & Johnson vaccine) and to complete the two-week waiting period post-vaccination before they are considered fully vaccinated. Teleworking employees will be required to get vaccinated, and new federal employees who start their government service after November 22 need to be fully vaccinated prior to their start date. Employees with a “disability or sincerely held religious belief, practice, or observance” may be exempt from the vaccine mandate. For more information, visit https://www. saferfederalworkforce.gov/faq/vaccinations/.

contributions for the rest of the year. Be sure to check the TSP website for 2022 contribution limits: www.tsp.gov.

QMay I contribute to the TSP from my lump sum annual payment?

ANo. TSP contributions may only be made from basic pay, and the lump sum annual leave payment is not considered basic pay. Generally, basic pay is subject to retirement contributions, which is one way to determine the pay used for TSP matching contributions as well as the pay used to compute the high-three average salary for your retirement benefit.

FEHB COVERAGE

QMy spouse has cheaper/ better health insurance coverage from her nonfederal employer and can cover me for less than what I would pay if I participate in the FEHB program. Why should I enroll in FEHB?

ATo continue FEHB into retirement, employees need to be covered under FEHB for five years immediately prior to retirement (coverage under a spouse’s FEHB plan counts, and coverage under TRICARE can be used to meet the five-year test if you are covered by FEHB on the last day of employment). Retirees pay the same rate as employees, although retirees pay premiums after tax, while employees have the benefit of paying with pre-tax dollars. Most private-sector employers do not continue coverage for employees who have separated, and some that do may not offer the same rates or family coverage. Federal retirees continue to enjoy annual Open Season periods and the ability to change plans as their needs change.

RETIREMENT BENEFITS

QI am considering leaving federal service soon, but I am not eligible to retire until July 2022. What do I give up if I resign now?

AYou are eligible for a deferred retirement benefit if you have at least five years of creditable civilian service (with retirement coverage). If you have at least 10 years of creditable service, you may receive a benefit as early as your Minimum Retirement

Age (55-57, depending on your year of birth). Under a deferred retirement, you will not be eligible to reinstate your insurance benefits or receive credit for your unused sick leave. In addition, the FERS supplement that bridges the time between retirement and qualifying for Social Security is not payable under the deferred retirement rules. It is important to consider the value of an immediate retirement compared with a deferred retirement before making this important decision. Your agency’s human resources or personnel office may be able to provide you with resources to further evaluate your decision.

RETIREMENT

MEDIGAP AND MEDICARE ADVANTAGE

QI have FEHB and am turning 65. My mailbox is full of unsolicited marketing from health insurance companies wanting me to apply for Medigap coverage or a Medicare Advantage plan. Do I need this?

AAt age 65, you qualify to enroll in Medicare. Most federal retirees maintain their FEHB coverage and enroll in Medicare Part A hospital insurance, which is available at no premium because you’ve paid the Medicare Hospital Insurance Tax (HIT) throughout your career (currently 1.45 percent).

You may also wish to enroll in Medicare Part B; however, you will pay a premium for Medicare Part B (the standard premium for 2021 is $148.50 per month per person, and the premium is adjusted for higher income enrollees).

If you enroll in Part B, many federal plans will waive their deductible, copays and coinsurance when Medicare is the primary payer. Some plans also offer a partial Medicare Part B reimbursement as a further incentive to enroll.

Federal retirees may choose to suspend their FEHB coverage to use a Medicare Part C (Medicare Advantage) plan, or they can continue FEHB coverage and use their FEHB plan to “supplement” Medicare Parts A and B. There are some FEHB plans that offer a Medicare Advantage plan without leaving FEHB coverage. All of this is to say that there’s no one easy, quick answer to your question.

But never fear. Helpful webinars are available at the NARFE Federal Benefits Institute at www.NARFE.org, including two that have been updated for 2021: “To B or Not to B: Is Medicare Part B Right for You?” and “Understanding Medicare Advantage.” In those webinars, NARFE’s federal benefits experts take a deep dive into your question and provide a more comprehensive answer than we have space for here.

COLA

QWhen can I expect to receive my COLA?

ACost-of-living adjustments (COLAs) are effective December 1 based on the increase in prices measured by the Bureau of Labor Statistics (BLS) calculating the difference of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2020 and the third quarter of 2021. The announcement is published in mid-October. The COLA that you receive in your first year of retirement is prorated by the number of months you were retired before the effective date of the increase. Most FERS retirees will not receive a COLA until they reach age 62. COLAs are reflected in the January 1 annuity payment, which is the payment for December. For more details, visit the BLS website at www.bls.gov/cpi/.

SURVIVOR BENEFITS

QIf I predecease my husband, what does he need to do to apply for the FERS survivor benefit that is provided for him through my retirement?

ASurviving spouses should notify the Office of Personnel Management (OPM) upon the death of a federal retiree. You can call 888-7676738, or go online and report the death at https://rsreporting. opm.gov/AnnuitantDeath. Your surviving spouse must have your Civil Service Active (CSA) number handy; it can be found on your annuity statement and in any communication you’ve received from OPM since you’ve retired. OPM will stop paying the annuity upon the death notification and will send an application to apply for the survivor benefit. OPM will also confirm eligibility to continue coverage under the FEHB program. The coverage will be changed to Self Only if there are no additional family members eligible for coverage. OPM will provide information for claiming Federal Employees’ Group Life Insurance (FEGLI) benefits. This process may take several months to finalize. During this time, health insurance will continue with premiums deducted once the claim is finalized.

Surviving spouses are eligible to continue or elect coverage under FEDVIP if eligible for a survivor benefit. A survivor annuity is not necessary to

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continue coverage under the Federal Long Term Care Insurance Program (FLTCIP); surviving spouses receiving a survivor annuity may apply for coverage at www.ltcfeds.com. Surviving spouses should also notify the TSP of the retiree’s death by submitting form TSP-17- “Information Related to Deceased Participant.” Once Social Security has been notified (1-888-772-1213), a determination will be made for eligibility of widow(er)’s benefits.

A special one-time, lumpsum death payment of $255 can be paid to the surviving spouse if he or she was living with the deceased, or, if living apart, was receiving certain Social Security benefits based on the deceased’s record. Check out the Benefits Brief article in the September issue of NARFE Magazine for additional details. Q How can I change my retirement benefits if my spouse predeceases me?

ANotify OPM and provide a copy of your spouse’s death certificate to stop the deduction for the survivor benefits election you made when you retired. Your unreduced annuity is restored in this event. And be sure to let OPM know to change your health benefits to Self Only coverage. You may also want to update the designation of beneficiary forms you have on file for Civil Service Retirement System (CSRS) or FERS retirement, FEGLI, and TSP. All the forms may be found at www.opm. gov/healthcare-insurance/ life-insurance/designating-abeneficiary/#url=Designationof-Beneficiary. Follow the instructions on each form.

At NARFE Headquarters, experts are available to answer questions and assist in helping with a variety of benefit matters.

CALL NARFE AT 800-456-8410,

OPTION 2

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 mail to NARFE Headquarters, ATTN: Federal Benefits; or submit it by email to fedbenefits@ narfe.org.

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