We are now in week 3 of the partial government shutdown. We are also in a new year, which means this time is a popular one for federal employee retirements. More than 300,000 federal employees are on furlough without the guarantee of back pay, and an additional 500,000 are working but facing a delay in their paychecks.
Due to the end of the year being a popular time to retire, some employees have spent their last days “working” in a furlough status. The Office of Personnel Management has issued guidance on furloughs and their effect on retirement planning, paperwork processing, and benefits. This information is also important for those wanting to apply for federal disability retirement, or who are waiting on their application to be processed by OPM. Below are some highlights from the guidance.
- Retirement planning—a furlough period in a non-pay status is treated as a period of leave without pay. Employees receive credit for LWOP periods up to 6 months in a calendar year without impact on their service credit for retirement or their High-3 average salary.
- Retirement effective during a furlough period—employees will be credited with service through their effective date of retirement as if there was no furlough. For example, if the effective retirement date was December 31, 2018, an employee will receive service credit through the end of business that day but not beyond that.
- It’s important to keep in mind there may be a delay in the processing of retirement applications because the employees responsible for finalizing retirement packages may be furloughed. That also means retirement applications can’t be sent to OPM.
- Lump sum payments for annual leave at affected agencies will be delayed until funds are available.
- Retirees will receive the cost of living adjustment in their retirement payment on January 1st.
Employees currently enrolled in the Federal Employees Health Benefits Program will continue their enrollment for up to 1 year in a non-pay status with the government continuing to pay its share. The effective date of an Open Season enrollment change will be unaffected by the shutdown.
Federal Employee Group Life Insurance continues to pay for 1 year for those in a non-pay status, without cost to the employee.
Coverages of expenses under flexible spending accounts won’t be reimbursed until the employee returns to pay status.
Any eligible dependent care expenses incurred during the non-pay status may be reimbursed up to whatever balance is in the employees’ dependent care account, so long as the expenses incurred during the non-pay status allow the employee to work, look for work, or attend school full-time.
Federal Long-Term Care Insurance Program coverage continues if premiums are paid.
Federal Employee Dental and Vision Insurance Program coverage will continue but employees will get a direct bill for past due premiums if no premium is paid for 2 consecutive pay periods.
As far as the Thrift Savings Plan is concerned, employees can make inter-fund transfers of their existing account balance during the furlough period and, may be entitled to make up contributions when they return to pay status.
There should be little effect on Social Security checks. Most Social Security offices are open and are processing payments because the agency has full-year funding already.