For benefits purposes, are phased retirees treated as active employees or as retirees?

Because phased retirees do not separate from federal employment, they generally are treated as active employees, although there are some special considerations.

They are subject to required contributions to their federal retirement system based on their salary received, while those under the Civil Service Retirement System may make voluntary retirement contributions. Phased retirees similarly are treated as active employees for Thrift Savings Plan purposes, meaning that they may continue making investments and may take loans and in-service withdrawals but are not eligible for post-separation withdrawal options.

For purposes of Federal Employees’ Group Life Insurance program coverage levels and the government contribution toward the cost of Basic coverage, a phased retiree is deemed to be receiving the full-time pay of the position. Similarly, eligibility for the Federal Employees Health Benefits program is unchanged and the government continues to pay its full share of FEHB premiums (even though part-time workers in general receive only a prorated share). Further, phased retirees can continue to pay their share of premiums from pretax salary and phased retirement counts toward the requirement to be covered under FEHB prior to retirement in order to continue coverage as a retiree.

Rules governing enrollment and participation in the flexible spending account, Federal Dental and Vision Insurance Program and Federal Long-Term Care Insurance Program are the same as for all other eligible employees.

Standard leave accrual rules for part-time employees apply to phased retirees; accrual is prorated based on hours in pay status.

2021 Digital Almanac

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