FAQ- Understanding my Federal Employee Benefits [Video]

How Do I Understand My Federal Employee Benefits?

Federal government employees are provided with an impressive benefits package. The standard benefits are considered by many experts to be a valuable component of its compensation package, often exceeding the benefit packages offered by public sector employers. Depending on the exact job, a federal employee typically receives benefits related to vacation, healthcare, sick leave, and holidays, to name just a few. For many federal employees, sorting through the array of benefits can become a bit overwhelming. And because of the complexity and sheer number of benefits available, many federal employees are at risk of failing to maximize the benefits offered because:

  • They don’t really understand the benefits offered.

  • They are not aware of all the available benefits.

Failing to take advantage of these available benefits can be shortsighted and self-defeating. The strategy (or lack of one) can leave your future open to chance rather than a decision based on a professional analysis.

Breaking Down Federal Employee BenefitsIn addition to the Federal Employees Retirement System (a.k.a. FERS), government workers are offered the following benefits:

Health Insurance Through FEHBP

Federal employees (and retirees) participate in FEHBP – the Federal Employees Health Benefits Program. This health insurance is federally subsidized, so those who retire with full benefits have the ability to carry this subsidized insurance into retirement. The subsidy typically falls between 70% & 75% of the cost to insure each employee. Current and retired government employees can choose from more than 100 healthcare programs. Therefore, a health insurance plan is available to meet each employee’s unique needs. The choice of plans from the federal government is among the widest selection of health insurance plans available.It is noted that these federal health insurance plans have no medical exams, physical/age condition restrictions, or waiting periods as a condition for participation. And the federal government’s health insurance offers guaranteed protection against cancellation.

Life Insurance Through FEGLI

The U.S. Federal Employees Group Life Insurance Program, with its more than 4 million members (current and retired), is recognized to be the largest group life program across the globe. FEGLI benefits provide a lump sum death benefit to a loved one(s) in the event a federal employee dies. Unless specifically waived, nearly all federal employees (part-time & full-time) are automatically enrolled without the need to pass a physical exam.

Health Care Flexible Spending Account (FSAFEDS)

A Flexible Spending Account (FSA) is a financial tool that allows federal employees to set aside a predefined amount of their pre-tax salary. These FSA-earmarked funds can be used to pay for eligible and future healthcare expenses – those costs not covered by FEHBP. Examples of eligible health care expenses that may not be covered by FEHBP include –

  • Over-the-counter medications.

  • Eyeglasses.

  • Hand sanitizer, to name a few.

Flexible Spending Account limits are subject to change each year. For 2022, the FSA limit was raised to $2,850.

Dental and Vision Insurance Coverage Through FEDVIP

The dental and vision program available to federal employees offers reduced group rates and no restrictions based on pre-existing conditions. If you elect to enroll, the premiums for this plan are deducted on a pre-tax basis from your paycheck.

Long-Term Care Insurance Through FLTCIP

The long-term care insurance offered by the federal government assists enrolled employees by paying the expenses should long-term care be needed.

Thrift Savings Plan (TSP)

Employees have the opportunity to participate in the federal government’s Thrift Savings Plan, a managed retirement investment vehicle. The TSP is the government’s equivalent of the private sector’s 401k retirement plan. Government agencies automatically contribute a small portion of an employee’s salary to the TSP. However, the government will match employee contributions (over and above its automatic contribution), although matching limits do apply.

Why Is It Essential To Understand Your Federal Employee Benefits?

Understanding your federal employee benefits offers you a defined path that maximizes the benefits offered. Here is an example for clarification -As noted above, federal employees are eligible for group life insurance, with a benefit that typically equals their current salary. However, FEGLI offers Option B – an optional way to increase the death benefit by defined multiples. So, if you elect for an Option B benefit of 2 (or any other), there will be an additional premium for the coverage. So, if your yearly salary is $80,000, the death benefit would be $160,000. This is a great tool, especially for younger individuals, but, as one would expect, it becomes expensive as one grows older. The premium for the option resets (and likely increases) every five years. And as one nears retirement age, they tend to be more established and have less of a need to multiply the death benefit.

The Take-Away

The federal government’s benefits package offers a comprehensive set of benefits. The ultimate objective is to understand how these available employment benefits can be used to meet your and your family’s needs. Medallion Financial Group’s Personal Benefits Analysis (PBA) begins with a customized breakdown of your federal employee benefits and an analysis of how well these benefits are meeting your needs. In addition, this guidance can determine if you are over-insured, or overpaying because you have overlapping insurance coverages.

Schedule a Free Consultation- Click Here button

At Medallion Financial Group, we believe financial planning is about Family. We have been helping families invest in the future since 1987 through a holistic planning approach. We recognize there are a variety of needs when it comes to retirement planning, plan rollovers, annuities, college planning, life insurance options, and investment management. It is easy to get lost in a sea of choices. Our financial advisors help with the basics and beyond to enable our clients to get the education, advice and management they need to retire with confidence.

Our focus is twofold: first and foremost, we are fiduciary advisors. We stand against any violation of laws, values, and ethics. Second, we treat our clients as part of our family, not only those who call Maryland and Georgia home, but clients across the US who have benefited from our reputation of personal service, integrity, and expertise.

We strive to exceed client’s expectations – because we have high expectations of ourselves.