Federal employees receive benefits that are unique to their positions within the United States government. Unlike workers in the private sector, they gain access to specialized retirement plans, healthcare benefits, and even life insurance options.
However, when two parties divorce and one partner has earned federal benefits, the division of these benefits can become a complex matter. Even though only one party is working for the federal government, the other spouse may be eligible to claim a portion of their benefits during a divorce, if they can demonstrate sufficient need.
Here is an overview of how a divorce will impact your federal benefits, including how the division is determined and methods to reduce the losses and shield as many benefits as possible during divorce.
Commonly Affected Federal Benefits After A Divorce
Federal employees are provided with numerous benefits that are specific to their roles as government workers. Perhaps the most well-known advantage is a FERS annuity (Federal Employees Retirement System), which serves as a pension after the employee retires. A FERS annuity combines benefits from its own basic plan as well as a TSP (Thrift Savings Plan) and Social Security to create the finalized payment that the retiree receives.
In addition, the FERS pension plan incorporates survivor benefits for the spouse of the federal employee. In the event that the federal employee should pass away, their spouse is entitled to a payment of 50% of the deceased employee’s salary alongside a standard payment.
Health insurance provided by the federal government also incorporates spousal benefits. A federal employee may have added their spouse to their federal health insurance plan. While federal employment confers numerous benefits, these are the most common to be impacted in cases of divorce.
How Benefits Are Divided In Divorce
When a divorce is filed, both parties must be transparent about their financial assets, debts, and obligations. This information is used to calculate the distribution of those assets and liabilities.
Even if a divorcing spouse is not a federal employee, they may receive some portion of their federal worker spouse’s benefits as long as they can demonstrate the need to do so. When benefits are divided, the process typically works as such:
- FERS pension – Because FERS pension plans are held in an annuity to pay out upon retirement, a divorcing spouse cannot claim pension payments until the federal employee retires. However, they may pursue either a flat payment amount taken from the annuity or a percentage of future payments made to the former federal worker. The amount claimed by the spouse cannot exceed what the federal employee would receive post-tax.
- Health insurance – A divorcing spouse is no longer permitted to utilize a federal employee’s health insurance benefits. However, if a spouse has been a beneficiary of an associated federal life insurance policy, it is important to change these details to prevent the divorced partner from claiming a portion of the life insurance policy.
- FERS pension survivor benefits – A spouse is permitted to early claim their survivor benefits in the event of a divorce. The amount of this benefit will be taken directly from the FERS annuity, thus reducing the future retirement payments received by the federal employee.
Ways To Reduce The Impact Of Divorce On Your Federal Benefits
When Maryland courts determine the division of assets, they do so using the principle of equity (rather than equality). Equality would divide assets evenly, but equity divides federal benefits according to what is fair. In order to reduce the impact of a divorce on your federal benefits, it is critical to demonstrate your own need and reliance on those benefits.
This can be achieved in multiple ways, from showing financial insolvency to compiling evidence of marital and non-marital assets. Non-marital assets are not eligible for division during a divorce.
Because federal benefits provide such favorable terms in many cases, spouses may elect to divide their assets in a way that avoids utilizing the benefits.
If a fair agreement can be reached without the need to access federal benefits, such as by offering more property or tapping non-federal savings, no rule indicates that these benefits must necessarily be included in a divorce settlement.
Get Legal Help from A Divorce Attorney Specializing In Federal Benefits
Divorce can be a complex process, and navigating the division of federal benefits adds another layer to the issue. For federal employees going through divorce, it is essential to work with a divorce attorney experienced in federal benefits.
The attorneys at Milstein Siegel provide representation and litigation for divorcing spouses who seek to maintain their federal benefits where possible. Contact Milstein Siegel to schedule a consultation.
