Retiree Health Insurance - Federal Employee

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Retiree Health Insurance - Federal Employee

Postby Barefootgirl » Sat Apr 27, 2013 11:35 am

I am a federal employee with 4 years of service. My understanding is that if I remain an additional 6 years and reach the minimum retirement age, I can leave federal service and keep my health insurance, with the same benefit level (premiums, copayments, etc.) as a regular employee.

I am having trouble confirming this, finding the exact reference in the OPM guides - if anyone knows where this is located, would surely appreciate it.

I will be comparing the benefits I receive now, with what I would have to pay if I leave, once the Affordable Care Act packages are announced later this year.

Thank you, BFG
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Re: Retiree Health Insurance - Federal Employee

Postby Blues » Sat Apr 27, 2013 11:38 am

Looks like a lot of the info is posted here: http://www.opm.gov/healthcare-insurance/healthcare/eligibility/
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Sat Apr 27, 2013 11:41 am

Google for OPM publications on "MRA+10." Here is a link for Eligibility for Health Benefits After Retirement.

If you retire with MRA+10, you will be immediately eligible for FEHB if you take the pension at that time. This constraint is important, because your pension is reduced by 5% for every year you are under the age of 62, and thus, it's financially advantageous not to take the pension until 62. The FEHB access may force one to take a reduced pension immediately.

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Re: Retiree Health Insurance - Federal Employee

Postby Barefootgirl » Sat Apr 27, 2013 1:22 pm

Thank you so much, this is very helpful. I will be close to 62 at that time, so the reduction won't be too significant and I will have other pensions and income streams, so this may just work out - still have to keep analyzing it.

Again, thank you. BFG
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Sat Apr 27, 2013 2:09 pm

I recommend that you work at least one more year for three reasons:

1. If you resign with four years of Federal service, you are not eligible for a Federal pension. If you have five years of Federal service, you will be eligible for a Federal pension starting at the age of 62. This is different from MRA+10, because in this scenario at 62 you would receive just the pension but no other benefits. This is the most important of my three reasons. Remember that Federal pensions are COLA'd.

2. Starting in January 2014, 100% of your unused sick leave will be added to your years of service. Before January only 50% of unused sick leave is credited.

3. In the first few months of 2014, there will be a lot of information about ACA and you will be able to make a more informed decision.

Good luck,
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Re: Retiree Health Insurance - Federal Employee

Postby Barefootgirl » Sat Apr 27, 2013 5:04 pm

Thank you Victoria,

I will be anxious to see the forthcoming health insurance changes for 2014.

I was totally unaware of the policy change with respect to unused sick leave. The whole sick leave benefit is new to me, coming from private industry where I just took from work when sick, but accrued no benefit for not taking time off due to sickness.

I assume this means that for example, if one has 1,000 hours of unused sick leave (approx. 5-6) months, one could tack that on to the service period and leave 5-6 months before the end of the targeted retirement date.

Thanks yet again! BFG
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Sat Apr 27, 2013 5:48 pm

Barefootgirl wrote:I assume this means that for example, if one has 1,000 hours of unused sick leave (approx. 5-6) months, one could tack that on to the service period and leave 5-6 months before the end of the targeted retirement date.


Barefootgirl,

Be careful with assumptions! You may need to have five years of the actual service to which the unused sick leave would then be added. I don't know the answer, you have to check it yourself or someone else here may know. As the default, assume the worst.

If you worked for four years, you have acquired 4 yrs x 26 pay-periods/yr x 4 hrs/pp = 416 hrs of sick leave. If you have used any sick leave in the past four years, your balance is lower; if you worked for the Federal government longer than four years, your balance is higher. Check your latest pay-stub; it may include information on your annual leave and sick leave balances.

If you work exactly five years, your maximum unused sick leave balance will be 520 hrs or 65 day or ~3 months. At that point, you will be eligible for a pension in the amount of 5.25% of the average of your high-three earning years (5% for five years of service and 0.25% for the additional three months of the credited unused sick leave). And as I wrote earlier, you would have to wait until you are 62 to collect this pension. Still it's not a negligible amount.

