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Retirement

Last Chance for Open Season for 2020

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Hopefully by now, you’ve done your research and narrowed your options for your 2020 Federal Employee’s Health Benefits Program plan and possibly dental and vision coverage. The end of open season is only a few days away (midnight EST on Monday, Dec. 9).

Many people will decide to stay with the same plan they have this year and keep the same allotments in their flexible spending accounts. According to the Office of Personnel Management, if you do nothing, here’s what will happen in 2020:

If you want to make a change, then the procedure depends on your agency or retirement system. Current employees can use one of various automated systems, depending on where they work. If you’re using a paper form, then submit form SF 2809 to your benefits specialist in human resources.

If you’re retired and your benefits are administered by OPM, then you can change your health benefit plan by using OPM’s Open Season Online system, calling 800-332-9798, or mailing OPM Form 2809 to: Office of Personnel Management, Open Season Processing Center, P.O. Box 5000, Lawrence, KS 66046-0500.

If You’re Retiring

Your agency needs to document your health insurance coverage to continue your coverage into retirement. If your agency is unable to provide documentation of an employee’s entire FEHBP coverage history, then OPM must have proof of coverage during the five years of service immediately prior to retirement—or if less than five years, during all service in which you were eligible for FEHBP.

Acceptable proof of coverage includes:

  • SF 2809 (Health Benefits Election Form) or other enrollment forms
  • SF 2810 (Notice of Change in Health Benefits Enrollment)
  • History reports from online enrollments that show both the old plan and new plan, and the effective dates for each change
  • Copies of screen shots or other documentation from online enrollments that show both the old plan and new plan, and the effective date for each change
  • Evidence of coverage as a family member under another’s FEHBP enrollment
  • Evidence of TRICARE/CHAMPUS enrollment (including evidence of coverage as a family member)
  • A signed memorandum from the agency detailing the continuous coverage of the employee to prove they meet the five-year requirement

Changes made by employees who are retiring before the first pay period of the new year may not take effect on Jan. 1, 2020, but OPM will process them as quickly as possible and coverage will be retroactive to Jan. 1. In the meantime, use your current coverage until the new coverage is in place. Your SF 2809 enrollment form should be included with your retirement package, not processed by your agency.

If You’re Retiring at Age 65 or Older

Now that you are retiring and are over age 65, you can go get Medicare Option B.  Here you can decide to stay with your health plan OR look at an alternative such as a Medicare Supplement.  Here is an example of Mary and her husband John:

Mary is retiring and is 66 and John her husband is 67 and both have been on her health plan, now that she is retiring and can get Medicare Part B her Health plan was going to be $392 per month plus $144.60 each (01/01/2020 Rate increased from $135.50 2019) for a total of $681.20.  But Excellent coverage with Zero out of pocket expenses, except co-pays on prescription drugs.

Now an alternative plan would be using a Medicare Supplement.  Based on Mary and John’s ages I recommended Plan G which comes similar coverage, but would have to cover the $198 deductible with Plan G.  Cost for Mary was $100.78 and John $107.22 plus Medicare Part B premiums for a total of $497.20 per month.  Now they would also have to go get Medicare Part D for Prescription Drugs, but that plan usually is somewhere between $19-$34.95 per month depending on medications being used.  So for everything bundled together with Part D with average cost of $24.95 the total would be $547.10 vs $681.20 for a first year savings of $134.10 per month or around $1600 per year.

Ask your Retirement specialist when you Contact Us today to see what rates you would have.

Should Feds Prepare for Another Government Shutdown

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We’re not even 12 months removed from the most recent government shutdown and already there are fears that another shutdown is possible later this month. The latest continuing resolution Congress passed to sustain government operations while lawmakers negotiate a budget deal runs out on Dec. 20, and while most lawmakers seem to believe an agreement is within reach, it is not certain that President Trump would approve it. That possibility should get every federal employee’s attention.

LifeCents survey data suggests that many of the 800,000 workers impacted by the previous shutdown suffered significant hardships: 22% percent of respondents claimed to have missed a significant payment, while 24% reported that the shutdown took a physical and emotional toll.

