Divorce is one of the most financially complex events a federal employee can navigate. Beyond the emotional toll, the decisions made during the process can have a lasting impact on your health coverage, life insurance, and retirement income. Here is what you need to know about divorce and federal benefits.
FEHB Coverage During Separation
If you are legally separated or in the process of getting a divorce and are enrolled in either the Self Plus One or Self and Family option of your FEHB plan, your spouse is entitled to continue that coverage while the separation is ongoing. Nothing changes on that front until the divorce is finalized.
FEHB Coverage When the Marriage Ends
Your former spouse’s FEHB coverage ends at midnight on the day your divorce becomes final. At that point, he or she has three options: continuing coverage under the Spouse Equity Act, electing temporary continuation of coverage under the TCC provision, or converting to an individual policy through your FEHB carrier. Your former spouse will need to act quickly, as these elections are time sensitive.
If you still have other family members covered under your enrollment after the divorce, you can remain on the Self and Family option or move to Self Plus One if only one eligible family member remains. If no one else is covered, you can switch to Self Only. Any of these changes need to be made within 60 days of the divorce by submitting Standard Form 2809 to your agency personnel office, or to OPM if you are already retired.
FEGLI Beneficiary Designation
If your life insurance beneficiary designation names your former spouse, now is the time to update it. This does not happen automatically when you divorce. To make a change, complete Standard Form 2823 and submit it through your agency or OPM. Failing to update this form means your former spouse could remain the beneficiary of your FEGLI proceeds regardless of your intentions.
The Survivor Annuity
Under FERS, if you are married at the time you retire, you are required to elect a full survivor annuity for your spouse unless your spouse consents in writing to a reduced benefit or no benefit at all. Any election below the full survivor annuity requires a notarized written statement from your spouse waiving the higher benefit. That obligation ends when your divorce is final.
However, a court order can require you to provide a former spouse with an annuity as part of a divorce settlement, which would reduce your own annuity accordingly. To avoid any future complications, notify your agency or OPM as soon as your marriage legally ends.
Navigating divorce and federal benefits is complicated, and the decisions you make during the process are difficult to undo. A Federal Retirement Consultant (FRC®) can help you understand how a separation may affect your retirement picture. Schedule a complimentary benefits review today.
