TSP and Insurance Sandra Hashimoto HRO-M, (808) June

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. 2

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. 3

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. 4

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: ThriftLine:

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. 6

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. 7

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: C ancellation 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. 8

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: or call www.BENEFEDS.com 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: or call www.FSAFEDS.com 9

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 Web site: 10

Contact the HRO Services Section with any questions or concerns with your employee benefits: Sandra Hashimoto, (808) Catrecia Lewis, (808) Danielle Silva (Last names A to K), (808) SPC Melanie Marquez (Last names L to Z), (808)