1. Federal Benefits Review January 8, 2003 Linda Hildebrand, Presenter Today’s Outline Termination of Schedule A Appointments Civil Service Retirement System Voluntary Early Retirement Authorization Federal Employees’ Group Life Insurance ** Break ** Federal Employees’ Health Benefits Public Employees’ Health Insurance Medicare Coverage Federal Long Term Care Insurance Leave Conversion Options at Retirement

2. President Bush signed Farm Bill May 13, 2002 Effective Date: January 31, 2003 Current federal CES dual appointees notified in October 2002 Acknowledgement letter required – does not endorse the termination, only receipt of the notice Termination of Schedule A Appointments

3. Rationale for Terminations 1990 Civil Service Reform Act – Merit Protection System – Schedule A Appointments covered – Federal partners involved in issues related to employee and university employment Alternatives – Create structured bureaucracies at each land- grant university to mirror federal system – Terminate Schedule A Appointments Date chosen to allow current Schedule A appointees to enroll in Federal Long Term Care Insurance

4. Requirements for the Continuation of Federal Benefits The employing CES organization participates and continues to participate in federal benefits, Employee eligible for federal benefits May 12, 2002, and Administrative and financial responsibilities continue to be fulfilled by the college or university.

5. Requirements for the Continuation of Federal Benefits (cont’d) Employee formally employed by the CES organization, No less than 50% of time devoted to Extension functions Appointed on a permanent basis/year round. Employee will no longer be considered a federal employee

6. Impact on Federal Benefits Employees will continue to receive credit for their continued employment with CES organizations Eligible to participate in new features of current federal benefits (health, life, TSP, long term care) Ineligible to participate in federal benefits not in effect as of May 12, 2002

7. Impact on Early Retirements Request for a Voluntary Early Retirement Authorization will continue to be submitted to CSREES for forwarding to OPM Request for Discontinued Service Retirements will continue to be submitted to the USDA HRD CES Team for approval.

8. Impact on Optional Federal Benefits Federal Employees’ Health Benefits – continue/modify current enrollment – participate in annual open seasons – five year waiver request for FEHB into retirement Federal Employees’ Group Life Insurance – continue/modify current enrollment – participate in FEGLI open seasons – request to cancel a waiver of all/part of coverage

9. Impact on Optional Federal Benefits Federal Long Term Care Insurance – participate in July-December 2002 Open Season – eligible to participate in program after January 31, 2003 Thrift Savings Plan – continue/modify current enrollment – participate in TSP semiannual open seasons

10. Civil Service Retirement System (CSRS) Civil Service Retirement System (CSRS) http://www.opm.gov/retire/html/faqs/faqs.htm Types of Retirement –Optional –Deferred –Disability –Discontinued Service –Early Out Authorization –Major Reduction in Force –Death in Service

11. CSRS Retirement Eligibility Rules Optional –Age 55 with at least 30 Years of Service –Age 60 with at least 20 Years of Service –Age 62 with at least 5 Years of Service Deferred –Age 62 with at least 5 Years of Service Disability –Any age with at least 5 Years of Service

12. CSRS Retirement Eligibility Rules Discontinued Service Voluntary Early Retirement Authorization Major Reduction in Force –Age 50 with at least 20 Years of Service –Any age with at least 25 Years of Service

13. CSRS Retirement General Formula 1.5 percent of the high-3 average pay multiplied by service up to 5 years; plus 1.75 percent of the high-3 average pay multiplied by the number of years of service between 5 and 10; plus 2 percent of the high-3 average pay multiplied by all service over 10 years.

14. CSRS General Formula Short Cut Method Assume 30 Years Total Service (Amount of Service – 2) x 2 Example: (30 – 2) x 2 = 56%

15. High-3 Average Salary Definition: The "high-3 average pay" is the largest annual rate resulting from averaging an employee's rates of basic pay in effect over any period of 3 consecutive years of creditable civilian service, with each rate weighted by the length of time it was in effect.

16. Voluntary Early Retirement Authorization (VERA) July 1, 2002 through March 31, 2003 Eligibility Rules –Age 50 with at least 20 Years of Service –Any age with at least 25 Years of Service Impact if under age 55 Impact to continued health coverage

17. CSRS Survivor Election Options Current Spouse Survivor Annuity –Elected a reduced annuity with survivor benefits Self-Only Annuity –No survivor benefits for a spouse –Only with spousal consent (if married at retirement) Former Spouse Survivor Annuity –Voluntarily elect survivor benefits for a former spouse –Court orders providing benefits for a former spouse

18. CSRS Survivor Election Options Combination Current/Former Spouse Survivor Annuity –Required when court orders provide benefits to a former spouse and retiree has remarried Insurable Interest Annuity –a person who would benefit from the employee continuing to be alive.

