Monthly Archives

August 2018

Sen John Kennedy

Senator Tries to Ensure That at Least 14,000 Feds Have Their Pay Frozen Next Year

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As the Senate began debate Monday on another minibus spending bill, one Republican lawmaker renewed his push to freeze federal employees’ pay, albeit on a much smaller scale than President Trump has proposed.

Last week, Sen. John Kennedy, R-La., introduced an amendment to the fiscal 2019 appropriations bill for the Defense, Labor, Education, and Health and Human Services departments (H.R. 6157) that would freeze the pay of the more than 14,000 employees at the Labor Department next year, unless the department devises a plan to reduce “improper payments.”

In June, Kennedy unsuccessfully attempted to insert a pay freeze for all federal civilian employees in the fiscal 2019 Financial Services and General Government appropriations bill, an effort that was voted down by the Senate Appropriations Committee 29-2. The committee instead approved a 1.9 percent pay hike for federal civilians in 2019, setting up a fight with the House, which backed President Trump’s proposed pay freeze for federal employees.

A spokesperson for Kennedy declined to comment on what payments from the Labor Department were “improper,” and directed inquiries on his amendment to a June 28 statement issued following the failure of his governmentwide pay freeze proposal.

“Washington is on a spending spree, and it’s time for some change around here,” Kennedy said at the time. “My amendment would have saved hundreds of millions of taxpayer dollars in a payroll that tops $270 billion annually. We could have used the savings to pay down the national debt and invest in our children’s futures. It may have only gotten two votes, but at least I tried. And I’ll keep fighting to curtail government spending.”

It is unclear whether the Senate will allow the Labor Department pay freeze proposal to come to the floor for a vote.

When the House returns from its August recess after Labor Day, it is expected to go to conference with the Senate to hash out the differences between the two chambers’ versions of the fiscal 2019 spending bill that includes Financial Services and General Government funding. Among other differences, the negotiators will decide whether to keep the 1.9 percent raise for civilians governmentwide that is in the Senate’s bill.

It’s always good to get all of the facts, especially when you are closer to retirement.  We offer free Federal Retirement Reviews for all Federal Employees working within the Federal Government, just fill out the simple Contact Us Form for your free review.

USPS Mail Truck

Arbitrator Overturns USPS Ban On Politically Motivated Leave

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The U.S. Postal Service must rescind a recent policy that its employees cannot take union official leave without pay to undertake “partisan political activity,” third party arbitrator Stephen B. Goldberg ruled August 6.

The Postal service instituted the change to the Employee and Labor Relations Manual (ELM) after a July 2017 Office of Special Counsel investigation called for the removal of such leave practices as they constituted a “systemic violation of the Hatch Act,” which restricts political campaign activities by federal employees.

But the American Postal Workers Union argued that the change violated rules preventing the Postal Service from making mid-term changes to leave policies and from making unilateral changes affecting wages, hours and other terms and conditions of employment without notice and consultation with the union.

The arbitrator ruled in the union’s favor, stating that the OSC did not have the authority to determine whether a violation of the Hatch Act has occurred, as that authority rests with the Merit Systems Protection Board. The Postal Service was therefore under no obligation to change its leave policies without consulting the union.

“To be sure, ignoring an OSC opinion or allegation creates the risk that OSC will institute proceedings before the MSPB. The possibility that it will do so does not, however, lead to the conclusion that the Postal Service need not abide by its contractual commitment to arbitrate,” Goldberg wrote in his award.

“I have found that the Postal Service violated Article 10.2, Article 5, and Article 19 in the changes it made to ELM Exhibit 514.4 and Postal Service Form 3971, and will, as the Union requests, direct the Postal Service to rescind those changes. I shall also direct the Postal Service to make whole any employees disciplined or whose LWOP requests were denied because they indicated they were requesting ‘union official’ LWOP to engage in partisan political activity.”

According to an APWU news release on the award, this means that its members can still continue to volunteer in political campaigns under LWOP.

