- The Washington Times - Monday, September 6, 2004

There are some things — hair and air come to mind — that most people don’t worry about until they start to lose them. That’s true of the so-called “premium conversion” perk that most federal workers have, although many don’t even know they have it.

But the more than 2 million federal and postal workers who save $200 to $500 a year in taxes without effort will learn about the joys of premium conversion when they retire — and lose it the very next day. Once retired, federal workers no longer can pay their portion of their health premiums with pretax dollars. The tax break they got with every paycheck will disappear as soon as they retire. Unless …

Friends of federal workers and the nearly 2 million retirees and survivors will take one more shot at extending the premium conversion option to retirees when Congress returns this week. Even though this will be a short session, with few federal benefit bills on the agenda, a concentrated effort will be made to extend the tax break to retirees.

The Bush administration — which could use some image improvement within the federal community — would be smart to push the option. Rather than viewing it as a revenue loss (less tax money flowing in from retirees), they could bill it as a way to make it possible for more senior citizens to purchase health insurance or to upgrade their policies so that health insurance companies — not the individuals or the taxpayers — would pay more for health care.

Pay raise progress

The difference between a 1.5 percent pay raise and a 3.5 percent pay raise in January is tens of thousands of dollars, in pay as well as in enriched perks and retirement benefits, for the typical career white-collar civil servant.

The White House has proposed the lower amount, but there is a growing bipartisan move in Congress, including by members of the Republican House and Senate leadership, to ensure civilian feds and uniformed military personnel get the same 3.5 percent raise.

Since 1993, presidents have proposed smaller raises for civilian feds than called for under the 1990 federal pay law, which was enacted by a Democratic Congress and signed by President Bush’s father, George Bush.

Congress has gone around the White House each year since President Clinton first proposed a pay freeze, instead of the increase set by law. Last year Congress missed one of its key end-of-year pay deadlines. The result was that federal workers got the White House-approved portion of their pay raise on time in January but had to wait months, in some cases, before the amount Congress added on earlier this year was cranked into their paychecks.

It wasn’t until last month — eight months after the second step of the raise took effect — that some feds got their retroactive payments.

There isn’t much doubt that feds will get the higher raise again next year. But with Congress just back and eager to leave town again, anything could happen.

Life insurance

During the ongoing federal life insurance open season workers can increase coverage without being required to take a physical. That’s a break for people in poor health who couldn’t pass the physical required by companies outside the federal program.

But a word of caution: The new higher coverage doesn’t kick in until next September, so if you upgrade your coverage, plan to stay alive for at least 12 more months. Also, to take the higher coverage into retirement, you must work for five more years.

Mike Causey, senior editor at FederalNewsRadio.com, can be reached at 202/895-5132 or mcausey@federalnewsradio.com.

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