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Re: Retiree Health Insurance - Federal Employee

Postby Barefootgirl » Sat Apr 27, 2013 6:01 pm

yes, my assumptions are more like off the top of my head, before any action, but I see your point and do verify.

I need to go look through those links now...(obviously need to verify, but 10 years sounds like it would be 10% of the high three).....with the annual COLA freeze currently in place for salaries, this saves the govt tons down the road, wow, staggering.

Tks, BFG
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Sat Apr 27, 2013 6:08 pm

Barefootgirl wrote:with the annual COLA freeze currently in place for salaries, this saves the govt tons down the road, wow, staggering.


The salary freeze affects pensions of those who are in the midst of their high-three. If you decided to work for additional six years until you are eligible for MRA+10, the future salary increases will matter more. Also, you should be getting step increases until you are at step-10.

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Re: Retiree Health Insurance - Federal Employee

Postby tacster » Sat Apr 27, 2013 6:08 pm

Unused sick leave is tacked on to the end of your service and is used for computing your FERS annuity, however sick leave cannot be used to extend your service to meet retirement eligibility. You must meet retirement eligibility with active service.
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Sat Apr 27, 2013 6:10 pm

tacster wrote:Unused sick leave is tacked on to the end of your service and is used for computing your FERS annuity, however sick leave cannot be used to extend your service to meet retirement eligibility. You must meet retirement eligibility with active service.


Thanks! You have confirmed what I suspected but did not know for certain,

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Re: Retiree Health Insurance - Federal Employee

Postby tacster » Sat Apr 27, 2013 6:24 pm

VictoriaF wrote:
tacster wrote:Unused sick leave is tacked on to the end of your service and is used for computing your FERS annuity, however sick leave cannot be used to extend your service to meet retirement eligibility. You must meet retirement eligibility with active service.


Thanks! You have confirmed what I suspected but did not know for certain,

Victoria

You are welcome. I'm retiring at the end of the first pay period next year (yay!) and will benefit from the new allowance for 100% use of sick leave in the pension computation (yay again!).
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Sat Apr 27, 2013 6:32 pm

tacster wrote:I'm retiring at the end of the first pay period next year (yay!) and will benefit from the new allowance for 100% use of sick leave in the pension computation (yay again!).


Congratulations!

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Re: Retiree Health Insurance - Federal Employee

Postby Barefootgirl » Sun Apr 28, 2013 11:42 am

Unused sick leave is tacked on to the end of your service and is used for computing your FERS annuity, however sick leave cannot be used to extend your service to meet retirement eligibility. You must meet retirement eligibility with active service.


Ok, so I get that you have to fill the seat physically for 10 years, but -
I am not sure I follow on how unused sick leave is tacked on and used to compute the FERS annuity? Off the top of my head, the only way I can think of, that it would matter, would be if you had enough sick leave to take you into the next calendar year and that a COLA bumped up your high three salary average? Is that the way it works?

Thanks, BFG
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Sun Apr 28, 2013 11:47 am

Barefootgirl wrote:Off the top of my head, the only way I can think of, that it would matter, would be if you had enough sick leave to take you into the next calendar year and that a COLA bumped up your high three salary average? Is that the way it works?


The amount of the annuity is the product:
ave-high-three salary x duration of service x percent-per-year-of-service

The duration of service is calculated with the precision of a month. The more months of the tacked-on service you have, the higher the duration--and thus the product--becomes.

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Re: Retiree Health Insurance - Federal Employee

Postby Barefootgirl » Sun Apr 28, 2013 12:39 pm

OK, thank you, I see it now.

Last night, I did a rough calculation with the assumption of remaining five years in service.

The amount I would receive after only five years is roughly equivalent to the same pension I will receive
from a previous employer of twenty years! caveat - the amount of the previous employer pension is an age 55 early retirement pension that is greatly reduced from what I would receive if I waited until 65. My current plan is to take that pension when I reach 55 and not wait to 65.

Nevertheless, this is still significant (to me).

