Federal workers who want to avoid a potential cut in take-home pay in January need to do some serious homework next month. That’s even more critical for retired government workers and their survivors. Here’s the deal:
• White-collar (nonpostal) federal workers are slated to get a national pay raise of 2 percent next year. That amount could be slightly higher in Washington-Baltimore, New York and San Francisco once a locality adjustment is tacked on.
Last January, the national federal pay raise was 2.9 percent. However, when locality pay was factored in, the total increase for the largest concentration of government workers, right here in the Washington metropolitan area, was a combined raise worth 4.78 percent. To see how that played out in other cities, use this link: https://opm.gov/flsa/oca/09tables/pdf/saltbl.pdf
• Because of a decline in living costs during the past 12 months (not the calendar year), federal-military-Social Security retirees who got a 5.8 percent cost-of-living adjustment last January will not get any COLA increase next January.
• Health-insurance premiums covering 9 million members of the civilian federal family are going up an average of 8.8 percent next year. Before you decide to end it all, remember the word “average” may not apply to you or yours.
On the surface the situation looks bad. A 2 percent raise for a GS-10 employee at the $50,000 level or a long-time GS-15 being paid $153,200 will overcome higher health premiums with money left to spare. But for a lower-level fed making $25,000 a year before many, many deductions, the health premium increase could hurt — if you are “average.”
Whether you are high-level or in a lower grade, and whether you are getting a pay raise or not getting a COLA, the message is the same: You have to shop around during the open enrollment period that starts early next month.
Shopping for the best health plan deal is always important in the Federal Employee Health Benefits Program. But this year — with a very low raise and a zero COLA — is it essential.
Not all health-plan premiums are going up next year. Most federal workers in the Washington area, for example, are eligible to join 10 or more fee-for-service health plans with nationwide coverage. They also can choose from among a dozen or more local health maintenance organizations, which often charge lower premiums.
Not all of those plans are raising premiums. A few are holding the line. A couple are actually reducing biweekly premiums.
One of the beauties of the federal health program is that eligibles can switch from plan to plan each year in pursuit of specific benefits and/or lower premiums. People cannot be rejected for any reason. Also, they cannot be denied coverage because of age or pre-existing condition. Workers and retirees can also change plans anytime if they get married, divorced or have or adopt a child or if they have HMO coverage and move to a different geographic area.
In the event that a fed or retiree (or survivor) approaches the catastrophic limit for his existing plan, he can simply switch to another plan where the countdown begins at zero.
Most people — including the folks who work up the averages — concentrate on the Blue Cross-Blue Shield plans, for good reason. Sixty percent of the enrollees in the FEHBP are in one of the Blue Cross options, mostly in the standard option.
Many Blue Cross enrollees are retirees who have been with the plan for years. Retiree health costs are significantly higher, as a group, than those of younger workers. That has a major impact on the size of any premium increase for any plan, but especially the Blues family.
Next year, for example, the total premium for the Blues’ standard self-only plan will be $248.42 biweekly, of which the federal government (the employees agency) will pay the lion’s share, or $167.61. That means the increase to a single fed or retiree in that plan will be $10.63 every two weeks.
By contrast, the high-option benefit plan offered by GEHA (Government Employees Hospital Association) is cutting premiums next year. The bottom line is that people who enroll in self-only coverage will pay $11.95 per pay period less next year than they are paying today. GEHA’s family plan will cut premiums by 72 cents every two weeks. GEHAs’ standard option single and family plans are going up only $2.75 and $6.24 respectively.
The upcoming open season — Nov. 9 through Dec. 14 — isn’t only about shopping for health plans. During that time, the Office of Personnel Management says you can also:
• Enroll in a flexible spending account — a health care and/or dependent care account, under the FSAFEDS Program. Unlike with other programs, employees must re-enroll in FSAFEDS each year to participate. Enrollments do not carry over year to year.
• Enroll in, change, or cancel an existing enrollment in a dental plan under the FEDVIP Program.
• Enroll in, change, or cancel an existing enrollment in a vision plan under the FEDVIP Program.
• Enroll in, change or cancel an existing enrollment in a health plan under the FEHB Program.
Benefit changes, if any, will be announced later on but in plenty of time for the open enrollment period. Some of the plans will put more emphasis on health, wellness and preventive medicine. There is speculation that some plans may offer coverage (at a price) for children over 22.
Meantime, do the math. And try to avoid being “average.”
• Mike Causey’s Federal Report runs Mondays. Contact him at email@example.com or 202/895-5132.