Life and Taxes
Feds now have more time to choose a life insurance plan, and retirees receive more tax help.
Open season for life insurance benefits occurs infrequently, so government workers don't have the chance to review their options, or to change their coverage often. But new guidance from the Office of Personnel Management provides the opportunity to do so. OPM last fall issued a final rule, which took effect Oct. 1, 2010, mandating reforms to the Federal Employees' Group Life Insurance program and earlier this month issued more detailed guidance on the changes.
All FEGLI enrollees receive basic insurance, which includes coverage totaling an employee's annual pay, rounded to the nearest $1,000, plus an additional $2,000. Enrollees also can elect additional plans. Option A provides $10,000 of coverage, while Option B is available in multiples of annual pay. Option C covers spouses and dependent children.
The new rules mean program enrollees now have 60 days, instead of 31 days, after becoming eligible for FEGLI coverage to choose an optional insurance plan. They also can use a qualifying life event, such as marriage, divorce, spousal death, a birth or an adoption, to elect coverage. In addition, federal workers called to active military duty have the opportunity to extend their automatic 12 months of FEGLI coverage for an extra year, for a total of 24 months of coverage.
According to the new guidance, the regulations also affect the level of coverage for specific employees. For example, the annual rate for physicians and dentists employed by the Veterans Affairs Department will include market pay in addition to base salaries. For workers holding more than one position, the amount of basic and Option B insurance is based on the total of both salaries, not whichever is higher.
Employees receiving workers' compensation benefits who return to their jobs and are eligible for continued compensation, also will see their coverage change. The coverage received before reemployment will be suspended and employee coverage will be reinstated.
Annuitant Tax Angst
OPM seeks to ease the worries of federal annuitants this tax season by providing additional help explaining withholding rate changes.
The Making Work Pay annual tax credit, included in the 2009 American Recovery and Reinvestment Act, expired on Dec. 31, 2010, meaning federal employees could see less money in their paychecks. According to OPM, the change means retirees also could see an increase in the amount of federal tax being withheld from their monthly annuity payments.
Federal annuitants can find general information about these changes at http://opm.gov/retire. Retirees who have additional questions can contact OPM by phone at 888-767-6738, or via e-mail at retire@opm.gov. The agency has increased the number of people responding to both types of inquiries and aims to answer all e-mails within 48 hours, according to Bill Zielinski, associate director of retirement services at OPM.
Annuitants also can change the amount withheld after they determine what their tax liability is using information from the Internal Revenue Service, Zielinski said. Retirees who want to adjust their withholding amount can log on to OPM's online service portal.