19. Reduction in CSRS Annuity Annuitant selects part of the annuity to be used as the base for the survivor benefit. Reduction is computed using that base. FORMULA = 2.5% of the base up to $3,600 PLUS 10% of the base over $3,600 Benefit - Survivor receives 55% of the base selected by the retiree or as ordered by a separation agreement or divorce decree.

20. Duration of Survivor Benefits Spouse - Benefits payable for life unless person remarries prior to age 55. Former Spouse - Benefits payable for life unless remarries prior to age 55. Benefits cannot be reinstated. Child(ren) –Benefits terminate upon: Marriage Age 18 (or 22 if going to school full-time) Recovery from disability or becoming self-supporting

21. CSRS Cost of Living Adjustment (COLA) Annual COLA increase based on the rise in the consumer price index. Effective - December 1st each year, payable in the following January 1st annuity. Prorated - An annuitant’s first COLA is prorated based on the number of months person was on the annuity roll prior to the COLA.

22. What happens to my retirement money when I die if I don’t provide a survivor annuity?

23. Lump Sum Payment Retirement Balance Order of Precedence Designated Beneficiary Widow or Widower Children Parents Executor, Administrator of Estate Next of Kin

24. Windfall Elimination Provision If you receive a Federal pension and are also eligible for Social Security benefits based on your own employment record, a different formula may be used to compute your Social Security benefit. This formula will result in a lower benefit. The Windfall Elimination Provision affects workers who reach age 62 or become disabled after 1985 and are first eligible after 1985 for a Federal pension. The Windfall Elimination Provision does not apply if: You were eligible to retire before January 1, 1986; or, You were first employed by the government after December 31, 1983; or, You have 30 or more years of substantial earnings under Social Security.

25. Government Pension Offset Some of an employee’s spousal Social Security benefit may be offset if the employee has a government pension from work not covered by Social Security. The offset does not apply to the employee’s own Social Security benefit, only the benefit that comes from a spouse’s employment. If the Government Pension Offset applies, the spousal Social Security benefit will be reduced by two-thirds of any Federal pension based on employment not covered by Social Security.

26. Federal Employees’ Group Life Insurance (FEGLI) Federal Employees’ Group Life Insurance (FEGLI) http://www.opm.gov/insure/life/index.htm Basic Life –Coverage equal to actual rate of annual basic pay (rounded to the next $1,000 plus $2,000) Example: Base pay = $42,600, rounded to $43,000 plus $2,000 = $45,000 in Basic Insurance Amount (BIA) –Extra Benefit - Double life insurance benefits at no extra cost until age 36, decreasing at 10% per year until age 45, at which time the extra coverage ends –Accidental Death and Dismemberment coverage Extra Benefit illustrated above not applicable

27. FEGLI Optional Life Options Option A - Standard –$10,000 additional life insurance coverage –$10,000 additional AD&D coverage Option B - Additional –Select coverage equal to one, two, three, four, or five times actual rate of annual basic pay (rounded to next $1,000) Option C - Family –Select multiples of one, two, three, four, or five –Each multiple for your spouse is $5,000 –Each multiple for each eligible child is $2,500

28. FEGLI Premiums - Who pays for what? Basic Life –Employee pays two-thirds –Employer pays one-third –Premium based on BIA Option A –Employee pays full cost –Based on age bands Options B and C –Employee pays full cost –Based on age bands and multiples selected

29. FEGLI Options at Retirement Basic Life –Retire on an immediate annuity –Covered for last five years of service –Does not convert Options A, B, and C –Eligible to continue Basic Life –Covered for last five years of service –Does not convert –Annuity sufficient to cover the cost

30. FEGLI Basic Life Reduction Options 75% Reduction - Full BIA coverage and premium until age 65, then coverage reduces 2% of original amount per month beginning month after you reach age 65 to 25% at no cost 50% Reduction - Full BIA coverage and premium until age 65, then BIA coverage reduces to 1% of original amount per month beginning month after you reach age 65 to 50% with a higher premium 0% Reduction - Full BIA coverage and premium until age 65, then full BIA coverage continues with a substantially higher premium

