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Personal Finance Guide for Federal Employees on Furlough

  • February 26, 2019

Since 1976 Congress has failed to authorize federal funding on dozens of occasions. The resulting government shutdowns have ranged in length from a few days to as long as a month during Bill Clinton’s presidency. Unfortunately, government shutdowns can carry serious and unpredictable consequences for federal workers and other Americans.

The best way to alleviate anxiety is to be proactive, so in this article we explain what happens with your pay and benefits during a shutdown, and outline the steps you can take to prepare for the next one.

What happens to pay and benefits during a shutdown?


Federal employees whose salaries are paid by congressional appropriations won’t receive wages during a shutdown, even if they are “essential” and must keep working. However, most will receive back pay after the shutdown ends. Agencies and positions funded by other means won’t see an interruption to pay. And benefits continue, with some caveats, for everyone both within and outside of the government.

Unemployment Benefits

Federal employees can apply for state unemployment benefits just like any other furloughed or laid off worker. However, the short-term nature of shutdowns makes this option unlikely to help; most states require a waiting period of one or more weeks before benefits start. Furthermore, you may have to return unemployment compensation once you receive back pay.

Back Pay

After the 2013 government shutdown, federal employees received back pay for the time they were furloughed, thanks to a provision in the spending bill that reopened the government. The same thing happened after the recent three-day shutdown in January. Support for federal employee back pay is so strong that several senators have introduced bills, such as the Federal Employee Retroactive Pay Fairness Act, that would guarantee back pay to furloughed workers after a lapse in appropriations. While these bills haven’t become law yet, history suggests it’s safe to assume that Congress will include back pay for federal workers in any spending bill that reopens the government after a shutdown.

Health Insurance And Other Benefits

Luckily, health benefits continue even when premium payments aren’t made on time. Just as back pay accumulates during a furlough; your contribution to the health insurance plan will accumulate during the time you are not paid. Whenever you receive your next check, the appropriate amount will be deducted.

Uninterrupted coverage will also continue for enrollees in the Federal Employees’ Group Life Insurance Program and the Federal Long Term Care Insurance Program. However, you will be billed directly for long term care insurance premiums after three consecutive pay periods without automatic deductions. You must pay on a timely basis in order to continue your coverage. The same rule applies for vision and dental insurance. After several pay periods of accumulated unpaid premiums, you will be billed and must pay your share of premiums out of your own pocket. Retired federal workers won’t see a gap in annuity payments, which continue as scheduled during a shutdown.

Social Security

If you collect Social Security, Supplemental Security Income, unemployment insurance, Temporary Assistance for Needy Families, or food stamps, your checks or benefits will continue to arrive because these programs don’t rely on Congress for funding.

Which positions are exempt from shutdown furloughs?


If you want to know how your position will be affected by a shutdown, the first question to ask is whether or not your agency is funded by the congressional appropriations process. If it isn’t, like the Postal Service, for example, operations will continue as normal throughout a government shutdown. If your position is funded through appropriations, you are either an “excepted” or “non-excepted” employee, a distinction between essential or non-essential jobs.

Excepted Positions

These include federal employees responsible for emergency work such as protecting people’s lives, safety, and property. For example, air-traffic controllers at the FAA and TSA officers are excepted from furlough. Each government agency can designate which positions are excepted or not according to its contingency plan. Your agency and manager should tell you whether or not you will be furloughed during a shutdown.

While excepted employees won’t receive pay during a shutdown, they are guaranteed to be paid once a new spending bill is passed.

Non-Excepted Positions

If you are not in an excepted position and your salary is funded through annual appropriations bills, you will be asked not to work (furloughed) during a shutdown. While non-excepted employees are officially on an unpaid furlough, they have historically received back pay after the furlough ended, as we mentioned earlier.

Prepare your finances for furlough


With another potential government shutdown looming and possible shutdowns in the future, it’s wise to start preparing a financial cushion now. After all, a furlough isn’t the only thing that could trip you up. If you are living paycheck to paycheck, even a relatively minor unexpected expense like a car repair could send you scrambling. Here are some steps you can take now to get ready for a furlough or other unanticipated event.

Create a monthly budget

It seems simple but many people never take the time to plan or track their spending. Operating without a budget makes it easy to overspend or continue paying for services you don’t really need or use. Take the time to create a budget–it can be as simple or complicated as you like.

Not sure how to start? Dave Ramsey explains the budgeting process in four steps. Want personalized help with creating a budget? SkyOne offers free debt and budget coaching to our members.

Once you have a better understanding of where your money goes, you can separate necessities from luxuries. For example, food is a necessity but eating out is a luxury. Clothing is a necessity but you may already have a complete wardrobe. When you do need to buy a new household or personal item, you may be able to find it cheaper at a thrift or consignment store, or from a website like Craigslist. Even the cost of something like cable, which many people consider a necessity, can be eliminated or reduced by, for example, subscribing to a cheaper monthly streaming service instead.

You may simply want to make a list of expenses you could cut in the event of a furlough. You could also experiment with reducing some of them now. After all, any money you free up in your budget could be directed toward an emergency fund or other savings account.

Set a savings goal

Speaking of saving, you should calculate the amount you’ll need in savings to cover necessities during an unpaid furlough. Whether a shutdown lasts for a few days, or a week plus, you’ll need an emergency fund you can draw from to meet bills and expenses that can’t be reduced or deferred.

Once you have a savings goal, figure out how much you can afford to allocate each month to your emergency fund. Many savings accounts allow you to set up automatic deposits so you can save without thinking about it. Watch the money accumulate and take comfort in the greater sense of confidence you feel.

Another option is to make a financial hardship withdrawal from your Thrift Savings Plan. However, this should be a last resort, not a go-to emergency fund, because there are tax consequences, particularly if you are younger than 59.


Understand how your credit union can help


Your credit union can be a helpful partner when you are facing an adverse event or need help figuring out the best way to meet your financial needs. Here are some of the programs SkyOne offers.

Emergency Relief Program

This program includes a short-term loan specifically designed for furloughs and other times of brief financial hardship. With loan amounts of up to $5,000 and 0% APR* for the first 90 days, Crisis Co-Pilot can help you cover bills and other necessities during a government shutdown until you receive back pay. Learn other ways the program can help.


Chartered Federal Employee Benefits Consultant

Have a question about your federal benefits options or want to know how these programs can help you during a government shutdown? Our complimentary consultations and seminars available through CUSO Financial Services, L.P.1 help you understand the coverage you already have as well as additional choices you could make to complement or supplement your federal employee benefits.


BALANCE Financial Counseling

Enjoy free financial education resources to help you with budgeting, debt, and other financial topics.



Personal Loans
As you analyze your financial situation and create a budget, you may find that debt consolidation could help you reduce your monthly expenses. We offer personal loans for this and other reasons. Check out our competitive interest rates, which are about half the average credit card APR.

Questions? Call us at 800.421.7111 or email


*Annual Percentage Rate. Published rates are subject to change any time.
1 Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. SkyOne Federal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.


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