It seems the federal pension formula is much more generous. My previous employer would argue that their pension was generous in light of the fact that they also contributed generously to the employee 401K plan (but only during the years the company performed well).

With federal service, I also have the TSP, so with the benefit of hindsight....

Thanks again, BFG
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Re: Retiree Health Insurance - Federal Employee

Postby stan1 » Sun Apr 28, 2013 12:43 pm

It seems the federal pension formula is much more generous. My previous employer would argue that their pension was generous in light of the fact that they also contributed generously to the employee 401K plan (but only during the years the company performed well).


It's all a matter of perspective. There are still a number of CSRS employees in the workforce hired before 1984 who will be retiring over the next decade with pensions well above $100K/year (over $200K/year if 2 GS-14/15 employees each with 30+ years of service are married). My FERS pension plus Social Security looks pretty meager compared to that.
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Sun Apr 28, 2013 12:54 pm

Barefootgirl wrote:OK, thank you, I see it now.

Last night, I did a rough calculation with the assumption of remaining five years in service.

The amount I would receive after only five years is roughly equivalent to the same pension I will receive
from a previous employer of twenty years! caveat - the amount of the previous employer pension is an age 55 early retirement pension that is greatly reduced from what I would receive if I waited until 65. My current plan is to take that pension when I reach 55 and not wait to 65.

Nevertheless, this is still significant (to me).

It seems the federal pension formula is much more generous. My previous employer would argue that their pension was generous in light of the fact that they also contributed generously to the employee 401K plan (but only during the years the company performed well).

With federal service, I also have the TSP, so with the benefit of hindsight....

Thanks again, BFG


If you are open to an idea of working for the Federal government until you reach the MRA+10 eligibility, then there is no reason for you to take your corporate pension at the age of 55. Not only the pension would be reduced, but it may also put you into a higher tax bracket. If there is a risk that the pension may disappear by the time you are 65, that's a different issue.

If you keep your current job for additional 5-6 years you will gain a number of benefits:
- COLA'd pension (with some reduction from COLA, but still better than a flat one)
- Access to FEHB, which seems valuable even to those eligible for Medicare. Also, FEHB will cover you if you live abroad whereas Medicare will not. ***Or at least I think so, I have not verified this yet.***
- Access to TSP, including the G fund.
- Additional savings that would provide you with cash to wait until the age of 62 and/or 65 to start taking the Federal and/or corporate pension.

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Re: Retiree Health Insurance - Federal Employee

Postby Barefootgirl » Sun Apr 28, 2013 1:04 pm

Yes, these are all the factors that keep rolling around in my head. Over the past few days, I have started writing them down as a way of keeping track of all of the various issues to consider.

I was not aware that FEHB provides coverage internationally....another factor to consider since I have been toying with the idea of teaching ESL abroad as a later career. Interestingly, I was also looking at another chart last night which listed a number of countries which appear to prohibit employment (of any type?) after age 60.

I would expect they might be revising this age number at some point, due to trends. Maybe not.

BFG
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Sun Apr 28, 2013 1:24 pm

Barefootgirl wrote:I was not aware that FEHB provides coverage internationally....another factor to consider since I have been toying with the idea of teaching ESL abroad as a later career.


I once started looking into it but abandoned my inquiry without getting a definitive answer. My next step would have been to call my insurance provider and ask them. I use GEHA but would be willing to change to another provider if getting coverage abroad were important.

Victoria
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Sun Apr 28, 2013 1:38 pm

Barefootgirl wrote:Yes, these are all the factors that keep rolling around in my head. Over the past few days, I have started writing them down as a way of keeping track of all of the various issues to consider.


To make it easier for you {smile}:
Decide to work until you reach the 5-year service mark that would make you Federal pension-eligible. By the time that happens, you may change your mind about the reasons that now cause you to want to retire.

Good luck,
Victoria
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Re: Retiree Health Insurance - Federal Employee

Postby Barefootgirl » Sun Apr 28, 2013 1:56 pm

yes, it's getting close enough now that it makes no sense to leave before the 5 year mark.

I keep thinking about years 5 through 10. If I stay in the current career track, I want to be compensated at least in my current grade.

