What a Government Shutdown Means for Federal Employees and Their Benefits

When the federal government shuts down, millions of federal employees face uncertainty about their work schedules, paychecks, and benefits. A shutdown occurs when Congress does not pass funding legislation in time, forcing agencies to suspend or limit operations. Some employees continue to work without pay because they are designated essential, while others are furloughed until funding resumes. Either way, federal employee pay is delayed until Congress agrees on a budget.

For federal employees, this creates a ripple effect beyond the paycheck. Benefits like federal health insurance, life insurance, and retirement contributions may be impacted, and there can also be questions about supplemental coverage such as disability insurance. The following overview explains what happens during a shutdown and what federal employees should know.

How a Shutdown Affects Federal Pay and Benefits

The most immediate effect of a shutdown is the delay of federal employee paychecks. Federal law requires that once funding resumes, employees receive back pay. This means that while you may not be paid on your regular schedule, your pay will be restored once the shutdown ends.

Your Federal Employees Health Benefits (FEHB) program coverage continues during the shutdown. Coverage remains in place, and premiums are collected from your back pay once payroll resumes. You do not need to take any action to maintain FEHB coverage.

Federal Employees’ Group Life Insurance (FEGLI) also continues during a shutdown. Premiums are delayed and then collected retroactively. You remain insured during the entire period, even if your paycheck is interrupted.

Thrift Savings Plan (TSP) contributions pause because they are linked to your paychecks. Once payroll resumes, contributions continue as normal. Your service time under the Federal Employees Retirement System (FERS) is not reduced by a shutdown, and your eligibility for retirement is not affected.

Other federal employee benefits such as dental, vision, and long-term care insurance remain in place, with premiums deducted once paychecks restart.

What This Means for Supplemental Coverage

Many federal employees carry supplemental protection to fill in gaps in the federal system. This may include federal employee disability insurance, additional life insurance, accident insurance, hospital indemnity, or critical illness coverage.

• If your premiums are paid through payroll allotment, deductions stop during the shutdown, but coverage does not automatically end. Once payroll resumes, missed payments are usually reconciled. Grace periods ensure that coverage remains active.

• If you pay through ACH or direct bank draft, payments continue as normal. ACH is not tied to the federal payroll system, so your premiums remain current even during the shutdown.

  
  

Claims for supplemental coverage can still be filed and processed. Whether you are enrolled in disability insurance through FedAdvantage or carry another supplemental benefit, your coverage remains in place, and claims are paid according to policy terms.

What Federal Employees Should Keep in Mind

A shutdown is stressful because it disrupts paychecks and creates financial strain, but your benefits remain secure. Health, life, and other employer-sponsored programs continue during the shutdown. Supplemental programs through FedAdvantage also continue, and missed premiums tied to payroll allotment are not considered voluntary nonpayment.

If you are concerned about delays in payroll deductions, you may want to consider ACH as an alternative to ensure continuous premium payments. This option keeps your coverage current regardless of government operations.

If you are currently enrolled in FedAdvantage benefits, you do not need to take action to maintain your coverage during the shutdown. If you would like to enroll or make changes, enrollment remains open and applications can be processed.

Quick guide:

• Paychecks are delayed but guaranteed by law once funding resumes.

• FEHB health insurance continues without interruption.

• FEGLI life insurance remains active.

• FERS retirement service time is not reduced.

• TSP contributions pause, then restart automatically.

• Supplemental benefits stay in force, with premiums reconciled later.

• ACH/direct debit premium payments continue without delay.

The Bottom Line: Federal Employee Benefits Stay Secure

Government shutdowns create uncertainty, but they do not cancel your benefits. Federal employees can be confident that both employer-sponsored programs and supplemental coverage through providers like FedAdvantage remain in place. Once payroll resumes, all missed deductions are reconciled, and coverage continues uninterrupted.

If you have questions about your supplemental coverage or would like to review your options, the FedAdvantage Member Services team is available to help. Knowing that your benefits remain secure can provide some peace of mind while the government works to restore funding.