Federal employees going through the divorce process may find that their federal benefits are also impacted. In many cases, the spouse of a federal employee is entitled to certain benefits to ensure that the division of property is fair. The government does not award former spouses with automatic rights to a federal employee’s benefits. Instead, the final divorce agreement must include a court order that grants the ex-spouse a share of the retirement and extends other federal benefits, such as health insurance.
It can be difficult to predict what effect divorce will have on federal benefits in a divorce. In addition to speaking with a divorce attorney, it is wise to become familiar with state and local laws regarding how federal benefits are addressed in a divorce.
Annuity Payments
Federal Employees Retirement System (FERS) is a federal employee retirement plan that provides benefits from three separate sources: Social Security, a Basic Benefits Plan and a Thrift Savings Plan (TSP). The Social Security and Basic Benefit components of FERS require employees to pay a share each pay period; the agency also contributes a share.
At retirement, the employee receives annuity monthly payments for the rest of their life. A court order can affect annuity payments by requiring federal retirees to pay a portion of their annuity payments to their former spouses. This continues while the retiree is living and ends when they die.
Survivor Benefits
Retirement benefits are distributed while a federal employee is alive and survivor benefits are payable to survivors, including former spouses, after death. At the time that the federal employee or retiree dies, an ex-spouse may be given full survivor benefits or at a minimum, the marital share for the survivor benefit payment.
The survivor benefit is not payable unless the divorce decree specifically mentions a survivor annuity under FERS or CSRS. If a FERS employee dies while still in employment, a surviving ex-spouse may be entitled to a FERS Basic Employee Death Benefit (BEDB).
Refund Of Contributions
When a federal employee leaves their job, they may request a refund of their retirement contributions to the FERS or Civil Service Retirement System (CSRS). This money can be delivered in a single lump-sum payment, or if the federal employee has at least five years of creditable service, can be provided as monthly retirement benefit payments at retirement age; this is known as a deferred retirement.
It is important to know that if a federal employee resigns or chooses to withdraw their FERS or CSRS contribution, the court may award a portion or all of the funds to a former spouse. A court may also block payment of a refund until divorce proceedings have been finalized.
Health Benefits
Spouses are often covered under their federal spouse’s medical, dental and vision coverage. However, once the divorce has been finalized, the former spouse will no longer be covered. When this occurs, the former spouse will have a 31-day extension period in which time he or she can move to an individual contract or continue receiving FEHB coverage under Temporary Continuation of Coverage (TCC) guidelines. TCC provisions of the FEHB law continue for up to 36 months.
There are currently no provisions that allow the former spouse to maintain coverage under the Federal Employees Dental & Vision Insurance Program (FEDVIP). This coverage for the former spouse terminates on the effective date of the divorce.
Group Life Insurance
Eligible federal employees are automatically enrolled in Basic Insurance under the Federal Employees’ Group Life Insurance (FEGLI) Program. Their family members may also be covered under Basic and Optional Insurance. During a divorce, the court may require a federal employee to assign their FEGLI coverage to a former spouse or name him or her as a beneficiary.
Thrift Savings Plan
In a divorce, many types of assets can be divided, including a TSP. Thrift Savings Plans are typically divided in one of two ways. First, it can be divided by means of a Retirement Benefits Court Order (RBCO), which could be an annulment, legal separation or decree of divorce. It could also be separated via a property settlement agreement that has been approved by the court.
During a divorce, the court may freeze the TSP account, meaning no loans or withdrawals can be made until the divorce has been finalized. A separate court order is required to permit the TSP to send the ex-spouse the amount that has been awarded to him or her in the divorce decree.
Request A Consultation
When navigating a divorce as a federal employee or retiree, it is important to have access to a reputable legal team. The divorce attorneys at Milstein Siegel have extensive experience managing cases involving the fair division of federal benefits. To learn more about how federal benefits may be affected in a divorce, or to speak with a divorce attorney, contact Milstein Siegel to schedule a consultation.
