From Civil Servants to Soldiers
What Benefits Need To Be Divided in Divorce?
Pension rights of federal and other government employee, their insurance and survivor are subject to division during divorce proceedings. They must not be overlooked or forgotten. At PGD Law PLLC, we believe in fair and equitable property settlements, and we push for amicable negotiations to get them. If litigation is necessary, we will aggressively pursue this alternative route. Contact us today to see how we can help you.
The United States Congress is a potent force of change in family law. Over the past decade, Congress has created complex and sometimes ambiguous statutory schemes relating to military and civil service pensions, and federal health and life insurance.
The waters are murky, but a practitioner representing either party in a divorce involving a member of the military or an employee of the federal government, current or former, must participate in resolving these complex problems.
Military personnel and their dependents are eligible for medical care in both government and civilian facilities. The same holds true for former spouses, but only those who fall into certain categories.
The first of these is sometimes referred to as the 20/20/20 category. This means that:
- The former spouse was married to a member who served at least 20 years in the military
- The former spouse was married to the member for at least 20 years
- The years of the marriage and time of military service overlapped for at least 20 years
As long as the former spouse does not remarry, he or she will qualify for both in-service medical care and medical care in civilian facilities. However, if the former spouse is covered under an employer-sponsored health plan, he or she will not qualify for care under a government plan.
If this spouse has remarried but is over the age of 65, he or she may still qualify if a letter of disallowance for Medicare, Part A, has been issued by the Social Security Administration.
The next category of former spouse is the 20/20/15. In this circumstance, the member or former member performed 20 years of service before the divorce, and the parties were married for at least 20 years, 15 of which occurred during the period the military member was on active duty.
If the marriage ended in divorce or annulment before April 1, 1985, the former spouse will receive the same coverage as 20/20/20’s, as long as they do not remarry. If the marriage ended after April 1, 1985, the former spouse receives full benefits, but for only one year from the date of divorce.
The last category of former spouses includes all other former spouses, as well as the 20/20/15’s who were divorced after April 1, 1985. These former spouses are eligible to purchase coverage through the Continued Health Care Benefit Program (CHCBP). Under this program, a 20/20/15 and other spouses are entitled to purchase a health insurance plan to cover up to 36 months following the divorce or the date the one-year extension of dependency under 10 U.S.C. § 1072 (2)(H) ends, whichever is later.
Enrollment should occur within 60 days after the divorce or other qualifying event. A former spouse could obtain indefinite coverage under CHCBP pursuant to 10 U.S.C. § 1078 (a) if the spouse is eligible to receive a portion of the member spouse’s pension and is not remarried under the age of 55.
It should be noted: Retired reservists and their families are eligible for benefits when the reservist reaches age 60. Therefore, one should consider a reservist’s health insurance and life insurance benefits in the divorce process.
Receiving Civilian Health Care
TRICARE is the program that provides medical treatment and medical insurance to active duty and retirees and their dependents. There are multiple resource materials to explain TRICARE. TRICARE is a component of every military divorce and this firm regularly deals with it in military divorce cases.
Government-provided life insurance for military members dates back to the War Risk Insurance Act of October 6, 1917. The present program, Servicemen’s Group Life insurance, was established in 1965. SGLI provides term insurance, which has no cash, loan, paid-up, or extended insurance value. It does not provide coverage for accidental death or disability. It is an addition to any coverage the service member may have under any other government policy. It is automatically provided to any service member on active duty, in the maximum amount authorized, with premiums automatically deducted.
A service member may decline or modify coverage, but this must be done in writing. The government is not the insurer; a life insurance company is the primary insurer, with multiple private insurance companies participating as reinsurers. The Veterans Administration has supervisory responsibility for the program. The retiring military member is entitled to convert this policy to a Veterans Group Life Insurance policy.
