Monthly Archives: January 2018

High Risk List Gains Security Clearance Process

clearance

The Government Accountability Office announced it’s adding the federal government’s security clearance process to its High-Risk List of federal programs that require broad transformation or specific reforms.

The National Background Investigations Bureau has struggled to deal with the volume of applications for security clearances required for many government jobs. The backlog, 190,000 in August 2014, now stands at more than 700,000 as of September 2017. The Office of Personnel Management’s goal for a stable backlog is 180,000 cases.

“A high quality and timely personnel security clearance process is essential to minimize the risks of unauthorized disclosures of classified information and to help ensure that information about individuals with criminal histories or other questionable behavior is identified and assessed,” the Comptroller General Gene Dodardo said. “Our objective for the High-Risk List is to bring attention to policymakers of the need for action sooner, rather than later.”

Adding the process to the High-Risk List was scheduled for a regular update until 2019, however, GAO cited 2 of its recent reports identifying the growing backlog and a look at long-term goals for agencies to increase capacity to process cases.

The 2018 National Defense Authorization Act contains provisions that could improve the security clearance backlog. Signed by President Trump last month, it requires the Pentagon to devise a “phased transition plan” to shift background checks to the Defense Security Service and it allows DSS to hire more personnel to deal with the backlog.

This backlog process has been on and off the High-Risk List for years. In 2005, GAO added the Defense Department’s clearance program to the list and in 2007, OPM’s program was added because of issues of timeliness and quality. In 2011, the program was removed after progress was made.

“After GAO removes areas from the High-Risk List, it continues to monitor them to determine if the improvements previously noted are sustained and whether new issues emerge,” GAO wrote. “If significant problems arise, GAO will put an issue back on the list, as it has done in this case.”

Evan Lesser, president of a career site for individuals with an active security clearance said, “Seeing this program placed on GAO’s High-Risk List is just a confirmation of what recruiters, employers, and security clearance applicants have bee experiencing for a long time. The question now is if the placement is met with reforms that really do the job of reducing the processing times that are placing such a significant burden on the industry and discouraging quality applicants from considering great government and contracting positions.”

House Oversight and Government Reform Committee ranking member Rep. Elijah Cummings (D-Md.), called for an investigation into the security clearance process. “Today’s urgent action by the nonpartisan investigators at GAO confirms what I have been warning about for months: serious deficiencies in our nation’s security clearance processes represent an urgent and grave risk to our national security, not only with respect to systemic challenges but also with respect to specific individuals who should not have access to our nation’s most highly guarded secrets.”

Sen. Mark Warner, D-Va., ranking member of the Senate Select Committee on Intelligence said in a letter to the Office of Management and Budget that the White House must prioritize improving the security clearance process in the coming months.

“I request that the president’s budget request for FY2019 ensures adequate funding for departments’ and agencies’ background investigations for purposes of suitability assessments and security clearances,” he wrote. “I also request you treat personnel security as a special topic in the budget request. It is essential that background investigations are treated as a critical mission function that receives attention from our government’s top leadership.”

In recent months, lawmakers have advanced legislation to improve reporting on the clearance backlog. The SECRET Act would require NBIB to report the backlog of federal employees awaiting background investigations on a quarterly basis. The bill awaits a floor vote in the Senate.

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Back Pay After a Shutdown

backThe Office of Personnel Management sent guidance to agency human resource directors detailing how federal employees will receive back pay and leave after the partial 3-day government shutdown. The continuing resolution Congress passed and the President signed ending the shutdown, included retroactive pay for furloughed and excepted federal employees during the recent shutdown.

It applied to feds who were furloughed or any “excepted employee” who came into their agency for work at any point during the shutdown.

“Employees should follow the guidance of their respective shared service payroll providers for the recording of time and attendance to ensure that all employees are paid at their standard rate of compensation,” OPM acting Director Kathleen McGettigan wrote to agencies. “Employees may be required to code furlough time as regular duty to ensure that they are paid properly and promptly.”

