As a FERS participant, your survivors are eligible for a number of federal benefits in addition to your annuity. Understanding how these benefits work upon your death is important when making decisions as you plan your retirement.
FEHB
Arguably the most valuable of these benefits is the Federal Employees Health Benefits (FEHB) program. Coverage for your survivor annuitants, including your spouse and any eligible children, can continue as long as two requirements are met:
- You must have been enrolled for Self and Family, or Self Plus One, at the time of your death.
- And at least one family member must be entitled to a survivor benefit from the FERS/CSRS retirement system.
If there’s only one survivor annuitant, and no other family member qualifies as eligible for continued coverage, the survivor may do well to change their enrollment to “self only” because premiums are lower. A child under age 26 can be eligible for FEHB coverage even if they’re married. However, the coverage will not be extended to their spouse or children.
Keep in mind — if you have elected “No Survivor Annuity,” your survivors cannot continue coverage under FEHB when you pass away.
“Your spouse will also receive a lump-sum, $255 death benefit when your death is reported. This payment does not affect the amount of their Social Security survivor benefit.”
Social Security
As a FERS participant you’re entitled to Social Security benefits because you have paid into the system through payroll taxes. When you pass away, your surviving spouse is entitled to 100% of your Social Security benefit when they reach their own full retirement age (FRA).
Of course, your spouse can collect a survivor benefit as early as age 60 but it will permanently reduce their monthly payment by approximately 30%. Your spouse will also receive a lump-sum, $255 death benefit when your death is reported. This payment does not affect the amount of their Social Security survivor benefit.
FEGLI
For employees or retirees covered by FEGLI, insurance proceeds are paid according to the Designation of Beneficiary Form 2823 you originally submitted to the OPM. The standard order of precedence is:
- The surviving spouse will be paid the life insurance proceeds
- If there isn’t a surviving spouse, proceeds go to a surviving child or children
As you can see, it’s important to update your Beneficiary Designation especially in the event of a divorce, new marriage or other life events. Otherwise your life insurance proceeds may go to an ex-spouse, unintentionally.
Consider working with an FRC® trained advisor who fully understands how your federal benefits work and can help you look at strategies to protect your survivors in the event of your death.
