Key Takeaways:
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Unlocking lesser-known federal benefits can dramatically enhance your financial and retirement planning strategies.
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Understanding the timelines and rules for these benefits ensures you don’t miss out on valuable opportunities.
Hidden Federal Benefits You Shouldn’t Ignore
Navigating federal employee benefits can feel like deciphering a complex map. But some lesser-known perks and programs often go unnoticed, potentially saving you thousands of dollars and enhancing your retirement. Let’s uncover these hidden gems and make sure you’re getting the most out of your federal benefits package.
Retirement Service Credit for Military Time
- Also Read: Dental Plans Under FEDVIP Are Offering Better Coverage Than Ever—Why Federal Employees Are Taking Notice
- Also Read: 5 Things You Need to Know About Survivor Benefits as a Federal Employee or Retiree
- Also Read: How FEGLI Premium Changes Are Forcing Federal Employees to Reevaluate Their Plans
Why It Matters
By buying back your military service, those years count toward your total creditable service, which can:
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Increase your monthly annuity.
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Allow you to retire earlier.
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Enhance overall financial security in retirement.
The cost of buying back your military time is based on a small percentage of your military earnings, plus interest. The earlier you act, the less interest accrues, saving you money in the long run.
Health Savings Through FEHB and Medicare Coordination
If you’re eligible for Medicare, pairing it with your Federal Employees Health Benefits (FEHB) plan can lead to significant savings and more comprehensive coverage. While many federal employees understand the value of FEHB, not everyone takes full advantage of this coordination.
Key Benefits
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Reduced Costs: Medicare often becomes the primary payer, and your FEHB plan covers what Medicare doesn’t, lowering out-of-pocket expenses.
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Comprehensive Coverage: Combining these programs often eliminates gaps in coverage, especially for hospital stays and prescriptions.
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Flexible Enrollment: FEHB coverage can continue into retirement as long as you meet the five-year enrollment rule before retiring.
Don’t overlook the savings opportunities this pairing offers, especially with rising healthcare costs.
Survivor Benefits for Your Family’s Security
Federal survivor benefits ensure your family’s financial stability in the event of your passing. However, understanding and electing these benefits is crucial to maximizing their potential.
What You Need to Know
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Survivor benefits must be elected during retirement planning.
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Your spouse could receive up to 50% of your annuity, ensuring ongoing financial support.
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Survivor benefits are often paired with FEHB coverage, allowing family members to retain health insurance.
While there is a cost associated with these benefits, their value in safeguarding your loved ones cannot be overstated.
Long-Term Care Insurance
Long-term care is a significant expense many retirees overlook. The Federal Long-Term Care Insurance Program (FLTCIP) is a unique benefit available to federal employees, retirees, and their families.
Why It’s Important
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Customizable Plans: You can select a plan that matches your anticipated needs and budget.
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Spousal Eligibility: Your spouse, even if not a federal employee, can apply for coverage.
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Tax Advantages: Premiums for long-term care insurance may be tax-deductible under certain conditions.
Given the rising costs of long-term care, enrolling in FLTCIP early can help you lock in lower premiums and prepare for potential healthcare needs.
Flexible Spending Accounts (FSA)
Flexible Spending Accounts allow you to save money on healthcare and dependent care expenses by using pre-tax dollars. Although FSAs are widely known, many employees don’t maximize their contributions or fully understand eligible expenses.
Benefits of an FSA
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Healthcare FSA: Covers medical, dental, and vision expenses not reimbursed by insurance.
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Dependent Care FSA: Helps offset the cost of childcare or eldercare.
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Tax Savings: Contributions are deducted before taxes, reducing your taxable income.
Keep in mind that FSAs have a “use it or lose it” rule, so plan your contributions wisely to avoid forfeiting unused funds.
Thrift Savings Plan (TSP) Matching Contributions
Your Thrift Savings Plan is one of the most powerful tools for building retirement wealth, especially if you’re under FERS. However, some employees miss out on the full government match by not contributing enough.