“This is what workers in a union do – make management respect their legal rights,” said APWU President Mark Diamondstein. “Process matters, and we earn process and have a real voice when we come together, both in bargaining and in politics.”

Ever wonder where you stand within the Federal Service and your retirement?  Reach out for your free Federal Retirement Review that way you know how much longer until you can retire.

Most Asked Question Going Into Retirement – Medicare

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Are you unsure about whether you should enroll in Medicare after you’re retired if you’re also covered under the Federal Employees Health Benefits Program? If so, you’re not alone. The number one query I get in my email inbox starts something like this: “I have a simple question for you. I’m about to turn 65 and I’m not sure what to do about Medicare enrollment.”

Unfortunately, this is not a simple question to answer. First of all, Medicare has four parts: A (hospital Insurance), B (outpatient or doctor’s coverage), C (Medicare Advantage) and D (prescription drug coverage). Each part provides benefits that are largely duplicated by FEHBP coverage. In addition, you will continue to be covered by your FEHBP plan even if you choose not to enroll in Medicare. Despite both of these facts, the majority of federal retirees choose to enroll in Medicare Part A and Part B. Let’s explore why.

Most people will have paid the Medicare hospital insurance tax (1.45 percent payroll tax) during their careers and will automatically be entitled to Medicare Part A without paying a premium. This coverage, when combined with most FEHBP plans, will generally cover 100 percent of hospital room and board and other inpatient expenses when Medicare Part A is the primary payer. (Generally, Medicare pays first once your FEHBP premiums are being deducted from a federal retirement check rather than from you or your spouse’s paycheck.)

Most federal employees and retirees do not choose to enroll in Medicare C or D. Medicare C can be used instead of FEHBP. It includes Medicare A and B along with additional benefits that may include dental, vision, hearing and prescription drug coverage. Part D provides additional prescription drug coverage for retirees who may not have prescription benefits that meet the Centers for Medicare and Medicaid Services minimum coverage standards. Generally, this does not include federal retirees covered by an FEHBP plan.

That leaves Part B. In 2016, the Congressional Research Service reported that 86 percent of federal retirees 65 and older who were enrolled in a fee-for-service FEHBP plan (such as Blue Cross/Blue Shield, GEHA or NALC) had also signed up for Medicare parts A and B. And 56 percent of retirees who were enrolled in an HMO (such as Kaiser Permanente or United Healthcare) were also enrolled in parts A and B. The report said that in the previous 20 years, the percentage of retirees enrolled in in a fee-for-service FEHBP plan and Medicare A and B had dropped by 6 percent. The percentage of retirees enrolled in an FEHBP HMO plan and parts A and B had declined by more than 10 percent.

This drop in Medicare enrollment can be attributed largely to the rising cost of Part B coverage. The standard 2018 premium is $134 per month per individual enrolled. So for a married couple, the cost would be $3,216 per year. In addition, an income-related monthly adjustment amount can raise the cost considerably higher.

About 70 percent of Medicare enrollees are covered by a “hold harmless” provision that prevents the annual increase in their premiums from exceeding the cost-of-living increase in Social Security benefits if the premiums are automatically deducted from their Social Security payments. This applies to about 70 percent of Medicare enrollees. Some 42 percent of Part B enrollees who are subject to this provision for 2018 pay the full $134 standard rate because the 2018 increase in Social Security was adequate to cover the additional cost of Medicare Part B.

People who are 65 or older and covered by a health plan based on current employment can delay enrollment in Medicare Part B without penalty. They will have a special enrollment period that will follow their retirement by eight months. Those who aren’t covered by health insurance based on current employment will incur a permanent 10 percent surcharge on the Part B premium for every 12-month period that enrollment is delayed.