Agencies must also adjust leave accounts for furloughed federal employees and recredit any lost time during the lapse of appropriations.

“Since the employee is retroactively placed in a pay status, annual and sick leave will accrue in accordance with the normal rules,” OPM wrote.

Those who were on pre-approved leave without pay during the shutdown will be charged LWOP for those 3 days. Also, federal employees who were scheduled or performed overtime or night work at any point during the shutdown will receive overtime, night differential, or premium pay.

Contractors

Federal employees receive back pay, contractors don’t.

D.C. Del. Eleanor Holmes Norton introduced a bill that would give back pay to federal contracted retail, food, custodial, and security service employees place on unpaid leave during the shutdown.

“I recognize, of course, that contract workers are employees of contractors, but the distinction between federal workers and at least, the lowest paid contract workers who, for example, keep buildings clean, fail when it comes to a deliberate government shutdown,” he wrote in a letter to the House. “Unlike many other contractors, those who employ low-wage service workers have little latitude to help make up for lost wages.”

The Low-Wage Federal Contractor Employee Back Pay Act is similar to the legislation he introduced in 2013 after the 16-day shutdown, however, the bill never got a vote in the House.

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Information for New Retirees

retirees

Entering retirement can be full of unknowns; how much is your monthly annuity? Are taxes withheld? Will insurance continue? This post looks to answer some of those questions, and more.

First Payments

OPM begins to provide interim payments as soon as they receive all your retirement records. Those payments represent a portion of your final benefit.

Withholdings

Only federal income tax is withheld from interim payments. Those federal income taxes withheld from your first interim payment will be higher than subsequent payments or your regular annuity. OPM makes necessary changes regarding tax withholding when your application is finished processing.

Health and life insurance continue while receiving interim pay. OPM begins withholding health and life insurance premiums retroactive to the commencing date of your annuity when your application is finished processing.

When OPM finished processing your application, they will send you a personalized booklet titles “Your Federal Retirement Benefits”. It details how much your monthly payments will be, confirms health and life insurance coverage, and provides the information you need to prepare your tax return.

Credit for Civilian Service

If you don’t make retirement contributions:

  • Under FERS, you’ll be given an opportunity to pay for temporary service prior to January 1, 1989.
  • Under CSRS, if no contributions were made for service on/after October 1, 1982, OPM will give you an opportunity to pay the contributions and let you know any difference it makes to your monthly benefit.

Changing Health Insurance Coverage After Retirement

After you retire, you still can change your enrollment from one plan to another during an annual Open Season. You may not change to another plan simply because you retired. That does not suffice for a life event.

If you are receiving an annuity and enrolled in the FEHB program and decide to cancel your FEHB enrollment, the following consequences may apply:

  • You cannot re-enroll in FEHBP
  • You and your enrolled family members will not be eligible to enroll in temporary continuation of coverage or convert to a non-group contract, plus the 31-day extension of coverage doesn’t apply to canceled enrollments
  • If you die, you won’t have an FEHB Self and Family enrollment for your survivors to continue, even if they are eligible for a survivor annuity.

Life Insurance Coverage After Retirement

You may cancel or decrease coverage at any time. However, you cannot increase coverage. Once you cancel your life insurance coverage, it can NEVER be reinstated.

Cost of Living Adjustments

Your first COLA will be prorates based on how long you were retired before it is given. FERS COLA’s aren’t provided until age 62, except for disability or survivor benefits.

FERS disability retirees get the adjustment except when they are receiving a disability annuity based on 60% of Hig-3 salary, in other words, the first year on disability retirement. Also, if you have a CSRS component under FERS, the component is subject to CSRS COLA calculations.

To receive the full COLA, a retiree or survivor annuity must have begun no later than 12/31/2016. If not, the increase is prorated under both retirement systems. Prorated accounts receive 1/12 of the increase for each month they received benefits.

