How Your Spouse and Children Affect Your Retirement Benefits

2.23.23: Audio automatically transcribed by Sonix

2.23.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Val Majewski:
Welcome back to the Federal Retirement Show. I'm your host Val Majewski with American Benefits Exchange. As always appreciate you joining us to learn about your benefits and retirement information. We do this for you. That's the purpose of this show. That's what it's here for, to provide you information that we believe you, as the federal employee, need to know. And hopefully we've hit on a lot of topics of interest, things that you desire to learn about. If you have not seen all of our previous episodes, I highly recommend you go to wherever you listen to your podcast or to our website, Federal Retirement Show.com and view all of the content that we have available. It's all there for you. It's informational. If you need more detailed information, if you say, hey, I want to dive into this topic a little bit more, I want to look at my personal situation. Hey, I didn't realize I should look into this. There's a form on the website. Fill it out. If it's not me personally, one of our reps nationwide will reach out to you to review your benefits. Go over your situation, answer your questions, give you the guidance that you need, and then also, if you would like a copy of our book, There's No Excuse Your Guide to Maximizing your Federal Employee Benefits. We can send you a digital or hard copy of that book. So let's dive into today's information.

Val Majewski:
And I want to talk to you a little bit about spouse and children. I say this all the time when I give federal benefit presentations. I actually said it today when I was talking to a group outside of DC. And when it comes to spouse and kids and your benefits, I believe it's my opinion that they are some of the most underserved areas of your life. You have everything when it comes to your benefits, revolves around you. And I'm going to talk about two different things we'll talk about vaguely for a little bit. I'm going to talk about your health insurance. So when it comes to your spouse and kids, we want to make sure that they're fully covered as well, that you're preparing for their future as well as yours. Because when we look at your situation, we're guiding you towards your retirement, but your spouse and children are along for the ride, and we want to make sure that they're included, that you're maximizing things for them as well. And if you've watched our episodes, if you've seen it, we say these two words a lot maximize and optimize. We want to make sure that you're set up properly. So let's talk first about your family. And if you recall, or if you know from your current situation that you have four different things that you can get with family. Federal employee group life insurance.

Val Majewski:
First is basic. Basic life insurance is based on your salary. It's essentially one multiple of your salary. Option A is also for you, the federal employee. That's an extra $10,000 if you have that. And option B is the bigger one, where you can get up to five times your salary and additional insurance. But then there's option C. So up to this point, basic A and B, all of this life insurance is on you. The federal employee. And you can get a significant amount essentially six times your salary in total insurance and a little bit more than that. But when it comes to option C, this is now where you can get life insurance on your spouse and kids significant amount of coverage on yourself, as I mentioned up to six times, if not a little bit more than six times your your salary in total spouse and kids, how much can you get for them? Well, spouse you can get up to five units. It's not five multiples of your salary, five units of coverage. Now what is a unit? A unit for your spouse is $5,000. So max coverage for your spouse is 25,000. You can get up to six times total again with basic and five multiples of option B. That's essentially six times your salary in total coverage for you, the federal employee, but only up to 25,000 for a spouse.

Val Majewski:
There's an imbalance there. Now, I know that some may be say, well, you know, my I'm the primary breadwinner or my spouse doesn't work, my spouse stays at home. But I know that if something happened to my spouse and my spouse happened to be a stay at home spouse, then 25,000 wasn't really going to cover it. I'd want to make sure that we're correcting that imbalance, and that's one of the underserved areas, is I'm saying you can get up to a significant amount of insurance for yourself, but only up to 25,000 for your spouse. And this is group terms insurance also. So there's no cash built in there. There's no way that it's going to get more than 25. It's 25,000. Well how can you get more then. Well, you have to look outside the government plan. So option C you can get up to 25,000 if you want more than that. Even if you want to get half of the total that you have, you have to look outside the government. And there are so many different plans you can go with and so many different ways that you can design a plan for your spouse. It can revolve around private insurance or forms of permanent insurance, and ways in which you can build cash value. So when the the temporary coverage falls off. Now your spouse has some permanent coverage that will last for the rest of their life.