So why might you want to add Part B to your FEHBP coverage when you’re over 65 and retired? I recently was talking to a federal retiree who requires physical therapy to treat knee problems stemming from years of pounding the pavement as a runner. Her out of pocket expense for the therapy is $100 per visit. She is entitled to a generous federal retirement benefit and has a substantial balance in her TSP account, but she limits her therapy visits to less than those prescribed by her doctor because of the  out of pocket expense. If she were enrolled in Medicare Part B, her FEHBP plan would waive the out of pocket expense because Medicare would be her primary payer. Medicare would pay 80 percent of the Medicare-approved amount and her FEHBP plan would only have to cover 20 percent. If her provider participates in Medicare and accepts the Medicare allowance as payment in full, then she would have no out of pocket expense.

Although having Medicare Part B would save her the coinsurance to receive her physical therapy as prescribed by her doctor, she would still be required to pay the additional Part B premium every month whether or not she was receiving therapy. To control the cost of FEHBP premiums in addition to the cost of Part B, she could opt to reevaluate her FEHBP plan enrollment.

Here are some other tips about enrolling in Part B:

  • If you’re eligible, use TRICARE for Life and suspend FEHBP during retirement. TFL provides “wraparound” coverage when combined with Medicare A and B and also includes a generous prescription drug benefit.
  • Check to see if your FEHBP plan offers a health fund or a Medicare reimbursement account. Some plans provide payments to help offset the cost of Part B.
  • Keep in mind that the majority of your lifetime health care needs may lie ahead of you. It’s more likely you’ll need expensive care in your later years.

FEHBP open season is coming soon. This year’s dates are Nov. 12 to Dec. 10. Open season provides an opportunity to evaluate your health insurance needs and make the best choice of coverage for you and your family.

Request your retirement review with a Federal Retirent Consultant today  

 

Three Percent Retiree COLA Remains Elusive

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Federal, military and Social Security retirees hoping for a minimum 3 percent cost-of-living adjustment in January will have to wait until at least next month to find out if they hit what for many has been the magic mark. That’s because the official inflation rate actually dropped slightly in July.

With two months to go in the inflation-catch-up countdown, the tens of millions who receive civil service benefits, military retired pay or Social Security are currently at the 2.71 percent level. That’s based on the Consumer Price Index-W for the month of July. The June CPI-W was at 2.72 percent.

The slight decrease in living costs from June to July was measured by the Bureau of Labor Statistics, which takes the nation’s inflation and deflation pulse. The actual size of the January 2019 COLA will be based on the rise in living costs from the current third quarter (July, August and September) over the CPI for the same period last year.

People who receive Social Security, military retired pay and those under the old Civil Service Retirement System get the full COLA based on the CPI. The vast majority of current federal retirees are under the old CSRS system.

People under the Federal Employees Retirement System receive diet-COLAs. That is a full increase up to 2 percent, then a reduced increase on anything over that amount.

The White House has proposed that COLAs be eliminated for FERS retirees and reduced slightly for people under the CSRS program. Congress has not acted on that proposal and may not get to it this year.

Retiree COLAs were once set by Congress. But starting in 1975 they were linked to the CPI-W. Many critics think the index doesn’t take into account the higher costs that retirees often incur for medical and health bills.

In January 2018 retirees got a 2 percent COLA. They received only 0.3 percent in 2016; 0 in 2015; 1.7 percent in 2014; 1.5 percent in 2013 and 1.7 percent in 2012. The biggest COLA in recent times came in at 3.6 percent in 2011.

During the high inflation period from the mid-1970s through 1982 retirees received 8 percent in 1975, 6.4 percent the next year, 5.9 percent in 1977; 6.5 percent in 1978; 9.9 percent in 1979; and 14.3 percent in 1981 and 11.2 percent in 1982.

The exact amount of the 2019 retiree COLA won’t be known until mid-October.

USDA

Hundreds of USDA Employees Face a Decision to Relocate or Take a Buyout

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The Agriculture Department has announced it will relocate two major components outside of the Washington, D.C., area, and bring one—the Economic Research Service—directly under the purview of Secretary Sonny Perdue’s office.