There are other careers that interest me more, some would require retraining and some are translatable to jumping to a new track, but staying in federal employment, but likely at positions that would be a few grades lower than my current grade....

A lot to ponder, for sure. Thank you. If we only knew 30 years ago, what we know now.

BFG
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Re: Retiree Health Insurance - Federal Employee

Postby Barefootgirl » Thu May 09, 2013 2:21 pm

Access to TSP, including the G fund.


Victoria or anyone,

Does the primary advantage to the TSP lie in low fees compared to fees charged by traditional 401K plans?

The trade off would be fewer investment options than provided by many 401K plans?

Is the G Fund special in some way that I am missing?

Thank you, BFG
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Thu May 09, 2013 2:35 pm

Barefootgirl wrote:Access to TSP, including the G fund.


Victoria or anyone,

Does the primary advantage to the TSP lie in low fees compared to fees charged by traditional 401K plans?

The trade off would be fewer investment options than provided by many 401K plans?

Is the G Fund special in some way that I am missing?

Thank you, BFG

Barefootgirl,

For the advantages of the G Fund, please see these recent discussions Time to Leave F Fund for G Fund? and Journal of Indexes Interview with TSP Administrators.

From my perspective:
(1) G Fund is an excellent container of the fixed, non-inflation indexed income allocation that spares me any concerns about potentially rising interest rates and accompanying declines in the bond funds values.
(2) Fewer investment options is an advantage. Most 401(k) plans have too many options leaving participants paralyzed with indecision or inciting them to invest in suboptimal funds. Costs of 401(k) plans are higher--usually, much higher--than those of TSP.

Victoria
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Re: Retiree Health Insurance - Federal Employee

Postby Iorek » Thu May 09, 2013 8:21 pm

tacster wrote:
VictoriaF wrote:
tacster wrote:Unused sick leave is tacked on to the end of your service and is used for computing your FERS annuity, however sick leave cannot be used to extend your service to meet retirement eligibility. You must meet retirement eligibility with active service.


Thanks! You have confirmed what I suspected but did not know for certain,

Victoria

You are welcome. I'm retiring at the end of the first pay period next year (yay!) and will benefit from the new allowance for 100% use of sick leave in the pension computation (yay again!).



I know everyone likes to retire at the end of the first pay period of the new year, but I never understood why-- does getting the COLA for one pay period help somehow?

Congrats!
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Thu May 09, 2013 8:30 pm

Iorek wrote:
tacster wrote:
VictoriaF wrote:
tacster wrote:Unused sick leave is tacked on to the end of your service and is used for computing your FERS annuity, however sick leave cannot be used to extend your service to meet retirement eligibility. You must meet retirement eligibility with active service.


Thanks! You have confirmed what I suspected but did not know for certain,

Victoria

You are welcome. I'm retiring at the end of the first pay period next year (yay!) and will benefit from the new allowance for 100% use of sick leave in the pension computation (yay again!).



I know everyone likes to retire at the end of the first pay period of the new year, but I never understood why-- does getting the COLA for one pay period help somehow?

Congrats!


The first payperiod of a calendar year is frequently the last payperiod of the previous "leave year." If it is, you don't lose "use it or lose it" annual leave of the previous year that accumulated beyond the maximum allowed carry-over.

It also provides a clean break with the last-year FEHB and HSA contributions.

After retiring in early January, one can spend the next two months in a much warmer climate, e.g., in Florida.

Victoria
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Re: Retiree Health Insurance - Federal Employee

Postby Paul78 » Thu May 09, 2013 9:15 pm

stan1 wrote:
It seems the federal pension formula is much more generous. My previous employer would argue that their pension was generous in light of the fact that they also contributed generously to the employee 401K plan (but only during the years the company performed well).


It's all a matter of perspective. There are still a number of CSRS employees in the workforce hired before 1984 who will be retiring over the next decade with pensions well above $100K/year (over $200K/year if 2 GS-14/15 employees each with 30+ years of service are married). My FERS pension plus Social Security looks pretty meager compared to that.