Coverage for Retired Reservists
Retired reservists of any service and persons who would be eligible for assignment to the retired reserve are also eligible for coverage. However, Retired Reserve coverage is not automatic; a member must apply for it within 120 days after qualifying. Retired Reserve coverage terminates on the reservist’s 61st birthday or when he or she receives retired pay, whichever comes first.
The statute must be consulted with care when coverage for reservists is being explored, because there are a number of very specific provisions underlying the scope of the program.
Civil Service Health Benefits
The federal civil servant, unlike his or her brother or sister in the military, has neither an in-service health care facility nor a no-premium program underwriting health care in civilian facilities. The civil servant, the foreign-service officer, the CIA employee, and, with some variation, the postal worker, have two broad types of health care plans.
The first is a fee-for-service plan. Within this category are the service benefit plan, which is a Blue Cross/Blue Shield program that typically provides benefits through direct payment to doctors and hospitals; and the employee organization plan, in which employee organizations provide services to their membership. In both programs the government normally pays about 60 percent of the average high-option premium.
The second broad category of health care plans is the prepaid plan, in which a Comprehensive Medical Plan (CMP) or Health Maintenance Organization (HMO) provides or arranges for health care by designated physicians, hospitals and other providers. Usually CMPs and HMOs are open to all federal employees who live within the plan’s enrollment area.
A former spouse may enroll in a government health benefit plan under certain rather limited conditions. Under the statutory and regulatory scheme, a former spouse who qualifies for health coverage may apply for such coverage within 60 days after the dissolution of the marriage.
A former spouse’s enrollment ends when the qualifying court order ceases to provide that spouse with a portion of the employee’s annuity or a survivor annuity under any of the retirement programs for government employees.
Coverage Pertaining to Divorce and Retired Civil Servants
In the case of a former employee whose marriage was dissolved after the employee’s retirement, application may be made 60 days after dissolution of the marriage, or within 60 days after the retired employee makes an election for the former spouse pursuant to the pension or survivor benefit programs.
The rules permitting enrollment by a former spouse require the former spouse to have been married to an employee of the federal government, a former employee of the federal government who is receiving an annuity or a former CIA or foreign service employee.
The former spouse may not have remarried before age 55. Additionally, the former spouse must have been enrolled as a family member under the employee’s health program during the 18 months preceding the divorce, and the former spouse must be receiving or have a right to receive a portion of the federal employee’s retirement or survivor annuity benefits pursuant to a qualifying court order under federal law. Should an employee leave federal service before being eligible for an immediate annuity, the employee’s former spouse is eligible for enrollment only if the divorce occurred before the employee left federal service.
Former spouses who meet the foregoing requirements may elect individual coverage or coverage for themselves and the family. In this regard, the family is limited to unmarried, dependent natural or adopted children of both the former spouse and the employee or former employee. An unmarried dependent child must be under age 22 or incapable of self-support because of a mental or physical disability existing before age 22.
A former spouse’s enrollment terminates when the qualifying court order ceases to provide that spouse with a portion of the employee’s annuity or a survivor annuity under any of the retirement programs for government employees. Likewise, termination occurs if the former spouse remarries before age 55, or dies, or the employee dies leaving no survivor annuity payable to the former spouse. If the former federal employee obtains a refund of retirement money incident to being separated, enrollment by the former spouse is also foreclosed.
The Effect of Estrangement After Divorce
Often the estrangement between the federal employee and his or her former spouse is such that the spouse does not have notice of the circumstances of the departure of the federal employee from service. Where a former employee leaves federal service without establishing a right to an immediate or deferred annuity, and dies before meeting the requirements for deferred annuity, the Office of Personnel Management may authorize a temporary extension of coverage for the former spouse.
The cost to the former spouse for health care benefits is the full subscription charge for enrollment, including amounts determined to be necessary for administration and certain reserves. Normally, the full subscription charge will be withheld from the former spouse’s annuity check. If that is insufficient to cover the amount, the provisions will be made for payment of the premium directly to the retirement system.