The changes will affect most of the 700 employees at the research service and the National Institute of Food and Agriculture. USDA vowed not to involuntarily separate any employee, though most of them will have to relocate to a yet-to-be-determined area. The department will provide relocation assistance and the same base pay to affected workers, though employees could receive a pay cut if the new locality rate is lower than what they currently receive.

Employees who choose not to relocate may receive some financial assistance: USDA is requesting authority from the Office of Personnel Management to offer early retirement or buyouts to those opting not to take a job in the new location.

The department is looking to make the shift relatively quickly, saying it will complete the moves by the end of 2019. It has already issued a “sources sought” solicitation, seeking outside consultants to help select sites. The appropriate vendor will have experience in choosing new locations and transferring “corporate operations to new sites,” the department said. It requested information on the expected timeline for such a relocation, vendors’ prior experiences with similar moves and the typical costs for the consulting services.

USDA cited recent “significant turnover” at the components as necessitating the relocations, as new recruits often come from land-grant universities.

“It has been difficult to recruit employees to the Washington, D.C., area, particularly given the high cost of living and long commutes,” the department said in a statement.

It added that most of USDA’s stakeholders live and work far from the nation’s capital, and the moves would enable employees to work closer to those the department serves. USDA also said the moves would save money, trimming spending on rent, employee compensation and recruiting efforts.

“In our administration, we have looked critically at the way we do business, with the ultimate goal of ensuring the best service possible for our customers, and for the taxpayers of the United States,” Perdue said. “In some cases, this has meant realigning some of our offices and functions, or even relocating them, in order to make more logical sense or provide more streamlined and efficient services.”

He added the moves were in no way a negative reflection on the components’ workforces.

“These changes are more steps down the path to better service to our customers, and will help us fulfill our informal motto to ‘Do right and feed everyone,’ ” the secretary said.

Questioning the Move

In addition to relocating, the Economic Research Service will move to the Office of the Chief Economist within the secretary’s office. The two separated in 1994 as part of USDA reorganization. The research service engages in more general analysis of trends and emerging issues, while the Office of the Chief Economist directly reports to the secretary to investigate the economic impacts of the department’s policies and programs.

The transition has raised eyebrows in the agriculture and statistics communities, with some experts questioning the Trump administration’s motives. The White House proposed slashing the Economic Research Service budget nearly in half in the president’s fiscal 2019 budget. It proposed cutting the National Institute of Food and Agriculture budget a comparatively modest 8 percent.

Forcing employees to choose to relocate or take a buyout could potentially shrink the agencies, and the ERS-OCE merger could also politicize a nonpartisan, statistical enterprise, some fear.

Ricardo Salvador, the director of the Food and Environment Program at the Union of Concerned Scientists, said ERS should not be brought under a political umbrella. The 1994 reorganization, he said, was designed specifically to use the USDA’s chief scientist as a “firewall” against political influence. Employees whose research demonstrates an argument an administration had been putting forward was incorrect, he explained, would be making a “bad career move” to show their findings to a political boss. He noted that political influence over ERS’ predecessor is what led Congress to create the separate agency in 1961.

Outside groups working on agriculture issues have come to rely on ERS employees as a “set of independent, objective analysts,” Salvador said. That status could be jeopardized under the new arrangement.

Steve Lenkart, executive director of the National Federation of Federal Employees, which represents workers in other parts of USDA, called the moved “suspicious.”

“Typically, when a research or scientific function is separated it’s so they can have autonomy in the research that they’re doing,” Lenkart said. USDA is “taking two scientific functions and moving them closer to a political function.” He added the changes amounted to a one-two punch, as moving the economists out of Washington would give them “less visibility.”

Joseph Glauber, however, who served as USDA’s chief economist from 2007 through 2014, said there is merit to bringing the Economic Research Service within the OCE purview.