A benefit will not be increased if it would cause the annuitant to receive payments more than any cap amount specified by law.

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Chained CPI and COLA’s

chainedA new tax reform bill references a chained CPI and is bringing changes to most taxpayers. So, what is the chained CPI, what does it have to do with retirement income for a fed, and what does the new tax reform bill have to do with a chained CPI?

Chained CPI

A consumer price index (CPI) determines the amount of any cost of living adjustment, but there are different CPI indices.

A CPI changes with the rise and fall of expenses for fixed items. A “chained CPI” does that but also considers “choices” people make because of behavioral changes. An example is if the price of beef increases, people may buy chicken instead because it may cost less. And when the price of a product goes up, people are more likely to buy less of that product.

The chain-weighted CPI would incorporate changes in both quantities and prices of products. This results in smaller benefit increases when calculating costs for multi-billion dollar programs like Social Security or the federal retirement system.

The chained CPI is often considered a more accurate measure of inflation; however, it will not accurately reflect increases costs for older Americans.

Good and Bad of a Chained CPI

As one executive summary noted if a chained CPI was implemented, over a 10-year period the federal government would save approximately $150 billion. “Since the chained CPI grows more slowly than the traditional CPI’s, benefits and eligibility thresholds would grow more slowly, resulting in lower spending.” the summary said.

An advantage of the chained CPI is the government would spend less money. However, a disadvantage is that it would result in smaller future increases for Social Security recipients and federal retirees.

Current COLA Calculation

The COLA for the next ear is currently determined by a complex formula. It’s currently determined by calculations using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This is different than the chained CPI.

The CPI-W is used for measuring increases in prices of consumer goods like food, housing, clothing, and gasoline.

For there to be a COLA for the upcoming year, the average CPI-W for the third quarter must be greater than the highest previous third quarter.

Tax Reform Bill and the Chained CPI

While this new tax reform references a chained CPI, it does not change how the annual COLA is currently calculated. However, it could have an impact on future COLA calculations, because the bill does require that the federal government start using the chained CPI in some ways.

Effective January 1st, tax provisions are now indexed for inflation. Under this new legislation, marginal personal tax rates, tax credits, and standard deductions are indexed for inflation. The measurement for determining this rate of inflation is the Chained Consumer Price Index for All Urban Consumers. This is the first time the federal government and it is using the chained CPI. It will now be used for measuring inflation for these tax purposes.

Under these new tax rules, the standard deduction has doubled to $13,000. That’s going to reduce taxes for most taxpayers.

While this new bill will result in lower taxes for many Americans, changing to the chained CPI is probably going to have a large impact over time by reducing the amount that can be deducted.

Tax Bill and COLA’s

The new tax reform bill does not impact how the annual COLA is calculated for those receiving Social Security or for federal employees receiving an annuity from the federal government.

One big concern of those that lobby to improve or retain the current government benefits is there will be another move to change retirement COLA calculations to the chained CPI. Congress may be reluctant to make a change because there are so many who would be impacted by the change.

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Non-Pay Status and TSP

status

So far in this series, we have covered the basics of the Thrift Saving Planemployee and agency contributions, the differences between Traditional and Roth TSP accounts, loansin-service and post-separation withdrawals, and life annuities, and taxes of post-separation withdrawals and IRS withdrawal penalties. With this current government shutdown, it is appropriate this is the last post in this series about TSP. This post looks at what effect a non-pay status (i.e. a government shutdown) has on your TSP account.

Effect of Non-Pay Status on Your TSP Account

The following looks at the effects a period of non-pay has on TSP loans, contributions, and withdrawals. This applied to civilian employees who are placed in a non-pay status (furlough of LWOP) and for members of uniformed services who are in Ready Reserves and have been given approval by their command to skip scheduled drills, or whose yearly drill schedule is performed over a 1-2-month period.

It does not apply to employees who are in no-pay status performing an assignment with a state or local government agency under provisions of the Intergovernmental Personnel Act, or to those who are in non-pay status serving as full-time officers or employees of a union.

