Federal deferred FERS retirement, TCC and FEHB

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
User avatar
Topic Author
VictoriaF
Posts: 19321
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Federal deferred FERS retirement, TCC and FEHB

Post by VictoriaF » Wed Mar 12, 2014 6:37 pm

In the Preparing to retire checklist thread, I mentioned that I want to take a deferred annuity, use TCC (Temporary Continuation of Coverage, the Federal counterpart of COBRA) for 18 months, and then commence my annuity and regular FEHB.

This is a critical issue, and I CAN'T get it wrong. Thus, I am starting a new thread specifically to get the definitive answer.

My situation and logic are as follows:
1. I am retiring under FERS, using Minimum Required Age, MRA + 10.
2. For every year that I am under the age of 62, I will be losing 5% of my annuity. There are no COLA adjustments until the age of 62, regardless of whether I take the annuity immediately upon retirement or at the age of 62.
3. I want to delay taking the annuity for as long as possible to reduce the 5% reduction. My reason for this is similar to deferring Social Security until the age of 70.
4. However, for as long as I will be deferring the annuity I will not be eligible to continue the Federal Employee Health Benefit (FEHB) coverage.
5. The FEHB coverage can resume at the time when I commence my annuity. <-- this is the crux of my question in this thread.
6. I can take TCC for 18 months, using the same health insurance I am using now but paying more for it (my part, the government part, plus 2%).
7. My plan is as follows:
  • - leave work in July 2014
    - request to defer my annuity
    - use TCC for 18 months, until February 2016
    - in 2016, commence the annuity and get FEHB at the same time.
8. The advantage: saving 7.5% of my COLA'd annuity.

I'd like to get item-5 confirmed, because in the other thread someone said that I could not do it. Thank you in advance,

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

User avatar
HueyLD
Posts: 7595
Joined: Mon Jan 14, 2008 10:30 am

Re: Federal deferred FERS retirement, TCC and FEHB

Post by HueyLD » Wed Mar 12, 2014 6:40 pm

..........
Last edited by HueyLD on Sat Feb 07, 2015 6:00 pm, edited 1 time in total.

User avatar
Topic Author
VictoriaF
Posts: 19321
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Federal deferred FERS retirement, TCC and FEHB

Post by VictoriaF » Wed Mar 12, 2014 6:50 pm

Thank you, HueyLD! This is a great reference.

But I've also noticed a discrepancy in the distinction between "deferred" and "postponed" retirement in your article and in what my benefits specialist told me. She told me that with MRA+10 I will be getting "deferred" retirement; the article refers to my type of retirement as "postponed."

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

User avatar
HueyLD
Posts: 7595
Joined: Mon Jan 14, 2008 10:30 am

Re: Federal deferred FERS retirement, TCC and FEHB

Post by HueyLD » Wed Mar 12, 2014 6:59 pm

..............
Last edited by HueyLD on Sat Feb 07, 2015 6:00 pm, edited 1 time in total.

User avatar
Topic Author
VictoriaF
Posts: 19321
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Federal deferred FERS retirement, TCC and FEHB

Post by VictoriaF » Wed Mar 12, 2014 7:08 pm

When I was discussing it with the HR specialist, she did confirm that I could take FEHB at the same time as I start the annuity. Then someone in another thread wrote that I can't. I started this thread to get it right. This is one mistake I don't want to make. It now appears that the poster who wrote that I can't get FEHB was right with respect to a deferred annuity. I was calling my annuity "deferred" because that's how the HR specialist called it. I specifically asked her which one I would have, and she very clearly said "deferred." Thus, she was wrong. It's not a big deal, but it's a good reason to double-check all the information I am getting from her and elsewhere.

Victoria
Last edited by VictoriaF on Wed Mar 12, 2014 7:10 pm, edited 1 time in total.
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

User avatar
baw703916
Posts: 6681
Joined: Sun Apr 01, 2007 1:10 pm
Location: Seattle

Re: Federal deferred FERS retirement, TCC and FEHB

Post by baw703916 » Wed Mar 12, 2014 7:10 pm

Victoria,

The OPM Page on FERS Deferred Retirement just says your health benefits don't continue (which you already knew and which doesn't answer your question. But this pamphlet does explain things (I had read this before, but of course can't find now)

https://www.opm.gov/retirement-services ... 92-19a.pdf

on page 3, it says that you are eligible to re-enroll, if you participates in FEHB for at least five years before retirement, and meet the MRA and 10 years of service requirements. I'd past the quote, but the PDF won't let me copy it...grrr!

"re-enroll" seems to be the key bit of terminology here.

Brad
Most of my posts assume no behavioral errors.

User avatar
Topic Author
VictoriaF
Posts: 19321
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Federal deferred FERS retirement, TCC and FEHB

Post by VictoriaF » Wed Mar 12, 2014 7:19 pm

Thank you, Brad, this is an excellent resource. Of particular interest is the following statement:
OPM wrote:If you separated from Federal service after reaching the Minimum Retirement Age with at least 10 years of service, but postponed the commencing date of your annuity to reduce or avoid the age reduction, you are eligible to reenroll in the Federal Employees
Health Benefits Program and the Federal Employees’ Group Life Insurance Program, if you participated in the program for the 5 years of service immediately before you separated from Federal service or continu­ally from your earliest opportunity. You are also eligible to reenroll in the Federal Dental and Vision Program if you were enrolled when you separated from Federal Service.
The brochure also confirms that my annuity will, in fact, be "postponed" (NOT "deferred).

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

User avatar
MikeWillRetire
Posts: 410
Joined: Fri Jun 29, 2012 12:36 pm

Re: Federal deferred FERS retirement, TCC and FEHB

Post by MikeWillRetire » Thu Mar 13, 2014 7:42 am

Victoria,
I am also contemplating retirement under the MRA+10 provisions. Your situation is considered a postponed retirement, not deferred. You are eligible for health insurance coverage when you start your annuity. I've learned to verify everything I hear by going to OPM's website. I've found errors on websites and in federal retirement guides that I purchased.

User avatar
Topic Author
VictoriaF
Posts: 19321
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Federal deferred FERS retirement, TCC and FEHB

Post by VictoriaF » Thu Mar 13, 2014 9:41 am

Mike,

Thank you for a confirmation.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

User avatar
rwcox123
Posts: 120
Joined: Tue Feb 27, 2007 6:49 am
Location: Washington

Re: Federal deferred FERS retirement, TCC and FEHB

Post by rwcox123 » Thu Mar 13, 2014 10:10 am

I was the one that started your anxiety, and now realize I am wrong -- for example:

https://www.opm.gov/retirement-services ... /#url=MRA2
Beyond all hope, set free to light.

User avatar
Topic Author
VictoriaF
Posts: 19321
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Federal deferred FERS retirement, TCC and FEHB

Post by VictoriaF » Thu Mar 13, 2014 11:34 am

rwcox123 wrote:I was the one that started your anxiety, and now realize I am wrong -- for example:

https://www.opm.gov/retirement-services ... /#url=MRA2
Thanks! You were also right, because I was misstating my plan. I was calling it "deferral" whereas in fact it's "postponement." With deferral, I would NOT have access to FEHB, with postponement I will.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

Post Reply