[OPM Contact: Mary Sugar, 202-606-0788]

NEW EMPLOYEES

Note: Retirement and insurance coverage for reemployed Federal annuitants may be handled differently from other employees. Your agency's Human Resources Office can provide the necessary information to these employees.

Health Insurance. Eligibility for participation in the Federal Employees Health Benefits Program depends on the type of Federal appointment. Generally, Federal employees who receive appointments that are limited to 1 year or less are excluded.

However, individuals with temporary appointments designated as "provisional appointment" are eligible since this type of appointment is used to expedite placement in a position expected to be permanent while the necessary procedures required for non-temporary appointment are proceeding, such as a pending Senate confirmation or security clearance. After the initial opportunity, the Program permits enrollment changes during a 4-week period each November and upon certain changes in family status.

-- Plans. Eligible new employees will receive materials describing available plans from the employing agency and must make an enrollment election within 60 days of becoming eligible. The Program offers each employee several governmentwide fee-for-service plans (some which require membership in employee organizations) and health maintenance organizations serving the geographic area in which the employee lives or works. Enrollment may be for self-only or for self-and-family.

-- Cost-sharing. The Government contribution equals 72 percent of the program-wide weighted average of subscription charges in effect each year, for self-only enrollments and for self-and-family enrollments, subject to the maximum of 75 percent of the charges for any particular plan or option. Employees are subject to payroll withholdings for health plan costs in excess of the Government contribution.

-- Premium Conversion. Eligible new employees who elect to participate in the Federal Employees Health Benefits Program are eligible to participate automatically in premium conversion. Premium conversion is a tax benefit. It allows an employee's contribution for health insurance to be made on a pre-tax basis, which means that the money is not subject to Federal income, Medicare, or Social Security taxes.
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Life Insurance. Eligibility to participate in the Federal Employees' Group Life Insurance Program also depends on the type of Federal appointment. Generally, Federal employees who receive appointments which are limited to 1 year or less are excluded.

However, individuals with temporary appointments designated as "provisional appointment" are eligible as explained above under Health Insurance. If life insurance coverage is waived on first opportunity to enroll, subsequent opportunities are very limited.

-- Basic. Eligible employees automatically receive Basic life insurance coverage unless they file a written waiver. The Basic insurance amount is equal to annual basic pay, rounded to the next higher multiple of $1,000, plus $2,000, and additional coverage for employees under age 45, plus an equal amount of accidental death and dismemberment coverage (AD&D).

-- Optional. In addition, the Program offers three types of Optional life insurance, without evidence of good health, which employees must elect within 31 days of becoming eligible. Option A, generally offers $10,000 life insurance and AD&D coverage; Option B offers life insurance (no AD&D) coverage in multiples of 1, 2, 3, 4, or 5 times the employee's annual rate of basic pay (rounded to the next higher multiple of $1,000); and Option C is life insurance (no AD&D) on the employee's family members in multiples of 1, 2, 3, 4, or 5 times the amount of $5,000 on death of a spouse and $2,500 on death of an eligible child.

-- Cost. Basic life insurance is funded by a biweekly level premium of $.1550 cents per $1,000 of the Basic insurance amount; the Government contributes one-third of the cost of Basic insurance. Employees pay the full cost of all optional insurance; premiums are age-adjusted.
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Retirement Coverage. Eligibility for retirement coverage depends upon the type of appointment. Most types of appointments, including "provisional appointments," will confer retirement coverage eligibility. However, generally, temporary appointments limited to a year or less and intermittent appointments are excluded from coverage eligibility. Other less common appointments may also be excluded from coverage eligibility.

-- Types of Coverage: Retirement eligible appointees who are new to Government service will be covered under the Federal Employees Retirement System (FERS), a three-tiered system consisting of Social Security benefits, basic FERS (a defined benefits plan), and the Thrift Savings Plan (a defined contributions plan).

Appointees who are now Government employees, or who have prior Government service, may be covered under one of several plans, depending upon individual circumstances. Those plans include FERS, the Civil Service Retirement System (CSRS) without Social Security coverage, or a combination of CSRS with Social Security coverage called CSRS Offset.