Loans

You can’t take a loan while in no-pay status. TSP loan payments are deducted from your pay, so if you aren’t receiving pay, you aren’t eligible for a TSP loan.

Furloughs

If your furlough is expected to last 30 days or less, you can take a TSP loan. On the other hand, if the furlough will be longer than that, you can’t take a loan from your TSP.

If you expect to be furloughed on a periodic basis (i.e. one day per pay period), you can take a loan, but you will be responsible for keeping your loan payments up-to-date.

The Internal Revenue Code (IRC) requires TSP loan payment be repaid in level payments. Payment through regular payroll deduction satisfies this. If your loan isn’t repaid in level payments, the IRC requires TSP to declare it a taxable distribution. Meaning TSP will report your unpaid loan balance (including accrued interest) as income to you. Further, you must pay tax on the amount and if you’re under age 59 ½ you may also be subject to an additional 10% tax penalty.

Although, tax-exempt and Roth contributions that may be included in the distribution are not subject to tax, any Roth earnings included in the distribution will be subject to federal income tax, even if you have already met the conditions necessary for your Roth to be qualified.

The reasons stated above are why it’s very important for you to be sure that your furlough will not last more than 30 days. Otherwise, be prepared to make regular loan payments from your own funds and you could face severe tax consequences if the furlough lasts longer.

Outstanding Loan When Placed in Non-Pay Status

Because TSP loan payments are made through payroll deductions, a period without pay will result in missed payments (unless made directly from your own funds). If you go into approved non-pay status, the IRC allows you to suspend TSP loan payments up to one year of the non-pay period. This isn’t automatic, so you must provide TSP with the proper documentation.

Note: If you are a civilian entering non-pay status to perform military service, you can suspend payments on your loan until you return to pay status, even if your civilian non-pay status lasts longer than a year. This is because you can’t repay your civilian payments from uniformed service pay.

Discontinuous Furlough

Your agency may choose to do this by putting you on a furlough that requires you to work fewer hours. Agencies do this because it reduces the financial impact on you and lessens the disruption to the agency. It may still cause you to not have sufficient pay to cover deductions. When this happens, agencies must follow an order of precedence to determine which deductions get processed. The order is:

  1. Retirement
  2. Social Security
  3. Medicare Tax
  4. Federal Income Tax
  5. Health Insurance and any other deductions
  6. TSP Loans

Therefore, furloughed employees for a discontinuous period may not have enough gross pay for the agency to make TSP loan payment deductions and you may fall behind on payments. Agencies aren’t permitted to submit partial loan payments.

TSP will notify you is you’ve missed more than 2 ½ loan payments at the end of a calendar quarter. This notice provides you with the amount needed to bring your loan up-to-date. If you don’t submit payment by the required date, the unpaid balance (including interest accrued) will be declared a taxable distribution and you could incur the 10% early withdrawal penalty.

You need to notify TSP of non-pay status only if your non-pay is expected to last, or has been extended more than 30 days.

Failure to Notify TSP of Non-Pay Status

If neither you nor your agency notifies TSP of a non-pay status, your loan is considered closed, and you can’t repay it. Also, for 12 months following the date of the taxable distribution, you aren’t eligible to apply for another loan from the account.

While in a non-pay status, if you receive miscellaneous civilian basic pay (medical, annual, or military leave) in an amount large enough to cover a loan payment, your agency may deduct a loan payment from that.

Non-Pay Status Longer Than a Year and Loans

TSP loan payments must resume at the end of one year of non-pay status, even if you still haven’t returned to pay status unless it’s for active military duty. Your loan will automatically re-amortize at the end of a calendar quarter following the expiration of your one-year limit. Once you receive confirmation of this, you must make loan payments directly to TSP from your personal funds.