Val Majewski:
This is not something you can do within the government plan. So you can do this outside to make sure we're correcting that imbalance between the life insurance you have versus the life insurance you're allowed to get through the government for your spouse. Now, the same can be said for kids. How does your child insurance work or life insurance work with option C? Well, if it's five units of coverage, the most you can get. What's a what's a unit for your child? It's $2,500. So 5000 per unit for a spouse 2500 for a child. That's a max coverage of $12,500. Now not that we want anything to happen to our kids, but still 12,500, even if it's for each kid. And I've got five kids. Eight kids, even if I have one kid, each one will have 12 up to 12,500. Well, what if something happens to them? How does that work? Is that going to cover everything now? Not just about the coverage, but how long does that last word now, spouse and spouse insurance will last as long as you continue to keep it, as long as you continue to pay for it. But children, similar to how health insurance work will age out. Now, when do they age out of the option C plan? Your children will age out of option C once they hit the age 22, once they obtain age 22.

Val Majewski:
Now, the definition for a child with an option C is under the age of 22 and not married. So as long as they satisfy that, they will have coverage. But once they do hit that age 22 number, they're no longer going to be eligible for coverage under option C, so that up to 12,500 will go away. Now, cost does not decrease for you once they age out, but their coverage will go away. What can be a better plan for your kids? Now? Not only would we maybe want to get them a little more life insurance, but we can design plans and look at ways that other federal employees have provided this type of coverage for their kids. What are some examples? There are plans out there that kind of grow with your child. They you put in a little bit of money. They get older that benefit that they have increases, but also the value within the plan. There's some equity built into this plan. Again, we don't want to see anything happen to our kids. But if something did happen, they're covered. And what if something doesn't happen? They're also covered. Meaning we're building some equity in this plan. I'll give you an example of what I did for my kids. Now, I'm not a federal employee, and that doesn't mean that this plan is not good for federal employees. But I'm just making that clear.

Val Majewski:
I'm not a federal employee. Um, but I recognize the need to set something up for my children. Somebody did this for me. My great grandmother did this for me when I was younger, and I wanted to do something similar, if not a little bit stronger, better for my kids. I set up a plan that does provide life insurance. However, that plan is designed to build cash as we go and over time it will build significant cash. They'd be a little slow at first, and then over time, as they get older, it will have a good amount of cash in there. And my goal is that when they graduate college or they're off on their own, let's say around age 25 or so, I can come to them in the same way that my parents came to me and say, hey, this is something that we set up for you when you were super young, right, right around the time you were born. We've been putting into it a certain amount of money each month. You can either take this money and it could be a head start for you, or we'd recommend you continue to pay that monthly amount and have it be a starter life insurance, as well as a starter cash savings account for yourself or your future. And I had that option as well. Now, I wasn't as smart as a 19 year old kid when I got brought this opportunity to what did I do? I took the cash out of the policy and got rid of it.

Val Majewski:
It wasn't a significant amount like the one we're setting up for our kids, but it's a way in which you can provide some kind of benefit, some kind of value for them. And oh, by the way, if something did happen, there is some life insurance or death benefit protection, but it is a better way to spend some money than putting it into option C, especially if our kids are going to age out at 22 and was not going to be any more value for them beyond that. So from a life insurance perspective, I said, spouse and kids, how can we provide for them? Uh, you can certainly get option C, but you understand you're maxing out at 25,000 for a spouse, 12,500 for each child that is under the age of 22 and not married. You can look at other plans outside the government in order to provide better coverage for both your spouse and kids, and especially a customized design for each of those. Because everybody's situation is different, there's not a one size fits all solution. We want to make sure we're customizing these plans for you, your situation, your budget, etc.. So that's with life insurance. What about on the health insurance side? So on the health insurance side, yes, your spouse is not necessarily underserved.