Frequently, in negotiating a property settlement agreement, the federal employee will seek to preserve his or her entire pension, and negotiate to avoid electing a survivor benefit annuity. Because the nonemployee spouse cannot participate in health benefits without some interest in the annuity, counsel may want to preserve a small interest in the pension or survivor benefit — even when these have been waived for other considerations. Of course, if the court order as required by 5 U.S.C. § 8347 and 5 C.F.R. § 831.1701, et seq., is technically inadequate to affect an award of an annuity to a former spouse, the right to health benefits will be lost.
Civil Service Life Insurance
The Federal Employees’ Group Life Insurance statute and regulations (FEGLI) outline the coverage available to federal employees. 5 U.S.C. § 8701, et seq., and 5 C.F.R. §§ 870.101 through 870.902. A FEGLI policy builds no cash or loan value or paid-up or extended insurance. It cannot be assigned to anyone prior to loss. The basic insurance amount is the greater sum of $10,000 or the employee’s basic annual pay rounded to the next $1,000 plus $2,000. The maximum basic pay that may be used for the basic insurance amount is the annual rate payable for positions at level two of the Executive Schedule under 5 U.S.C. § 5313. Presently, this amounts to about $92,000.
There is an extra benefit for employees under the age of 45. The policy pays double if the employee is 35 or younger at the time of death. Beginning on the employee’s 36th birthday, the extra benefit decreases 10 percent each year until the employee reaches age 45.
Because the nonemployee spouse cannot participate in health benefits without some interest in the annuity, one may want to preserve a small interest in the pension or survivor benefit — even when these have been waived for other considerations.
FEGLI includes an accidental death and dismemberment (AD&D) benefit, as well as three options to the basic insurance:
- Option A: referred to as the standard option, increases coverage by $10,000.
- Option B: which is sometimes referred to as additional coverage, allows an amount equal to one, two, three, or five times the employee’s basic pay. The maximum amount of basic pay to be used for this option is, again, level two of the Executive Schedule.
- Option C: is family coverage for the employee’s spouse and each dependent child.
The cost of basic insurance is shared by the government and the employee.
Coverage After Retirement
Coverage of the basic insurance may continue upon retirement. However, an employee must meet certain conditions to carry the insurance into retirement. The employee must:
- Be immediately eligible to receive an annuity at the time he or she leaves government service.
- Have had basic life insurance coverage under the government program for the entire period during which coverage was available, or for the last five years of service.
- Not have converted his or her insurance to an individual policy.
If any of these conditions are not met, no AD&D coverage is available upon retirement.
Coverage for Beneficiaries
Beneficiaries under federal insurance are specifically defined under federal law. 5 U.S.C. § 8705. This statute governs precedence of death benefits in a manner similar to a state descent and distribution statute. However, federal law does not prohibit specific designation of a person, firm, corporation or other legal entity not set forth in the statute as a designated beneficiary. Therefore, a federal employee’s life insurance package is available for consideration as a tool in resolving domestic relations disputes.
Litigation involving federal life insurance, be it under FEGLI or SGLI, usually comes down to questions of entitlement to insurance proceeds. In some cases, there is no specifically designated beneficiary. In others there is ambiguity about a particular individual’s entitlement. These cases are numerous.
The most important responsibility for the family law attorney in terms of federal life insurance is to assure that appropriate government forms required to effect a change in beneficiary are completed as part of the initial resolution of the case. This should not be deferred until later. If designation of beneficiary is not accomplished in accordance with federal regulations, it will not be recognized.
Questions About Government Benefits?
Contact the law office of PGD Law PLLC, to talk to a lawyer from our firm. We have considerable experience handling a variety of family law matters for government employees and members of the armed services.
Call 703-291-0492 or 301-825-9629 or send us an email briefly describing your situation. We will respond quickly to set up an appointment, either in person at any of our three offices — Vienna, Virginia; Greenbelt, Maryland; and Washington, D.C. – or over the telephone.