FERS retirement

How part-time service impacts federal benefits, such as TSP, FEGLI, FEHB, and Leave

FEDZONE Ed Zurndorfer


< PART I

Ed Zurndorfer-

There are employees covered by the Federal Employees Retirement System (FERS) who at some point during their federal service may have worked less than full-time. This is the second of two FEDZONE columns discussing how part-time service affects employee benefits including annual leave and sick leave, Thrift Savings Plan (TSP), and insurance benefits (health insurance, life insurance, long-term care insurance, and dental and vision insurance).

Part-time service is defined as:

· Any actual service performed on a less than full-time basis by an individual whose appointment describes a regularly scheduled tour of duty; and

· Any period of time credit during non-pay status under CSRS that follows a period of part-time service without any intervening period of actual service.

Note the following: (1) the definition of part-time is not limited to part-time career because it includes part-time temporary employment as well; and (2) part-time service does not include intermittent or “when actually employed” (WAE).

· Full-time service is any actual service in which the employee is scheduled to work the number of hours and days required by the administrative workweek for his or her grade or class. That means 40 hours per week or 80 hours per two-week pay period.

Effect of Part-Time Service on Annual Leave and Sick Leave Accrual Amounts

An employee’s Service Computation Date (SCD) for leave (as shown in Box 30 of an employee’s SF 50 – Notice of Personnel Action) determines how many hours of annual leave a full-time employee accrues or earns every two weeks. During the first three years of federal service, an employee earns every two weeks 4 hours of annual leave; years 4 through 14 an employee earns 6 hours of annual leave every two weeks (10 hours during pay period 26), and starting in year 15, an employee earns 8 hours of annual leave every two weeks.

The aforementioned accrual rates for annual leave (4,6 or 8 hours every two weeks) are for full-time employees who work an 80-hour pay period. Those employees who work less than full-time will have their accrual rates adjusted “pro-rata”. For example, an employee working half-time (40 hours per pay period) with 5 years of service will earn 3 hours of annual leave every two weeks. Similarly, an employee with 15 years of federal service, working half-time earns 4 hours of annual leave every two weeks.

For sick leave, all full-time employees earn 4 hours of sick leave every two weeks no matter how many years of federal service they may have. As such, a half-time employee earns 2 hours of sick leave every two weeks. An employee working ¾ time (60 hours per pay period) earns 3 hours of sick leave every two weeks.

Effect of Part-Time Service on Employee TSP Contributions and Agency Matching Contributions

During 2021, all permanent federal employees are eligible to contribute a maximum $19,500 to the TSP. Those employees aged 50 or older as of Dec. 31, 2021, are eligible to contribute an additional $6,500 in “catch-up” contributions. All employee TSP contributions must be made via payroll deduction and can be made to the traditional TSP, to the Roth TSP, or to a combination of both.

FERS employees receive an automatic 1 percent of gross salary (the current salary shown on their SF 50) contribution from their agency. Those employees who contribute at least 5 percent of their salary per pay period to the TSP receive the maximum matching contribution of 4 percent per year from their agencies. The 1 percent automatic and 4 percent maximum matching contributions are not part of the current year maximum $19,500 limit that employee contributions via payroll deduction are subject to, nor the $6,500 “catch-up” contribution limit that employees aged 50 and older are subject to.

The above discussion applies to both full-time and to part-time FERS employees. It makes no difference if an employee works less than full-time. A part-time employee’s contribution for the year is not reduced in any way because the employee is working less than full-time. Nor is the agency’s 1 percent of SF 50 gross salary automatic contribution and the 4 percent matching contribution limited because a permanent employee is working less than full-time hours.