“It is really important to maintain that independence,” he said, but, “I don’t think the independence is compromised by reporting to a chief economist.” He explained that any secretary he worked with would confirm his office, led by a career employee, provided “objective analysis” and the shift would make ERS employees more responsive to “day-to-day issues.” He cited examples of instances when he presented research to the secretary and the secretary confirmed the accuracy of the data but said he had other factors to consider. Glauber found that process to be executed exactly as it should be executed.

What did not hold up, he said, was the decision to move the department outside of Washington. He agreed the relocation could help long-term recruiting, but argued that it would first raise significant, immediate problems.

“My fear is it will just result in a big loss of personnel,” Glauber said. He added if he were still at USDA, he would “want my economists close by.” ERS employees would miss out on key meetings, he said, and it “just doesn’t make a lot of sense” for future chief economists to have to travel hundreds of miles to visit their new employees.

Salvador agreed, saying USDA was “disincentivizing employees from remaining in ERS.” Coming to Washington is a point of attraction for agriculture scientists and economists, he said, as it enables them access to decision makers. Other USDA offices, such as the Natural Resources Conservation Service and Agricultural Marketing Service, have legitimate reasons to be spread across the country in more rural areas. Economists, statisticians and NIFA employees deciding grant awards benefit from not maintaining “cozy relationship” with department stakeholders, Salvador said.

The announcement marked the second USDA reorganization in the Trump administration. Last year, Perdue announced he was creating a new undersecretary for trade and foreign agricultural affairs and another to focus on farm production and conservation. That shake-up also involved concentrating the secretary’s power, as it eliminated the department’s rural development agencies’ undersecretary and moved those agencies into Perdue’s office.

Ask for your Free Federal Retirement Consultation today.

Federal Retirement Claims Up Nearly 16 Percent

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The number of federal workers who filed retirement claims with the Office of Personnel Management from January to July is 15.6 percent higher than it was over the same period last year, according to statistics released by the agency Monday.

Between January and July 2017, 59,987 federal employees had filed retirement paperwork with OPM. But over the same period this year, that number increased to 69,340.

Claims may be starting to drop off again. Last month, 8,281 federal workers filed for retirement with OPM, down from 10,070 in July 2017. July typically is one of the busiest months for retirement processing, behind January and February. At the end of July, the backlog of retirement claims climbed to 18,334, an increase of about 130 claims from June and nearly 1,250 over July 2017.

The news of the overall increase in claims for 2018 comes after recent reports that about one in seven federal workers is eligible to retire today, a rate that reaches as high as one in five at a few agencies.

Topping the list of agencies with the highest proportion of feds eligible to retire are the Housing and Urban Development Department, the Environmental Protection Agency and NASA.

Officials at those agencies said they are actively working on succession planning to cope with a potential retirement wave, both focusing on recruitment of new civil servants and retention of employees who are at or nearing retirement age.

At HUD, where nearly one quarter of employees are currently eligible to retire, Secretary Ben Carson has “directed everyone [in leadership] to make the vibrancy and the succession planning of their workforce not only top of mind, but to start really thinking and cooperating together and working very carefully together to make that a reality,” said Suzanne Tufts, assistant secretary of administration, in an interview with Government Executive.

The increase in the number of new retirees from federal service also comes on the heels of a number of agency efforts to offer buyouts and early retirement to workers. Although most of those offered buyouts would have left the government payroll in 2017, a few extended into this year, like those at the Education Department.

July also marked the third straight month where OPM’s backlog of retirement claims has increased. OPM’s goal for pending requests is 13,000, but at 18,334, it is at its highest point since March. In one bright spot, the monthly average processing time for a retirement claim ticked down last month, from 65 days at the end of June to 57 last month.

Before you decide to take a buyout, you should speak to a retirement consultant to make sure it might be right for you.  Schedule to speak with a consultant today.

Who Decides When You Can Afford To Retire?

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What is or should be the deciding factor in when and if you retire?

Are you leaving at the first opportunity? Or are you planning to work extra because you like the job or your coworkers and want to build your annuity? Are you planning a December or January departure to get the best tax break and carry over the maximum amount of annual leave? Does your departure date depend on your spouse, your health or college bills?

