The Foreign Service Journal, June 2010

T he 2010National DefenseAuthor- ization Act made significant changes in the rules for employees in the new retirement system, the For- eign Service Pension System. As of Oct. 28, 2009, employees in this system will receive credit for unused sick leave and can reinstate refunded FSPS service credit if they redeposit refunded retire- ment contributions with interest. According to the 2010 NDAA, un- used sick leave will be counted as serv- ice credit in the computation of retire- ment benefits under FSPS, but not for establishing eligibility for an annuity or in computing the high-three average salary. As a result, sick leave will be used in the computations in the same man- ner it is used in the old retirement sys- tem, the Foreign Service Retirement and Disability System. Employees who leave the Foreign Service, retire with a right to an imme- diate annuity, or die leaving a survivor eligible for a survivor annuity on or after Oct. 28, 2009, will receive credit for 50 percent of their unused sick leave. Those who leave the Foreign Service, re- tire or die with a survivor annuity on or after Jan. 1, 2014, will receive service credit for 100 percent of their unused sick leave. Those whose annuities have both FSRDS and FSPS components will receive service credit only for sick leave not included in the calculation of the FSRDS component. Calculations for service credit for sick leave will be made at the time of re- tirement. The department has advised former employees who retired since Oct. 28 — and are still waiting for their calculations to be done— that they will have their annuities recomputed in the next two to three months. Since its enactment, the FSPS law has provided that employees who leave gov- ernment service and receive a refund of their FSPS retirement contributions shall lose service credit for the period of service covered by the refund. The 2010 NDAA changes that prohibition, per- mitting individuals who were reem- ployed on or after Oct. 28 to redeposit the refunded amount plus interest and receive credit for the service reinstated. Survivors entitled to survivor annuities may also make redeposits. FSPS employees may make a rede- posit of refunded retirement contribu- tions by logging into the Employee Benefits Information System and com- pleting a Prior Service Request under the “HR Link”module. ❏ The FS Pension System and Sick Leave BY BONNIE BROWN, COORDINATOR FOR RETIREE COUNSELING AND LEGISLATION A F S A N E W S I n March, President Obama signed into law two major pieces of legisla- tion that will make significant changes to the provision, availability and re- quirements of health insurance inAmer- ica, including changes that affect the Federal Employee Health Benefits Pro- gram. These two bills are H.R. 3590, the Patient Protection and Affordable Care Act (P.L. 111-148) and H.R. 4872, the Health Care and Education Reconcilia- tion Act of 2010, which made technical fixes and amended parts of P.L. 111-148. Many AFSA members are asking questions about what exactly is in P.L. 111-148, and how it will affect them. This law will make some changes that have an impact on the FEHBP and over- all health insurance regulations. Some provisions will go into place immedi- ately, while others will be implemented over the next few years. Changes to the FEHPB The bill (P.L. 111-148) introduces an excise-tax on high-value employee health insurance plans, like many of the plans offered through the FEHBP. Insurance companies will be required to pay a 40- percent tax on health care plans valued at the threshold levels of more than $10,200 for individuals and more than $27,500 for family coverage starting in 2018. However, the threshold levels that the plans are taxed at could rise if the cost of coverage in the standard Blue Cross Blue Shield option in FEHBP rises more quickly than projected between now and 2018. An important change for families with older-children dependents is that the new law will require any health in- surance plan that offers dependent cov- erage to cover unmarried children until they turn 26, and this change will go into effect in roughly six months. There was some initial concern that the legislation was vague about whether or not this ex- tension of coverage would apply to FEHBP plans, but the insurance compa- nies have since said that it would, and that they will not challenge this. For a more comprehensive overview of the bill and changes, please visit www.afsa.org/congress/hcr.pdf. ❏ 54 F O R E I G N S E R V I C E J O U R N A L / J U N E 2 0 1 0 Legislative Update: Health Insurance BY CASEY FRARY, LEGISLATIVE DIRECTOR This law will make changes that affect the FEHBP and overall health insurance regulations. Some provisions will go into place immediately, while others will be implemented over the next few years.