Val Majewski:
Your spouse can enjoy your health benefits to the fullest, right? You have very good health benefits as a federal government. Now, I know I've talked to a lot, and some people have told me that they didn't think the health coverage was great. I will tell you, compared to what you can get in the private sector, it is it is really great. You guys do have very good benefits and you can continue to keep those benefits not only for your entire working career, but into retirement. And your spouse can enjoy those benefits the entire time as well. But what about your kids? Now your kids? It's different than the life insurance where the child ages out once they attain age 22. In the health insurance side under your fhlbb, they will age out when they hit age 26. So your child can stay on your health insurance if you've got family coverage and they can maintain that until they turn 26. But what happens beyond that? Well, this is where we want to make sure that they're understanding all the rules and what exactly they can do. Um, as your your child is approaching 26, you can talk to them about the options. They have the ability to request a temporary continuation of coverage, a TCC, as they call it, and apply for that in order to continue with that same health plan for an extended period until they figure out what their next step is.

Val Majewski:
So that's called a temporary continuation of coverage. What happens in that scenario? Well, you would apply for this. Normally you have to apply for this within 60 days of them obtaining age 22 or losing their coverage. And the child will be responsible for the full premium. So it's not that they're getting a discount, they're responsible for the full premium for whichever plan they were rolling into. Um, for that. Now, this coverage could last up to 36 months. So this temporary continuation of coverage is TCC can last up to 36 months for a child. Okay. This is for a child. There's different rules. If there were a spouse ex-spouse, things like that. But for a child losing coverage, it's up to 36 months at the end of that period when the TCC is going away, they have the ability to convert to an individual plan from the same carrier that you've got your current plan from. So they have a way in which they can, uh, continue the health insurance. But they you need to be proactive in this because if you don't catch it the right time, they may lose their opportunity. So I'm not saying that your child is underserved when it comes to your health insurance, but there's going to be a point at which they age out, and they can have the ability to continue that coverage for a temporary period of time, as well as get some coverage on their own.

Val Majewski:
Now, if they need something additional, obviously they may be in the workforce at that place at that time at 26, there could be other things that they'd be looking at, right? Maybe you did set up that life insurance plan for them when they were younger. Maybe you did set up some other sort of coverage for them as well. But when it comes to the health insurance side, they can continue as long as we're doing it within that time frame. If you don't get in with that within that time frame, there might be a problem. You may not be able to continue that coverage after turning age 26. So hopefully you found this information helpful. Hopefully you learned a little bit about spouse and child coverage when it comes to life insurance. When it comes to your fhlbb and especially, you know, making sure that your kids are taken care of, right? I want to emphasize that not only we want to make sure our spouse is secured with, uh, our life insurance and maybe our retirement savings, but also, if something were to happen to them that you've got the proper coverage on your spouse. Uh, same to go with the kids. We can provide different value or better value with plans that are out there and make sure that they're covered as well, and understand all the options that your child has when it comes to them aging out of your health insurance, you want to make sure that they're taking advantage of that so they're not left looking for something that may not be as beneficial.

Val Majewski:
As I said, your fhlbb plans are very good and have been good for a very long time compared to the ones that are available in the private sector. So again, if you need more information, you can check out all of our episodes. See if you can find your answers there. If you cannot reach out to us, go to Federal Retirement Show.com fill out the form. And as I mentioned earlier, one of our representatives across the country, if it's not me personally, will be reaching out to connect with you, review your situation and get all of your questions answered. I really hope you enjoyed this session. Today when we talk about spouse and child insurance options, um, write us again. If there is something that you have not heard. If there's a topic that we have not discussed, you can reach out to us. We'd be happy to bring that to everybody else's attention, because if you need it, I'm sure somebody else does too. Well, thank you again for your time and I look forward to seeing you on a future episode.

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