See APPENDIX D for additional information about health benefits, life insurance, and retirement for new appointees.
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SEPARATED EMPLOYEES

Health Insurance. After separation, your Federal Employees Health Benefits plan coverage continues at no cost to the employee for 31 days. In addition, if the employee files an election with the separating agency and pays both the employee and the Government share of costs (plus a 2 percent administration fee) coverage in the existing plan, or another plan in the Program, can be continued for up to 18 months. When group insurance eligibility ends, the employee has the right to convert the coverage to an individual health insurance policy.

If an employee retires under a retirement system for Federal employees, group health insurance can be continued into retirement, provided the employee qualifies for an immediate annuity and was enrolled in the Federal health program for the 5 years of service immediately preceding retirement, or -- if less than 5 years -- for all periods of eligibility since first opportunity to enroll.

Retirees have the same health plan choices and pay the same share of the costs for health insurance as active employees do.
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Life Insurance. Life insurance continues for 31 days after separation at no cost. During this period all or any part of the coverage can be converted, without medical examination, to non-group coverage, with rates based on the individual's age and class of risk.

If the employee retires under a retirement system for Federal employees, Basic and Optional group life insurance can be continued into retirement, provided the employee qualifies for an immediate annuity and was enrolled for purposes of each type of coverage to be continued for at least the 5 years before retirement, or during all periods of eligibility since the first opportunity to enroll, whichever is less.

Retirees pay the same premiums as active employees, except that premiums stop at age 65, when the face value of insurance in effect at retirement begins to decrease by 2 percent per month. The post-retirement reduction continues until the Basic and the $10,000 Optional insurance is 25 percent of the insurance in force at retirement and until other Optional coverages expire all together. At time of retirement, however, an employee eligible to continue Basic insurance can elect to pay additional premiums to prevent Basic insurance from decreasing.

Effective April 24, 1999, at the time of retirement or becoming insured as a recipient of workers compensation, an employee may elect how many Option B and C multiples he/she wishes to continue into retirement and choose whether to have all of those multiples reduce (i.e., Full Reduction) or none of them reduce (i.e., No Reduction) upon reaching age 65 (or retire, if later.)
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Retirement. Under CSRS, individuals can retire voluntarily after reaching age 55 with 30 years of service, age 60 with 20 years, or age 62 with 5 years. Under FERS, voluntary retirement is available under these same combinations. Individuals can also retire at the minimum retirement age (age 55 to 57, depending on year of birth) with as little as 10 years of service.

Individuals may also be eligible for early retirement if they qualify for a discontinued service retirement (DSR) based on an involuntary separation and meet the following age and service requirements. Under both CSRS and FERS, individuals meet those requirements if they are age 50 and have at least 20 years of service, or if they have at least 25 years of service regardless of age.

An involuntary separation is qualifying for DSR unless it is based upon misconduct or delinquency. A resignation may also qualify for DSR if the individual resigns in response to a written request from an Administration representative having the authority to request such resignations or the new head of an agency. The resignation of a Presidentially-appointed policy-making officer qualifies for DSR whenever the individual's resignation is accepted by the President (not limited to the advent of a new Administration). When it is known that a Presidential appointee is leaving, the resignation of a noncareer SES appointee or Schedule C appointee who works for that person is also considered an involuntary separation for purposes of DSR.

-- Individuals Not Eligible For Immediate Retirement. Such individuals might be eligible for a deferred annuity. Under both CSRS and FERS, if an individual has at least 5 years of civilian service, he or she can receive a deferred annuity at age 62. Also, a FERS employee with at least 10 years of Federal service (which must include at least 5 years of civilian service) may elect to receive a deferred annuity as early as the minimum retirement age (55-57, depending upon year of birth). To qualify for deferred benefits, individuals must leave their retirement contributions in the retirement fund. Individuals with less than 5 years of civilian service do not qualify for a deferred annuity.

-- Refunds of Retirement Contributions. Individuals not eligible for an immediate annuity (whether or not eligible for a deferred annuity) may elect to receive a refund of retirement contributions. To qualify for the refund, the individual must be separated for at least 31 days and apply for the refund at least 31 days before qualifying for a deferred annuity. Under CSRS, the service covered by the refund may be creditable towards retirement benefits if the individual returns to Government service. However, under FERS, receipt of the refund permanently terminates the right to use the service covered by the refund for retirement benefits under any circumstances.
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