Benefits would continue to flow for furloughed employees

Federal employees are not promised a paycheck during or after a government shutdown, but they still would receive insurance coverage, retirement credit and Social Security benefits.

The last time the government shut down in 1995 and 1996, for 27 days at an overall cost of $1.4 billion, furloughed federal employees were paid retroactively for the time they were off the job. But due to the current budget climate, Congress could choose not to reimburse employees for time lost. Though federal workers might miss out on a paycheck during a shutdown, their benefits -- for the most part -- would continue uninterrupted.

Furloughed employees receive credit toward retirement and their high-three salary even though they aren't getting paid or coming to work, said Tammy Flanagan, senior benefits director at the National Institute of Transition Planning and author of Government Executive's weekly Retirement Planning column. For workers under both the Civil Service Retirement System and the Federal Employees Retirement System, coverage continues at no cost while the employee is in nonpay status.

Thrift Savings Plan accounts would be affected only if Congress decides not to pay employees retroactively after a shutdown. If participants are compensated for the loss in pay, then their designated contribution and the matching amount from the government goes through as if the furlough didn't happen, according to Tom Trabucco, director of external affairs for the Federal Retirement Thrift Investment Board. If lawmakers choose not to reimburse feds, however, then TSP accounts will take a hit for that period of time. Participants also cannot request a loan from their account during a shutdown.

Government workers will not see a break in health or life insurance coverage during a furlough. According to the Office of Personnel Management, Federal Employees Health Benefits Program participants are covered while in nonpay status for up to one year. The government will continue its contributions to the program during a furlough and also is responsible for advancing the employee's share. Participants then can choose between paying the agency directly on a current basis, or having the premiums accumulate and be withheld from their pay upon returning to work. Coverage continues even if agencies do not make premium payments on time.

Federal Employees' Group Life Insurance coverage also continues, and both the employee and agency contributions continue if the employee's salary in each pay period is sufficient to cover deductions, Flanagan said. If the employee's paycheck is insufficient to cover his or her withholding, then coverage will continue for up to 12 months without cost to the employee or agency.

Federal workers eligible for Medicare and Social Security benefits still should receive payments because neither program is funded through annual appropriations. Whether checks go out on time depends on whether employees responsible for administering benefits are furloughed, however. During the 1995 shutdown, the Social Security Administration retained workers to distribute benefits, but did not have sufficient support staff to answer calls from customers, or process new claims. Current SSA Commissioner Michael Astrue has acknowledged his agency already is preparing for a potential shutdown.

According to David Snell, director of retirement benefits services for the National Active and Retired Federal Employees Association, recipients of workers' compensation and OPM retirement benefits also likely will continue to receive checks as scheduled. Agencies responsible for these payments have not officially announced their policies, however.