Benefits Impact of Divorce
Basic Effects of Divorce or Separation
Broadly speaking, a court order related to a federal or postal employee’s divorce, annulment, or legal separation can:
• divide a Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) annuity;
• block payment of or divide a refund of CSRS or FERS employee retirement contributions;
• award or divide a lump-sum FERS basic death benefit if a FERS employee dies while still employed;
• provide a survivor annuity payable upon the death of an employee or retiree;
• permit a former spouse to continue health insurance coverage under the Federal Employees Health Benefits (FEHB) program;
• require employees or retirees to assign their Federal Employees’ Group Life Insurance (FEGLI) coverage to a former spouse or children;
• require an employee to name his or her former spouse and/or children as beneficiaries under FEGLI; and
• require payment to the former spouse from a Thrift Savings Plan (TSP) account.
In addition, a court order may require that a federal employee’s pay or retirement benefits be garnisheed for alimony or child support or in cases involving child abuse.
Special rules and procedures apply to divorce and similar proceedings involving federal and postal benefits. At the outset, it is essential to recognize that the TSP and federal retirement programs are exempt from the Employee Retirement Income Security Act (ERISA), which generally governs marriage-related court orders affecting private-sector workers. Thus, court orders that are commonly used to divide private-sector benefits, called “Qualified Domestic Relations Orders,” might not be valid in proceedings involving federal or postal employees or retirees. Such an order might be acceptable for Office of Personnel Management processing if the court specifically states that it has considered the terminology and requirements of the federal employee benefit laws and regulations and that the terms and provisions of the order “are governed by the standard conventions” of those federal employment laws and rules.
Similarly, benefit allocations commonly used under ERISA might not be allowable or acceptable for OPM processing purposes. For example, under ERISA, a former spouse’s share of a retirement benefit can begin when the employee reaches the minimum retirement age, even if the employee is still working. However, this arrangement is not available under the CSRS or FERS systems, both of which refuse to allow court orders to affect a retirement benefit until the benefit is actually payable to the retired employee. The TSP also has special rules for distributions from TSP accounts under which standard court orders might not achieve the desired effect.
There are also differences in policies regarding the designation of beneficiaries in defined contribution retirement savings plans such as the TSP and 401(k)s.
Likewise, it is important that any court orders or agreements intended to award a survivor annuity reflect the intent of the parties and conform to law and regulations. While court orders can be changed before the employee retires or dies, in general they cannot be modified to affect survivor benefits once the employee dies or has retired.
For information about an active employee’s work history, pay or other information required in the legal proceedings, the employing agency, not OPM, normally is the proper source. Requested information that an employing agency can provide in response to a subpoena signed by a judge, or a release signed by the employee, includes a statement of retirement system coverage, amount of money withheld by the agency to the employee’s credit in the retirement fund, and an annuity estimate using service to date. The requirements for obtaining information vary among agencies.
Agencies can prepare estimates of benefits that the employee has already earned. However, such estimates are not considered binding on the government. An employing agency will not provide estimates that would require speculation about events such as promotions. Nor will it determine the "present value" of employee entitlements since they involve economic and mortality assumptions.
If the employee previously worked for a different agency, OPM has the information about the retirement fund contributions for that service.
For retirees and separated employees, OPM is the appropriate source for information similar to that available from individual agencies about active employees. OPM also has annuity rate information about retirees. OPM will release such information only in response to a subpoena signed by a judge or a release signed by the retiree or former employee. The subpoena or release should be sent to: Associate Director, Retirement Services, OPM, 1900 E St., N.W., Washington, DC 20415.
The government will not become involved in the division of benefits between spouses.
Guidance for attorneys in preparing court orders is in the Handbook for Attorneys on Court Ordered Retirement, Health Benefits, and Life Insurance at www.opm.gov/retirement-services/publications-forms/pamphlets/ri38-116.pdf. Also see www.opm.gov/faqs (search for "divorce").
Note: Divorces of same-sex spouses are treated in the same manner as divorces of opposite-sex spouses.
A divorce is a "qualifying life event" that allows certain changes in benefits, as described below and in Chapter 1, Section 9 and Chapter 2, Sections 1, 2 and 4.
