Weekend Reading on Your Federal Benefits 5-18.jpg

(for the week of January 27th – February 2nd)

You’re too busy during the week to keep up on all the news around your employee benefits and pay. My weekly summary of the most interesting and relevant news stories could help you and includes my comments and insights.

By the way, if you’ve read something about your employee benefits that you think is important or interesting, share it. And, let me know about news sources that you follow. Have a great weekend.

George Ray
Federal Benefits Online

In this week’s Federal benefits news, we get a lesson on why you should get and keep copies of important documents, learn that some employees can be eligible for exceptions to the rules, and discuss what OPM is doing to reduce health insurance costs. And speaking of health insurance, I’ll answer the question “what happens to my health insurance after I leave Federal service?” Let’s get started.

Married or Getting Married? Be Sure to Think Divorce Too!

From Federalnewsradio.com

People love to hear stories. A good story that is told well can help you to remember something or maybe teach you a lesson. Many business schools like to use case studies, which you might say is a structured story containing facts and a situation which needs a solution. They’re an interesting and productive method often used to teach valuable lessons.

Mike Causey at Federal News Radio relates a story of a couple who got divorced in 2001. The husband was ill and needed money (cash flow) so his wife agreed to waive her right to his pension, and instead accept a partial payment from his life insurance after he died (the other portion went to a son from a previous marriage). After her former husband passed, she went to claim her money but learned from OPM that all the proceeds had already been paid out as the beneficiary designation was changed back in 2003, years before her former husband’s death. Whoops. She received a copy of the beneficiary designation form with a stamp on it from OPM at the time of the divorce, but never got a copy of the irrevocable assignment of the life insurance policy, if it was ever properly executed (apparently not). OPM doesn’t appear to have received a copy either. Now, what happens? — probably some legal battles, legal fees, and legal headaches. And speaking of case studies . . .

How Come FBI’s McCabe Gets to Take Leave Before Retiring?

From Govexec.com

If you heard the news this week that FBI Deputy Director Andrew McCabe was leaving his job a few months before he was scheduled to retire (and you’re a benefits guy like me) the first question you may have asked is ‘Is he going to have to defer his pension until he’s eligible to begin receiving it?’ One of the big issues with deferring a pension (which means you’ve left service but didn’t retire from service) is the permanent loss of your health insurance, a valuable benefit for retirees. (Check out the last story at the bottom for more on this).

But no deferment is needed as McCabe will be using up vacation time immediately before retirement. What? If you didn’t already know (or haven’t tried it yet), way back in 1945, the Comptroller General ruled that “terminal annual or vacation leave may not be granted immediately prior to separation from service in any case where it is known in advance that an employee is to be separated from service.” Someone’s got some ‘splaining to do here, Lucy.

When I answer questions during my benefits briefings, I usually preface my answer with ‘In most cases . . .” because there are often exceptions to every rule. The exception here says that it’s allowed when the “exigency of the service” determines that administrative authority should allow terminal leave approval when the separation is known in advance (Comptroller General Opinion B-120074, August 10, 1954). Principal human resource managers are authorized to make such determinations, and Mr. McCabe's situation seems to call for it. Sounds like he'll be able to get an exception to the rule, and his retirement benefits will be just fine.

OPM Seeking More Cost Controls for Federal Employee Health Insurance

From Fedsmith.com

Stories on your Federal Employees Health Benefit (FEHB) program usually get the most attention each year during Open Season, then we tend to forget about health insurance for the rest of the year (although I reminded you recently that You Still Have One Healthcare Chore for 2017).

OPM just sent out its annual letter requesting proposals from health insurance providers for the 2019 plan year and is emphasizing quality and affordable health insurance coverage for Federal employees. I don’t have to tell you that costs have been increasing every year. Premiums rose an average of 6.2% for participants in 2017. So OPM is continuing its proactive strategy by asking insurers to improve engagement with their enrollees, explore cost-management techniques, and reduce cost-sharing for members.

According to OPM, prescription drugs accounted for 26% of FEHB program costs in 2016, and program participants are also using more specialty medications and drugs each year. When it comes to prescription drugs, the letter requires that members are charged the lesser of the prescription price or applicable copayment amount for prescription medications. There have been many news articles recently on this issue referred to as a ‘clawback’. (Just Google ‘prescriptions + clawback’ for more on this.)

How much will healthcare costs rise in 2019? We’ll certainly find out as we approach the next Open Season. In the meantime, here’s an important question that I was asked by an employee who cares a lot about America’s fish and wildlife, and also about her coworkers. She asked me . . . .

What Happens to My Health Insurance When I Leave?

From Federalbenefitsonline.com

I love getting and answering questions. This week I received a question from a reader named Roberta who said:

I was chatting with a coworker today about some of our colleagues taking early retirement. One of the things we are not clear on is what these early retirees will do for healthcare until they are eligible for Medicare. Will they be able to continue their current discounted coverage, or will they have to fill in the gap with private insurance?

Well, Roberta, Federal retirees have access to something that most private sector retirees don’t, employer-provided health insurance. But whether the employee retires from service, retires early, or simply leaves service will determine if the employee is able to keep his coverage. So let’s talk about what happens to your health insurance after leaving Federal service and why it depends on how you leave. My answer is inside.

See you next week. Thanks.

Get the help you need to understand and wisely use your benefits. Do it when you’re ready and at your own pace. Let me be your guide to “Understanding Your Federal Benefits” and become the boss of your benefits with my comprehensive e-learning course. There’s a free trial that gives you the course introduction and first module at no charge. Give it a look. You’ll like what you see.