Contributions

You are not allowed to contribute to TSP while in a non-pay status. These deductions must be made from civilian or uniformed service pay. If you are a civilian employee in non-pay status to perform military service, you may make contributions to your uniformed services TSP account. You may also be titled to make up TSP contributions to your civilian account when you return to civilian pay status.

Receiving Workers’ Compensation

Workers’ Compensation are payments made by OWCP and by law, aren’t payments from which TSP contributions can be made. Also, while you are in a non-pay status, you can’t contribute to TSP or make loan payments from OWCP benefits.

Harris Federal Law Firm helps federal and Postal employees nationwide with federal disability retirement cases. If you have an injury or illness that keeps you from performing your essential job duties, you may qualify for Federal Disability Retirement. Give us a call at 877-226-2723 or fill out this INQUIRY form today.

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Does the WEP Affect Retirement Income?

wep

While there may not be too many Civil Service Retirement System employees left in the federal workforce, the Windfall Elimination Provision and Government Pension Offset can affect Social Security benefits for CSRS retirees. The WEP and GPO are 2 provisions of Social Security law that can affect Social Security benefits that CSRS retirees may be entitled to.

The WEP can also apply to CSRS Offset and FERS Transferee retirees. However, the GPO does not apply to CSRS Offset and FERS Transferees once they have worked for 5 years under CSRS Offset or FERS.

As with many aspects of retirement rules, both can cause confusion among current and prospective CSRS retirees.

  • The Windfall Elimination Provision doesn’t eliminate a Social Security benefit, but it will drastically reduce it.
  • The Government Pension Offset’s offset of any Social Security benefits you’re entitled to on the earnings record of another is generally so severe that it eliminates a benefit.

Both benefits were introduced in the 1980’s to ramp up the Social Security system. Public employee supporters in Congress have been trying to repeal/revise them since then, with no success.

“The Windfall Elimination Provision affects only Social Security benefits to which you are entitled based on your own earnings record.” If you have earned 40 credits (formerly known as quarters of coverage), you’ll receive some kind of Social Security benefit.

The Social Security system has a “need-related” component designed to replace a much greater portion of a low wage earner’s income than that of a high wage earner. CSRS employees possibly have many years on their Social Security earnings record where they had little or no employment covered by Social Security. They look like low wage earners to the Social Security system, despite the fact they’d been working at a good job and earning a pension the entire time.

Social Security benefits are based on lifetime earnings. Below is how they were computed in 2017.

  • Lifetime earnings are indexed for inflation.
  • The highest 35 inflation indexed years are added together.
  • The total is divided by 420 (number of months in 35 years) to get the average indexed monthly earnings (AIME).
  • AIME is multiplied by:
    • 90% x the first $885
    • 32% x $886-$5,336
    • 15% x amount over $5,336 up to the Social Security cap

If you are affected by the WEP, the multiplication factor for the first point above will be less than 90%. The reduction depends on how many years of substantial earnings you have under Social Security. If you have 20 or fewer years, as most CSRS employees do, your benefit computed using the 40% factor. If you have over 20 years, the factor increases by 5% a year until it reaches 90% after 30 years.

CSRS Offset and FERS Transferees should know they must meet the same 30 years of substantial earnings test to avoid the WEP.

If you receive Social Security statements form the Social Security Administration on an annual basis, and have earned 40 credits, there is an estimated benefit listed on your statement. You can either go to ssa.gov and use their WEP calculator or try the following computation:

  • If the monthly benefit on your statement is less than $885, cut it in half.
  • If the monthly benefit on your statement is greater than $816, subtract $443 from it.
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Federal Dental and Vision Insurance

dental

Dental and vision benefits are available to eligible federal and postal employees, retirees, and their eligible family members. Both dental and vision insurance can be purchased on a group basis which means competitive premiums and no pre-existing condition limitations.

Eligibility

Federal Employees

If you are a federal or postal employee and are eligible to enroll in FEHB and your position is not excluded by law or regulation, you are eligible to enroll in FEDVIP. It doesn’t matter if you’re enrolled in FEHB—the key is eligibility.