Honestly I still think the FERS is a bit to generous. To me the payout is fine (ie high 3 average X 1% (or 1.1 if you are 62 with x amount of experience) X number of years experience). BUT the employee should be contributing more during working years. Current FERS employees pay .8% of base salary per paycheck employees after 12/31/12 pay 3.1% of base salary (they get no additional benefit). The cost to fund the pension is suppose to be 12.7% of base salary. Thus a breakdown of 8% cost to employee and 4.7% to agency seems "fair" to me.

Take that pension
add in the up to 5% of base salary tsp match. 4% of the match is vested automatically and the other 1% is vested after 3 years experience. PLUS the tsp offers low cost funds. My private sector job had a much worse 401k and no pension. They only matched up to 3%, the vesting schedule was worse 0-1year 11 mth = 0% vested, 2 years =20%, 3 years =30% ect until 10 years =100%, you had to be employee 6 mths before you could even start the 401k, and the funds had high fees.

add in the generous amount of paid holidays (10 PAID holiday private sector job had 5 unpaid holidays), generous leave (I get 26 days off a year plus 13 sick days. My private sector job just gave me 15 days of PTO and I would have had to been their 20 years to get up to 25 days of PTO a year), and much better job security then the private sector.

In the end the federal system is still a very nice place to work.
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Re: Retiree Health Insurance - Federal Employee

Postby Barefootgirl » Thu May 09, 2013 9:18 pm

Thank you. I need to double check current fees on my Fidelity 401K account...it may be time to roll over to TSP..

Appreciate the links as well, good reading.

BFG
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Re: Retiree Health Insurance - Federal Employee

Postby Paul78 » Thu May 09, 2013 9:29 pm

VictoriaF wrote:
Iorek wrote:
tacster wrote:
VictoriaF wrote:
tacster wrote:Unused sick leave is tacked on to the end of your service and is used for computing your FERS annuity, however sick leave cannot be used to extend your service to meet retirement eligibility. You must meet retirement eligibility with active service.


Thanks! You have confirmed what I suspected but did not know for certain,

Victoria

You are welcome. I'm retiring at the end of the first pay period next year (yay!) and will benefit from the new allowance for 100% use of sick leave in the pension computation (yay again!).



I know everyone likes to retire at the end of the first pay period of the new year, but I never understood why-- does getting the COLA for one pay period help somehow?

Congrats!


The first payperiod of a calendar year is frequently the last payperiod of the previous "leave year." If it is, you don't lose "use it or lose it" annual leave of the previous year that accumulated beyond the maximum allowed carry-over.

It also provides a clean break with the last-year FEHB and HSA contributions.

After retiring in early January, one can spend the next two months in a much warmer climate, e.g., in Florida.

Victoria


My plan is a bit different.

Using the current federal rules (yes they can/will change).

Retire in early April (this will get me enough earned income to max out my tsp and ira account 28.5k in today's $)

I will be 55 years and 7 months. At that time I will delay taking my pension until 57 but keep my federal health insurance (they allow you to keep it for up to 18mths before you start your pension. You just have to pay the full premium and a 2% fee). At 57 my pension will start the gov will again pay part of the health care premium and the 2% fee will go away.

Going into the last year I will have 685 hours (max allowed) of AL stocked up. I will use as many hours of leave as possible (many people take 2-3 months off their last 6 mths or so of work). I would rather have a bit more time off then cash out my AL when I leave.
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Thu May 09, 2013 9:36 pm

Paul78 wrote:Going into the last year I will have 685 hours (max allowed) of AL stocked up. I will use as many hours of leave as possible (many people take 2-3 months off their last 6 mths or so of work). I would rather have a bit more time off then cash out my AL when I leave.


The regular AL carry-over limit is 240 hours. Are you an SES?

Whether you can take time off or have to retire and collect cash is frequently up to the agency. For example, if you are taking a vacation they cannot use your billet to advertise the position.