How to Maximize Your TSP
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Contribute at least 5% of your salary to receive the full match.
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Take advantage of catch-up contributions if you’re age 50 or older.
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Consider diversifying investments within the TSP for growth and stability.
The government match is essentially free money, so don’t leave it on the table.
Social Security Windfall Elimination Provision (WEP)
The Windfall Elimination Provision can affect your Social Security benefits if you’re a CSRS employee who didn’t pay into Social Security during your federal career. Although this provision reduces benefits, understanding how it works can help you plan.
Key Tips
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Use the Social Security Administration’s WEP calculator to estimate your benefits.
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Consider whether additional Social Security-covered work might mitigate the impact of WEP.
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Plan your retirement budget with the adjusted benefits in mind.
Being informed about WEP ensures you’re not caught off guard when benefits are calculated.
Annual Leave Lump-Sum Payout
Federal employees often overlook the value of their accrued annual leave upon retirement. When you retire, any unused annual leave is paid out as a lump sum, often at your final pay rate.
Why It Matters
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Boosts Retirement Savings: This payout can provide an immediate financial cushion.
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Maximizes Earnings: Save as much leave as possible to increase the payout.
Check your agency’s policies and plan your retirement date strategically to maximize this benefit.
Avoiding the “Use or Lose” Leave Trap
In addition to annual leave, many federal employees fail to track their use-or-lose leave properly. This leave expires if not used by the end of the calendar year.
How to Stay on Top of It
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Regularly review your leave balances.
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Plan vacations or personal time to avoid forfeiting leave.
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Consider donating excess leave to coworkers under leave-sharing programs.
By managing your leave effectively, you can avoid wasting valuable time off.
Federal Employees’ Group Life Insurance (FEGLI)
FEGLI offers basic life insurance coverage automatically for most federal employees, but it also provides optional additional coverage.
How to Optimize FEGLI
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Review your coverage annually to ensure it aligns with your needs.
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Consider the rising cost of premiums as you age, especially in retirement.
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Compare FEGLI options with private life insurance to ensure you’re getting the best value.
FEGLI is convenient but requires careful consideration to balance cost and coverage.
Special Benefits for Law Enforcement Officers (LEOs)
Law enforcement officers, firefighters, and other special-category employees have unique retirement benefits under FERS. These include earlier retirement eligibility and higher annuity calculations.
Perks for LEOs
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Eligible to retire at age 50 with 20 years of service or any age with 25 years of service.
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Receive the FERS Special Retirement Supplement until Social Security eligibility at age 62.
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Higher annuity calculation, typically 1.7% of your high-3 salary for the first 20 years of service.
Understanding these specialized benefits can make a significant difference in planning your career and retirement.
Tax Advantages in Retirement
Federal retirees often overlook key tax-saving opportunities. With proper planning, you can minimize your tax burden in retirement.
Tax-Saving Strategies
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Roth TSP Contributions: Withdrawals in retirement are tax-free, offering long-term savings.
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Health Savings Accounts (HSA): Contributions are tax-deductible, and withdrawals for qualified medical expenses are tax-free.
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State Tax Exemptions: Some states don’t tax federal pensions, providing additional savings.
Consult with a financial advisor to ensure you’re taking advantage of these tax breaks.
Maximizing the Federal Employee Viewpoint Survey (FEVS)
While not a direct benefit, the Federal Employee Viewpoint Survey (FEVS) provides valuable insights into workplace satisfaction and areas for improvement. Participating in this survey ensures your voice is heard and can lead to better policies and programs.
Why It Matters
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Improves workplace conditions.
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Advocates for new benefits or policy changes.
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Ensures your agency remains competitive in retaining top talent.
By actively participating, you contribute to shaping the future of federal employment benefits.
Making the Most of These Overlooked Benefits
Federal benefits are designed to support you throughout your career and retirement, but it’s up to you to unlock their full potential. Take the time to review your options annually, consult with HR professionals, and prioritize your long-term financial security.