31. FEGLI Optional Life Retirement Options Option A - $10,000 –Elect to continue with a premium until age 65, then reduces 2% ($250) per month until coverage amount reaches $2,500 Option B –Elect to continue with a premium until age 65, then premium significantly increases depending on multiple Option C –Elect to continue with a premium until age 65, then premium will increase depending on multiple

32. What happens to my life insurance when I die if I don’t identify a beneficiary?

33. Payment of Life Insurance Benefits Order of Precedence for Basic Life, Options A and B Designated Beneficiary Widow or Widower Children Parents Executor, Administrator of Estate Next of Kin Option C Employee or annuitant automatic beneficiary

34. LET’S TAKE A TEN-MINUTE BREAK

35. Federal Employees’ Health Benefits (FEHB) Federal Employees’ Health Benefits (FEHB) http://www.opm.gov/insure/health/index.htm Guaranteed Coverage No Medical Examination Employer contribution to cost Continued Coverage after Retirement Continued Coverage for Survivor Annuitants Open Season - November 11, 2002 through December 9, 2002 COBRA coverage for separated employees

36. FEHB Options at Retirement Retire on an immediate annuity Covered for last five years of service Monthly premium continues, rate increases determined by the Office of Personnel Management

37. Public Employees’ Insurance Agency (PEIA) http://www.wvpeia.com/ Open enrollment mid-April to mid-May Managed Care Plans –PEIA Preferred Provider Benefit (PPB) –Health Maintenance Organizations (HMO) Carelink B Health Plan A Health Plan B Basic, Optional, and Dependent Life Insurance

38. Public Employees’ Insurance Agency (PEIA) Mountaineer Flexible Benefits Plan Dental Insurance CompDent Select 25 CompDent Select 45 Delta Dental Basic Indemnity Delta Dental Enhanced Vision Insurance Long-Term Disability Income Plans Short-Term Disability Income Plans

39. Public Employees’ Insurance Agency (PEIA) Mountaineer Flexible Benefits Plan Flexible Spending Accounts (FSAs) –Dependent Care FSA –Medical FSA Group Legal Plan Life Events

40. PEIA Options at Retirement Retire on an immediate annuity –Based on WV Years of Service Any age with 30 Years of Service Age 60 with at least 5 Years of Service NOT required to be covered for last five years of service NOTE: If enrolled in Carelink HMO, employee will need to transfer over to the PPB Plan. Leave conversion option towards premiums Life insurance options can continue Mt’neer Flexible Benefits - COBRA rules for dental and vision insurances

41. MEDICARE Part A – Hospital Insurance http://www.medicare.gov/ Helps cover your inpatient care in: – hospitals –critical access hospitals –skilled nursing facilities –It also covers hospice care and some home health care. (You must meet certain conditions.) $812 Deductible for Year 2002 No premium – coverage is free

42. MEDICARE Part B – Medical Insurance Helps cover your: –Doctors' services –Outpatient hospital care –Some other medical services that Part A does not cover, such as some of the services of: Physical and occupational therapists Some home health care –Part B helps pay for these covered services and supplies when they are medically necessary $100 Deductible for Year 2002 Monthly premium is $54.00 for Year 2002

43. Federal Long Term Care Insurance (LTC) http://www.opm.gov/insure/ltc/index.htm New federal program Effective October 1, 2002 Active employees or retirees eligible Open Season: July 1, 2002 – December 31, 2002 Premiums based on age of insured and level of coverage Age ‘frozen’ as of July 1, 2002, during open season

44. Leave Conversion Options at Retirement Annual Leave –Lump Sum Payment - not subject to benefit deductions –Remain on Payroll - subject to benefit deductions Sick Leave –Additional federal service credit –For PEIA participants, convert to premium payments One month family health coverage for every three days One month single health or basic life only coverage for every two days

45. PEIA Premiums Sick Leave Conversion Options at Retirement Through Dec 31 Leave Totals Family YY.MM Single or Basic Life YY.MMMonthConversion 200145012.5018.750.08 = 1 Month0.58 = 7 Months 200246813.0019.500.17 = 2 Months0.67 = 8 Months 200348613.5020.250.25 = 3 Months0.75 = 9 Months 200450414.0021.000.33 = 4 Months0.83 = 10 Months 200552214.5021.750.42 = 5 Months0.92 = 11 Months 200654015.0022.500.50 = 6 Months1.00 = 12 Months

46. What questions do you have? To request an retirement annuity estimate, please email me: LDHildebrand@mail.wvu.edu

47. Program Evaluation Please take a few minutes to complete the evaluation form. Thanks very much - have a safe trip home!