- The Washington Times - Monday, March 20, 2006

Federal employees could find themselves paying 20 percent more — or a total of $130 million extra a year — for their government-backed health insurance after retirement than what current retirees pay. The typical federal retiree would pay about half of his or her health care premiums, or an average of about $1,500 a year more than what retirees pay now.

The National Association of Active and Retired Federal Employees, whose membership includes working feds as well as current retirees, says the plan would cut further into annuities that already are much lower than pre-retirement income.

The Federal Employees Health Benefits Program (FEHBP) is the nation’s biggest group plan. It covers more than 9 million current and retired civil servants, their families and surviving spouses, and even some former spouses who never worked for Uncle Sam.

The government pays about 72 percent of the total premium, but a change proposed by the Republican Study Committee would decrease what the government pays for future retirees by two percentage points for each year of service less than 30 years. The RSC is not a standing committee, but the more than 110 House Republican members help make policy and legislative proposals. Lowering the government share of health care premiums for “short-service” feds is one of the proposals in a 65-page document on ways to balance the budget.

Last year, the Congressional Budget Office (CBO) “scored” the savings to the government, from paying a reduced share of premiums, at about $130 million in the first year and more than $1.6 billion in the first five years. Put another way, that means people retiring after the change — which would require legislation — would pay that much more for health insurance.

The typical first-time fed hired today is 31. Most retirees in recent years have left with less than 30 years of federal/military service. That is partly because of changing government hiring patterns: Fewer clerical jobs mean fewer right-out-of-high-school hires. People are coming into government later, and fewer of them have military service that can be combined with their civilian federal service for retirement purposes.

Figuring the government share is complex, but it is fixed by law at 72 percent of “the weighted average premium of all participating plans.” As a result, although health premiums go up each year, most of the increase is borne by the government for both workers and retirees. Under the RSC plan — which is part of a 65-page laundry list of cuts that supposedly would balance the budget — it is estimated that the government contribution to health care premiums would drop to 52 percent from the current 72 percent for new retirees.

In a study last year on the same proposal, the CBO says “about 60 percent of the roughly 60,000 new nonpostal retirees who continue in the FEHBP each year have less than 30 years of service. The average new retiree affected by this option would pay about 50 percent of his or her premium rather than 30 percent, an annual increase of approximately $1,500 in 2006.”

TSP scam

If you have a Thrift Savings Plan account — most federal and military people do — don’t fall for a fake e-mail asking for your Social Security number and/or date of birth to “update” your account. The e-mail is from bad guys trying to steal your identity. Many retirees also have TSP accounts, and they too have been getting the bogus e-mail requests. So if you get one, delete it. And if you were taken in by the e-mail and passed on your information, call this number as soon as possible: 877/968-3778.

Retiree raise

Federal retirees, military retirees and folks who get Social Security checks are due another cost-of-living adjustment (COLA) in January.

The amount will be determined by the rise in living costs over the next seven months. Right now, five months into the COLA countdown, the retirees have “banked” at least 0.8 percent toward their January boost.

Feds retired under the old Civil Service Retirement System will get a full COLA regardless of their age. Those retired under the Federal Employees Retirement System, which replaced CSRS in the mid-1980s, get slightly reduced COLAs that don’t begin until they are age 62.

Mike Causey, senior editor at Federal News Radio AM 1050, can be reached at 202/895-5132 or [email protected]

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