Annuitants

You are eligible to enroll if you:

  • Retired on an immediate annuity under CSRS/FERS/another retirement system for government employees.
  • Retired for disability under CSRS/FERS another retirement system for government employees.

FEDVIP enrollment will continue into retirement is you retire on an immediate annuity or disability under a covered retirement system, regardless of the length of time you had FEDVIP coverage as an employee.

There is no requirement to have coverage for 5 years of service prior to retirement to continue coverage into retirement, like with FEHB.

FEDVIP coverage will end if you retire on MRA+10 and postpone the receipt of your annuity. You can enroll in FEDVIP again when you begin to receive your annuity.

Survivor Annuitants

If you are a survivor of a deceased federal or postal employee or annuitant and are receiving an annuity, you may enroll or continue your existing enrollment.

Receiving OWCP

You are eligible to enroll in FEDVIP or continue coverage into compensation status from the Department of Labors’ OWCP.

Family Members

A spouse and unmarried dependent children under 22 are eligible family members. This includes legally adopted children, stepchildren, and foster children. Also, under certain circumstances, you may continue coverage for a disabled child 22 years or older who is incapable of self-support.

FEDVIP and FEHB rules for family member eligibility are NOT the same.

Not Eligible

The following are not eligible for FEDVIP coverage regardless of FEHB eligibility or receipt of an annuity or portion of an annuity:

  • Deferred annuitants
  • Former spouses of employees or annuitants
  • FEHB Temporary Continuation of Coverage (TCC) enrollees
  • Anyone receiving an insurable interest annuity who is not also an eligible family member
  • Temporary, seasonal, or intermittent employees whose positions are excluded

Enrollment

You must use BENEFEDS to enroll or change enrollment for FEDVIP plans. If you are currently enrolled in FEDVIP and don’t want to change plans or options, your enrollment will continue automatically. Opportunities to cancel FEDVIP coverage are very limited. To cancel, you must do so during the annual Federal Benefits Open Season.

3 Types of Enrollment

Self-Only—covers you as the enrolled employee or annuitant. You may choose a self only enrollment even though you may have a family, but your family members won’t be covered.

Self-Plus One—covers you as the enrolled employee or annuitant. You may choose one eligible family member to be covered as well.

Self and Family—covers you as enrolled employee or annuitant and all your eligible family members. You must list all family members when enrolling.

Check out opm.gov for plan information, rates, and premiums.

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Staffing Shortages at DHS

staffing

The Trump administration and Congress will turn their focus to immigration and border security in the coming weeks, but the agencies charged to meet those demands aren’t nearly equipped to handle the job. Border Patrol and Customs and Border Protection have a serious recruitment and retention problem. The Department of Homeland Security, the parent agency to BP and CBP, plans to hire 5,000 new BP agents, but first, they must dig themselves out of a hole.

President Trump signed an executive order last year ordering DHS and CBP to hire 15,000 new BP agents and immigration officers. To get started, he tasked DHS human capital leadership to bring on 5,000 new employees.

To meet the demands from the president and Congress, BP must recruit and train 2,729 new agents a year for the next 5 years, according to Jon Anfinson, president of the National BP Council’s Local 2366.

“The Border Patrol is only as good as its employees,” he told the House Homeland Security Border and Maritime Security Subcommittee. “If we don’t retain quality personnel, we’ll never be able to secure our border.”

According to Anfinson, the agency hired, trained, and deployed just 485 agents to field in 2016. The U.S. BP has not met mandated hiring targets since FY2014, House Subcommittee Chairwoman Martha McSally (R-AZ) said.

Today, BP has 1,900 vacancies, well below its Congressional target of 21,370 agents.

Customs and Border Protection

CBP is also facing a similar staffing shortage with its officers. The agency has nearly 1,200 vacant CBP officer positions. They need to fund and hire an additional 2,500 CBP officers to meet 2018 staffing needs.