Effect on Designations of Beneficiary
A divorce does not affect a designation of beneficiary that was filed at an earlier time. An employee or retiree who has designated a now-former spouse to receive life insurance, retirement lump-sum benefits or proceeds of a Thrift Savings Plan account must file new designations for any benefits that become payable to go to someone else. Designations of beneficiary may be changed at any time except that under Federal Employees’ Group Life Insurance, you cannot change the beneficiary designation if the policy was assigned.
The life insurance designation of beneficiary for both retirement systems is SF 2823. To designate a beneficiary for any lump-sum benefit that may remain after a retiree’s death, the CSRS form is SF 2808 and the FERS form is SF 3102. The forms are available at www.opm.gov/forms; employees also may obtain them through personnel offices and retirees also may obtain them by calling (888) 767-6738. To change a TSP beneficiary designation, file a new Form TSP-3, available at agency personnel offices, at www.tsp.gov/forms/formsPubs.shtml, or by calling (877) 968-3778 from the United States and Canada, (404) 233-4400 from elsewhere.
If you have not filed a designation of beneficiary, payments will be made according to a standard order of precedence. For lump-sum benefits, see Death Benefits When No One is Eligible for Survivor Annuity in Chapter 3, Section 4; for life insurance, see FEGLI Beneficiaries: Order of Precedence in Chapter 2, Section 2; for the TSP, see Beneficiary Designations in Chapter 6, Section 6.
Effect on Insurance Coverage
FEHB—If you have a self and family Federal Employees Health Benefits program enrollment, your spouse is eligible to continue coverage under your enrollment while you are legally separated or in the process of getting a divorce or an annulment. After the date the divorce or annulment is final, your ex-spouse is eligible for a 31-day extension of coverage but cannot remain covered as a family member under your self and family enrollment. Your ex-spouse may be eligible to enroll under spouse equity, or temporary continuation of coverage, or convert to an individual policy with your carrier.
If you have a self and family enrollment and there are no other eligible family members, the divorce is a qualifying life event; within 60 days of the date of your divorce or annulment, you can change to a self-only enrollment. At the same time, you can change plans or options. If you have a self and family enrollment and other eligible family members remain on the enrollment, you still must contact your FEHB plan to let it know the date of the divorce or annulment and have your ex-spouse removed from coverage.
Also see Section 3 below and Changes Outside of Open Season in Chapter 2, Section 1.
FEGLI—Unless you’ve assigned your Federal Employees’ Group Life Insurance coverage, you can reduce or cancel coverage at any time. Benefits may also be paid based on a valid court order. If you have Family (Option C) insurance and don’t cancel it, coverage continues on your spouse until the marriage is terminated. Afterward, Option C benefits are not payable on the ex-spouse even if you continue to pay premiums, although they would remain payable on any eligible dependents. You also can change your designation of beneficiary at any time without prior notice to any beneficiary unless the policy has been assigned.
Also see Section 4 below and Adding Coverage in Chapter 2, Section 2.
FLTCIP—A change in marital status does not affect your coverage or premiums under the Federal Long Term Care Insurance Program. If you are currently paying the premiums for your spouse, contact LTC Partners to make other billing arrangements. A divorced spouse may keep coverage by continuing to pay the premiums, but may not first apply after the divorce unless otherwise eligible, for example as a federal employee or retiree himself or herself. Children of an eligible employee or retiree may continue or take out coverage at age 18 or above. A court order related to a divorce or separation cannot make a former spouse qualified to enroll in the FLTCIP.
Also see Chapter 2, Section 3.
FEDVIP—If your spouse is currently covered under your Federal Employees Dental and Vision Insurance Program enrollment, that coverage will continue until the date of divorce or until the effective date of an open season change. You cannot remove your spouse outside of an open season just because you are separating or in the process of divorce. Once you are divorced, your ex-spouse will not be eligible as a family member under your enrollment in FEDVIP. There is no spouse equity, temporary continuation of coverage, or the right to convert to an individual policy in FEDVIP. Nor may a former spouse first apply after the divorce unless otherwise eligible, for example as a federal employee or retiree himself or herself. A divorce is a qualifying life event that allows enrollees to decrease the level of coverage (for example, from self plus one to self-only) at any point after the divorce.
A court order related to a divorce or separation cannot make a former spouse of an employee or annuitant eligible for FEDVIP or require an agency or retirement system to enroll an employee or annuitant in a FEDVIP plan to cover his or her children.
Children continue to be covered under self and family or self plus one coverage, so long as they meet other eligibility rules.
Also see Chapter 2, Section 4.