Or you may be one of a growing number of nervous-in-the-civil-service folks who plan to beat a hasty retreat and retire before politicians change the rules surrounding the Civil Service Retirement System and Federal Employees Retirement System plans.

For each of the past five to seven years Congress, and now the White House, have presented plans to change the retirement package. Dozens of proposals have come and gone. Last year it appeared at least one, maybe two changes would hit the FERS program. But Congress ran out of steam and did nothing.

There have been so many proposed changes, some of them decades old, that it is hard for people who care to keep track. There is the “high-5” — basing annuities on the employees highest five-year salary average instead of the current “high-3” formula. If enacted most feds would have to work longer to get the same starting annuity.

Other proposals range from using a different index that would reduce future cost of living adjustments for retirees, thus forcing FERS workers to pay an additional 6 percent for benefits that would be reduced when they retired. There is also the plan to eliminate all future COLAs for FERS retirees and to reduce them slightly for people under the FERS program.

Threats to the retirement system have left some people numb or immune to worry. Others worry a lot, and say their Departure day is based on getting out before any changes are made — if that would do any good.

Typical is this email from a reader who describes himself as a federal employee looking to retire this year. The question is whether that will happen Sept. 30 or Dec. 30:

“I would like to know if the president’s plan to change the retirement system from the high-3 to the high-5 formula … is in the fiscal 2019 budget? And if so, is it likely to pass? This information will help me decide which date I should pick.

“Unfortunately, nothing in Washington is easy. Remember Mike, the high-3 to high-5 proposal has been around forever and it hasn’t happened yet. Also it is probably the least financially harmful of all the other proposals.” — Mike S.

So we punted and asked Jessica Klement, the top lobbyist for the National Active and Retired Federal Employees. Most of NARFE’s members are retirees, so protecting the CSRS and FERS programs is at the top of its agenda. So far, working with a coalition of federal and postal unions, and groups representing supervisors, managers and career executives — to good!

Her first suggestion to Mike S., not surprisingly, was to urge him to join NARFE in order to “get answers to these and more questions for the low membership fee of $40 a year.” Then she pointed out that “a change in the retirement calculation will require congressional action” because the president cannot do so unilaterally.

“We recommend that people do not change their retirement plans based on something Congress might do” she said.

So before you decide speak to one of our retirement consultants today.  Schedule your retirement review today!

Senate Passes Pay Raise For Federal Employees

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The Senate passed a package of appropriations for FY19 August 1 that included a 1.9 percent pay increase for federal employees, commensurate with the increase feds received in 2018.

The increase includes a 1.4 percent bump to basic pay, plus another .5 percent boost in locality pay.

The package passed near unanimously on a vote of 92 to 6.

According to National Active and Retired Federal Employees Association President Richard G. Thissen, the Senate bill marks an important step in preventing a federal pay freeze proposed by the Trump administration for 2019.

“Approval of a 1.9 percent pay raise for federal employees begins the process of countering the Administration’s proposed federal pay freeze in 2019. Without Congressional action, federal pay will be kept stagnant by the Trump administration, which has clearly stated its intention to freeze federal pay for calendar year 2019. To keep federal pay at a standstill while the economy and private-sector wages continue to grow is a direct show of contempt for our nation’s middle-class, career civil servants,” said Thissen.

“This pay raise is important to keep federal pay from falling even farther behind that of the private sector. Now, more than ever, competitive federal salaries are sorely needed to confront hiring needs as 40 percent of the current workforce is eligible to retire in the next three years.”

This bill would mark the sixth consecutive pay raise since federal employee compensation was frozen between 2010 and 2013.

The bill will now move into reconciliation with the House appropriations bill, where the two bodies will iron out differences between the two versions before it can be sent to the president for signature.

To learn more of how this pay raise could affect your pension, high-three average, FEGLI Life Insurance Cost, Request your retirement Review today to learn more.