McSally said it takes CBP an average of 292 days for a new agent to complete the 12-step hiring process, making it difficult to keep up with the current pace of agent and officer retirements.

The agency recently signed a $42 million one-year contract with Accenture Federal Services to help streamline their hiring process for 7,500 applicants. Some lawmakers showed skepticism regarding the $40,000 figure per recruitment and hiring action. However, base don figures presented by union officials, this latest contract could be a bargain. According to Anfinson, it costs CBP $180,000 to recruit, hire, and train one new BP agent.

Union officials say the main obstacle they see with CBP’s current requirements in the polygraph exam. Most applicants must pass a polygraph to begin working with CBP, but 2 out of 3 applicants fail the test.

The House Homeland Security Committee passed a bill last year that would waive the polygraph requirement for current state and local law enforcement officers who have already passed a poly, federal law enforcement officers who have already passed a background investigation, and veterans with at least 3 consecutive years in the military who have held a security clearance.

Another issue plaguing the agency is retaining agents. U.S. BP has a 6% attrition rate, nearly twice the federal law enforcement rate of 3.2%. Agents leave for other law enforcement organizations for many reasons including pay disparity.

“This legislation, which we supported, was originally revenue neutral, through the legislative process, the Obama administration forced through a savings cut of $100 million per year in the final law,” Anfinson said. “As a result, the average agent took a pay cut of approximately $5,500. We only supported the legislation because the agency had begun limiting agents’ [administratively uncontrollable overtime], which began affecting agents’ monthly pay and retirement.”

The Office of Management and Budget denied DHS’s request to provide additional pay and said the administration planned to issue a government-wide pay freeze for civilian employees next year.

“When we’re looking at trying to make a career at CBP more attractive, it is difficult to try to go out and recruit folks, and at the same time they’re hearing in the media [about] the potential for federal employees—all federal employees— [to get] another pay freeze,” Tony Reardon, National Treasury Employees Union president, said. “That is a non-starter.”

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Refresher on FEGLI

fegliFEGLI is a benefit available to federal employees and may seem confusing if you don’t know much about it.

In most cases, you are automatically covered by Basic Life insurance unless you decline it.

In addition to Basic, there are 3 forms of Optional insurance you can elect, but you must be enrolled in Basic to elect any other Options. Enrollment in the other choices is not automatic, you must elect them.

The government pays 1/3 of the total cost of Basic insurance and you pay the other 2/3. USPS pays the entire cost for its employees. Age does not affect the cost of Basic.

You pay the full cost of Optional insurance and the cost depends on your age. For withholding purposes, the government assumes you reach an age in the 1st pay period that starts after your birthday.

Basic is effective on the 1st day you enter in a pay status (or duty) unless you waive coverage before the end of your 1st pay period. You can waive Basic at any time—effective at the end of the last day of the pay period in which your HR office receives it.

Optional insurance generally must be elected within 60 days of an appointment but can also be added later under certain circumstances.

Basic Life Insurance

Your Basic Insurance Amount (BIA) is equal to your annual basic pay rounded up to the next $1,000 plus $2,000.

There is also an extra benefit to employees under age 45 at no additional cost. This doubles the amount of life insurance payable if you are 35 or younger. Beginning on your 36th birthday, the extra benefit decreases 10% each year until, at age 45, there is no extra benefit.

Option A—Standard

This option is available in the amount of $10,000.

Option B—Additional

You may elect this option in the amount equal to 1, 2, 3, 4, or 5 times your annual basic pay (after rounding up to the next $1,000).

Option C—Family

This option provides coverage for your spouse and eligible dependent children. When you elect Option C, all your eligible family members are automatically covered. You may elect 1, 2, 3, 4, or 5 multiples of coverage. Each multiple is equal to $5,000 for your spouse and $2,500 for each of your eligible dependent children. For example, if you elect 3 multiples, if your spouse dies, you receive $15,000 (3x$5,000). If eligible dependent children die, you’d receive $7,500 (3x$2,500).