Effect of Part-Time Service on Federal Health and Life Insurance Benefits

· Federal Employees Health Benefits (FEHB) Program Health Insurance. In general, employees and annuitants share the cost of their health benefits coverage with the federal government as the employer. The federal government’s share of the FEHB program insurance premiums is set by law. The federal government pays on average 72 to 75 percent of the FEHB insurance for full-time permanent employees. It makes no difference which type of FEHB program health insurance plan (fee-for-service, PPO, HMO, CDHP, HDHP) an employee is enrolled in nor the type of coverage (self, self plus one, or self and family). Full-time employees pay the remaining 25 to 28 percent of the FEHB program premiums via payroll deduction. The employee agency’s contribution toward a part-time permanent employee’s FEHB program health insurance premiums is prorated in proportion to the percentage of full-time service a part-time employee is regularly scheduled to perform. The following example illustrates:

Example 1. Lucy is a part-time career federal employee. She is enrolled in the FEHB program and works half-time (40 hours per pay period). Since Lucy works half-time, her agency’s FEHB program premium contributions are reduced to 36 to 38 percent of the total FEHB program premium cost. Lucy’s share of the FEHB program premium is the other 62 to 64 percent.

Note that assuming that Lucy participates in the FEHB program for all of the last five years of federal ending on the date that she retires from federal service (even as a part-time employee), Lucy will be eligible to retain FEHB program coverage into and throughout her retirement. Once she retires, the federal government will then contribute 72 to 75 percent of her FEHB program premium cost (like it does for full-time employees), no matter which type of FEHB program plan Lucy is enrolled in or her type of family coverage she has as a federal annuitant.

· Federal Employees Group Life Insurance (FEGLI) life insurance.

Career federal employees are eligible to enroll in the federal government’s group-sponsored life insurance program called FEGLI. FEGLI is composed of two parts- (1) the “basic” insurance amount or BIA which is an employee’s SF 50 salary as adjusted; and (2) optional coverages – Option A – Standard, Option B – Multiple of Salary; and Option C – Family Coverage. In terms of cost, employees pay the full premium cost of all three of the optional coverages. Therefore, it makes no difference whether a career employee is full-time or part-time.

    With respect to the FEGLI BIA insurance, the federal government pays 1/3 of the premium cost for full-time career employees. The federal government contribution toward part-time career employees BIA life insurance coverage is prorated in proportion to the percentage of full-time service they are regularly scheduled to perform. The following example illustrates:

Example 2. Lucy, from Example 1, is also enrolled in FEGLI BIA. Lucy works half-time (40 hours pay period). The federal government’s contribution to her BIA premium cost is therefore 50 percent of the total 1/3 that the federal government’s contribution for full-time employees, or 1/6 of the premium cost. Lucy therefore must pay the other 5/6 of the premium cost for her BIA FEGLI coverage.

Effect of Part-Time Service on Federal Long-Term Care Insurance (LTC) Benefits

The federal government’s group-sponsored long-term care insurance program called the Federal Long Term Care Insurance Program (FLTCIP) has been available to full- and part-time employees since 2001. Information about the FLTCIP may be found at www.ltcfeds.com.

 Employees must apply and get approved for coverage under the FLTCIP. Since the federal government contributes nothing to the premium cost for those employees who are enrolled in the FLTCIP program, it makes no difference whether a career employee is full-time or part-time in terms of employee cost. Both full-time and part-time employee pays the full cost of the FLTCIP insurance given the type of LTC insurance they have selected and been approved for coverage.

Effect of Part-Time Service on Federal Dental and Vision Insurance Benefits

The federal government-sponsored group dental and vision insurance program (called the Federal Employee Dental and Vision Insurance Program or FEDVIP)) has been available to all career federal employees since 2007. There is separate dental and vision insurance available to federal employees and their eligible family members (spouse and children under the age of 22). Information about the program may be found at www.benefeds.com.

Like the federal government-sponsored group long-term care insurance program, employees pay the full cost of the FEDVIP premiums. The federal government does not contribute anything to the FEDVIP premium cost. As such, part-time employees do not pay more in premiums for a FEDVIP dental and/or vision insurance plan than does a full-time employee pays for the same dental and/or vision insurance plan.


Edward A. Zurndorfer is a Certified Financial Planner, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street – Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While the employees of Serving Those Who Serve are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

FERS retirement

FERS Retirement, Part-Time Service