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TSP and Insurance. Sandra Hashimoto HRO-M, (808) 672-1235 June 2013. TSP AND FURLOUGH. What will happen to my TSP contribution ? Deduction based on percentage -- decreases in direct proportion to basic pay. Example : Biweekly salary is $1,000; you contribute 10%.
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TSP and Insurance • Sandra Hashimoto • HRO-M, (808) 672-1235 June 2013
TSP AND FURLOUGH • What will happen to my TSP contribution? • Deduction based on percentage -- decreases in direct proportion to basic pay. Example: Biweekly salary is $1,000; you contribute 10%. 1) Before Furlough: $1,000 x 10% = $100 2) Furlough 2 days per pay period: $800 x 10% = $80 • Deduction based on set dollar amount -- remains the same. Example: Biweekly salary is $1,000; you contribute $100. 1) Before Furlough: $1,000 - $100 2) Furlough 2 days per pay period: $800 - $100 • For FERS -- any reduction in basic pay will impact agency contributions whether you contribute a percentage or dollar amount.
TSP AND FURLOUGH • Should I terminate my TSP? • Traditional TSP is tax deferred. Stopping could increase AGI and income tax liability. • Earnings compound over time. Stopping, even for a short time, will cause you to lose money. • FERS employees will lose agency matching contributions (lost of free money). • Should I consider a financial hardship withdrawal? • Penalized for 6 months from contributing to TSP. • Considered taxable income and may also be subject to the 10% early withdrawal penalty tax. • Cannot be repaid; TSP account permanently reduced. • If FERS, will not receive any agency matching contributions. • Taking a loan may be a better option.
TSP AND FURLOUGH • Should I take a loan? • Can take a loan even if furloughed on periodic basis (one or two days per pay period). • You borrow from yourself. You repay the loan plus interest; therefore, continue to accrue earnings as you repay it back. • Repay through payroll deduction. Agency required to deduct the required loan payment. • Responsible for keeping loan payments current or risk taxable distribution. • You can continue to contribute to your TSP. If FERS, you continue to receive agency matching contributions.
TSP AND FURLOUGH • Already have a loan? • Remember loan payments continue. Keep loan payments current or risk a taxable distribution. • May be able to reamortize (adjust) the term of the loan. • Cannot already be at maximum term limit (5 years for general purpose loan and 15 years for residential loan) • Lower payments; but repayment period extended. • If financial situation improves, could reamortize again to shorten the term of the loan (will increase amount of loan payment). • Additional Information • Web Site: www.tsp.gov • ThriftLine: 1-877-968-3778
INSURANCE AND FURLOUGH • Federal Employees Group Life Insurance (FEGLI). • Coverage continues up to 12 months in nonpay status without cost to you. • However, premium will be deducted as long as there is enough pay in the pay period to cover the full premium. • National Guard Association of United States (NGAUS). • Premiums continue if pay is sufficient. • If pay is insufficient: • Basic/Suppl Disability – premium waived if nonpay status is less than 30 days. • TermLife/GuardLife – premium waived if nonpay status is less than 90 days. • No waiver of premium for ValuLife and Universal Life. Only option is direct-bill or insurance coverage will lapse.
INSURANCE AND FURLOUGH • Federal Employees Health Benefits (FEHB). • Premiums continue if pay is sufficient. No prorated premiums due to reduced work hours. • If pay is insufficient, options are: • Terminate coverage. • Continue – incur debt or pay premiums directly to DFAS. • If coverage terminated, may re-enroll within 60 days of returning to sufficient pay status. If you miss this, you must wait for next open season or have an eligible QLE. • Furlough is not QLE – cannot cancel and/or change plan or option…unless you waived premium conversion.
INSURANCE AND FURLOUGH • If you waived Premium Conversion and you elect to cancel coverage, be aware: • There is NO 31-day temporary extension of coverage. • Must wait for next open season or have a QLE to re-enroll. • If you separate without re-enrolling, not eligible for TCC. • If injured on the job and qualify for OWCP benefits while coverage is cancelled, no health coverage to continue with workers compensation. • If you retire while coverage is cancelled, no health coverage to take into retirement. • Reminder: Cancellation is a break in the 5-year participation requirement to take health benefits into retirement. • If you die while coverage is cancelled, no coverage for survivors even if entitled to a survivor annuity.
INSURANCE AND FURLOUGH • Federal Dental & Vision Program (FEDVIP). • Premiums continue if pay is sufficient. • If pay is insufficient, two premiums deducted on the following pay period. • If furlough continues for more than 2 pay periods, BENEFEDS will mail direct-bill to employee. • Web site: www.BENEFEDS.com or call 1-877-888-3337 • Flexible Spending Accounts (FSA). • Allotments continue if pay is sufficient. • If pay is insufficient, expenses cannot be reimbursed until allotments are restarted. Outstanding allotments would be recalculated based on your election & number of pay periods remaining in the benefit period. • Web site: www.FSAFEDS.com or call 1-877-372-3337
INSURANCE AND FURLOUGH • Federal Employees Long-Term Insurance Program (FETCIP). • Eligible claims will continue to be paid. • Premiums continue if pay is sufficient. • Coverage will terminate if premiums are not paid. • You have option to change to direct billing or pay via EFT (electronic funds). Contact Long Term Care Partners at 1-800-582-3337. • Web site: www.ltcfeds.com
Contact the HRO Services Section with any questions or concerns with your employee benefits: • Sandra Hashimoto, (808) 672-1235 • Catrecia Lewis, (808) 672-1236 • Danielle Silva (Last names A to K), (808) 672-1234 • SPC Melanie Marquez (Last names L to Z), (808) 672-1218