Victoria
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Re: Retiree Health Insurance - Federal Employee

Postby Paul78 » Thu May 09, 2013 9:52 pm

VictoriaF wrote:
Paul78 wrote:Going into the last year I will have 685 hours (max allowed) of AL stocked up. I will use as many hours of leave as possible (many people take 2-3 months off their last 6 mths or so of work). I would rather have a bit more time off then cash out my AL when I leave.


The regular AL carry-over limit is 240 hours. Are you an SES?

Whether you can take time off or have to retire and collect cash is frequently up to the agency. For example, if you are taking a vacation they cannot use your billet to advertise the position.

Victoria


Are you an SES? No. Just part of what the union was able to get for registered nurses. Our max is 685 and get 8 hour of AL per pay period from the start (most people start at 4 hours and build their way up to 8 hours with experience).

I guess in theory it is because they pay RNs less then the private sector but when you add up all the benefits I still think federal is a better deal.

"Whether you can take time off or have to retire and collect cash is frequently up to the agency. "

I might not be able to use all of my 685 hours of AL but at the very least I will be able to use a 3 week block (the max number of days the union basically "forces" mangers to approve. If I request a period off any longer then 3 weeks it would really be up to my manger). Plus I would easily be able to take another 2-3 weeks off (in smaller chuncks) during that 3 month time period.
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Re: Retiree Health Insurance - Federal Employee

Postby VictoriaF » Thu May 09, 2013 10:14 pm

Paul,

Your benefits negotiated by the union are quite good, but as you say, they are a compensation for a lower salary. The same is true for most of us. The private industry pays more for the same level of education, credentials and experience, but the benefits in the industry are less comprehensive and jobs are less stable. My former employer is about to have another wave of layoffs. Those who are still working there have been constantly under the threat of layoffs since 2001. This is not a nice working environment, regardless of pay.

Good luck with your retirement plans,
Victoria
Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
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Re: Retiree Health Insurance - Federal Employee

Postby Barefootgirl » Fri May 10, 2013 9:30 am

Current FERS employees pay .8% of base salary per paycheck employees after 12/31/12 pay 3.1% of base salary (they get no additional benefit).

Can you explain this a bit further? Employees after 12/31/12 - is this referring to brand new employees who began federal employment after 1/2013?

There are so many differences between private and public employment that I hardly know where to begin to compare them. I truly appreciate the respect for my time off - but have come to loathe the lack of room to be creative and the lack of appreciation for innovation and suggestions for increased efficiency (too many years on the private side I guess, I can't stop trying to be innovative and efficient)...I could be with the wrong agency.

BFG
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Re: Retiree Health Insurance - Federal Employee

Postby Iorek » Fri May 10, 2013 11:49 am

Barefootgirl wrote:Current FERS employees pay .8% of base salary per paycheck employees after 12/31/12 pay 3.1% of base salary (they get no additional benefit).

Can you explain this a bit further? Employees after 12/31/12 - is this referring to brand new employees who began federal employment after 1/2013?

There are so many differences between private and public employment that I hardly know where to begin to compare them. I truly appreciate the respect for my time off - but have come to loathe the lack of room to be creative and the lack of appreciation for innovation and suggestions for increased efficiency (too many years on the private side I guess, I can't stop trying to be innovative and efficient)...I could be with the wrong agency.

BFG


Yes. I think as part of the sequester legislation they raised the employee contribution for new federal employees hired after a certain date (or I think if you have a long break in service that might trigger it as well).
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Re: Retiree Health Insurance - Federal Employee

Postby Paul78 » Fri May 10, 2013 12:10 pm

Barefootgirl wrote:Current FERS employees pay .8% of base salary per paycheck employees after 12/31/12 pay 3.1% of base salary (they get no additional benefit).

Can you explain this a bit further? Employees after 12/31/12 - is this referring to brand new employees who began federal employment after 1/2013?



BFG


Employees who started on or after 1/1/2013
or former federal employees who were NOT employed as a federal employee on 12/31/12 with less then 5 years of fers service (ie if they come back at a future date they will have to pay 3.1%)
or employees who where employed as a federal employee on 12/31/12 BUT they leave the federal system before they have 5 years of service credit (if they come back at a future date they will have to pay 3.1%)
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