Each multiple is a unit. For example, if you elect 2 multiples, that means you have 2 multiples on your spouse and 2 multiples on your eligible dependent children. You can’t elect a number of multiples for your spouse that is different from the number of multiples for eligible dependent children.

Children must be dependent, unmarried and under age 22 to be eligible. Or if over 22, incapable of self-support because of mental or physical disability that existed before the child reached 22.

Termination of Life Insurance (including Accidental Death and Dismemberment Insurance)

Your life insurance as an employee will stop at the earliest of the following dates:

  • The date you separate from federal service (although you may be eligible to continue coverage as an annuitant or while receiving workers’ compensation benefits).
  • The end of a period of 12 months in a non-pay status (although you may be eligible to continue coverage while receiving workers’ compensation benefits). The 12 months may be continuous or broken by periods of less than 4 consecutive months of pay status.
  • At the end of the last pay period where your agency withheld life insurance premiums from your pay if it determines your pay will be insufficient to cover withholdings for the next 6 months or more and you decide you don’t want to pay those premiums directly.
  • At the end of the last day of the pay period during which your human resources office receives your Life Insurance Election (SF 2817) on which you voluntarily cancel some or all insurance.

*Visit opm.gov to see rates for all FEGLI options.

Temporary Extension

You may have a temporary extension of coverage for 31 days after your life insurance terminates unless you voluntarily cancel coverage, or your annuity or workers’ compensation benefits terminate.

Temporary coverage doesn’t include AD&D Insurance.

Canceling or Reducing Insurance

You may voluntarily cancel Basic, Option A, B, or C, or reduce multiples of Option B and/or C at any time by completing a Life Insurance Election (SF 2817). Simply sign onlyfor insurance you want. If you don’t sign for a type, you have canceled it. If you cancel Basic, you automatically cancel all forms of Optional insurance.

Coverage and deductions for coverage you cancel stop at the end of the last day of the pay period in which your agency receives your election form canceling coverage.

Exception: For Option C, the effective date of cancellation is retroactive to the end of the pay period in which you ceased to have any eligible family members. You will not have a temporary extension of coverage nor a right to convert any insurance you voluntarily cancel.

Harris Federal Law Firm helps federal and Postal employees nationwide with federal disability retirement cases. If you have an injury or illness that keeps you from performing your essential job duties, you may qualify for Federal Disability Retirement. Give us a call at 877-226-2723 or fill out this INQUIRY form today.

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USPS to Offer Early Retirement

earlyThe U.S. Postal Service is offering early retirement incentives to 26,000 mail handlers and clerks to start off 2018. Employees who accept the offer must separate from the agency by the end of March. Those eligible can also choose to retire by the end of January or February.

Employees began receiving offers Monday, and USPS will continue to send them out throughout the week. To qualify under the Voluntary Early Retirement Authority, employees must have 20 years of experience and be at least 50 years old, or have 25 years of service and be any age.

The Office of Personnel Management granted permission, so USPS can offer these incentives. The Postal Service has no plan to offer buyouts in conjunction with VERA incentives. Eligibility letters from USPS will include annuity estimates and will emphasize to employees that voluntary early retirement “is just that—voluntary”.

The Postal Service shed 6,500 jobs in 2017, according to a report from the Bureau of Labor Statistics. They have also cut close to 300,000 positions over the last 30 years through separation incentives and natural attrition.

USPS is “right-sizing” its workforce due to reduced mail volume. In 2017, mail volume dropped at a much faster rate than expected, leading to the offer of early retirements. They lost $2.7 billion last year and suffered a “controllable” loss for the first time in 5 years.

“This VERA action is part of ongoing efforts to right-size our workforce through attrition to match current and projected overload,” Carl Walton, a Postal Service spokesman said, “and in response to the recent acceleration of the declines in mail volume.”

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