One career government employee told us: “The long shutdown was the fifth time I have experienced being shut out from my job, with the associated worries of how long it will last, when will we get back pay, and how long will my emergency fund last.” After more than 30 years of federal service, he finally decided to leave his job at the IRS as a direct result of the shutdown.

While this employee had an emergency fund that could sustain him until the government reopened, many people do not. Studies show that 78% of American citizens live paycheck to paycheck, while 40% do not have enough in savings to cover a $400 emergency. For such individuals, the prospect of missing one or more paychecks could be catastrophic.

Where to Begin

Agencies can help protect employees from potential financial hardship by encouraging workers to establish emergency savings funds, and then help them acquire the knowledge and build the habits to regularly contribute to that fund.

Many will find the prospect of building a savings account with enough money to cover three to six months of living expenses daunting, so employers should advise people to start small. A base amount of a few hundred dollars can still cover a small emergency and may even be enough to see employees through an abbreviated shutdown. Maintaining a small emergency fund can also limit the amount of debt someone takes on when they’re not receiving an income. Instead of using credit cards to cover expenses, employees can rely on their emergency funds, allowing them to avoid accruing new debt.

There are programs available to educate government employees on savings strategies. For example, the Office of Personnel Management provides retirement and financial literacy training that can help employees better manage their finances.

Inspiration From the Private Sector

Although the public sector is more limited than the private sector in its ability to incentivize employees, there are aspects of some private sector savings programs that government agencies may wish to consider emulating.

For instance, many companies have implemented “helping hands” or “hardship” funds. Employees contribute a small amount of money on a regular basis into a specialized savings account as a gesture of goodwill to their colleagues. These funds accumulate and can be disbursed in case of an emergency—such as a government shutdown.

Some companies have established community savings programs that reward or recognize participants when they achieve specific goals. For example, an organization may set a savings goal of $400 per person and reward employees with a celebratory event once everyone hits that goal. Initiatives like this show that a small incentive tied to a specific goal can help people develop long-term savings habits.

Benefits of Financial Security 

Shutdowns sow tremendous confusion and uncertainty among employees. By helping employees understand the importance of creating emergency funds, managers can proactively provide workers with the underpinnings of a financial safety net that may help soften the blow.

Investing in employees’ financial literacy and wellness can also help improve job satisfaction and reduce attrition. A 2019 PwC survey found that employees value having a financial wellness benefit and access to unbiased counselors. Organizations that provide such benefits are more likely to be seen as good places to work.

While managers cannot control shutdowns, they can help employees understand what tools, benefits, programs, and resources they have at their disposal to protect themselves during economic hardship

Getting Close to Retirement

Is your retirement date just around the corner and you have Questions?  We specialize in helping you plan, prepare and execute your retirement plan with the Full Assistance of My Federal Retirement Help.  Just contact us today

It’s that simple, you can easily schedule your Free Retirement Review with a day/time that will work for you the best, but our calendars do fill up quickly, so schedule your review today.

 

 

health premiums

Feds and Annuitants Now Have a New Long Term Care Option

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The Office of Personnel Management has officially launched, FLTCIP 3.0, a new plan and rate structure under the Federal Long Term Care Insurance Program.

FLTCIP 3.0 is a traditional long term care insurance plan with an emphasis on stay-at-home care and home care provided by health professionals as well as family and friends. The highlight of the new plan is a bonus “premium stabilization” feature.

Under the premium stabilization feature, there is an adjustable amount that is calculated as a percentage of premiums paid, which is designed to reduce the potential need for future premium increases.

“Under certain conditions, the amount may be used to offset an enrollee’s future premium payments or provide a refund of premium death benefit,” according to OPM.

The new benefit is available to federal and U.S. Postal Service employees and annuitants, active and retired members of the uniformed services, and qualified relatives who apply for coverage on or after October 21, 2019.

Learn more here.

Federal Retirees Will Get 1.6% COLA in 2020

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Retired federal workers will receive a cost of living adjustment of 1.6% to their defined benefit pensions next year, according to an announcement from the Social Security Administration.
The increase, which also applies to recipients of Social Security benefits, is a downgrade from the 2.8% increase some federal retirees received in 2019, and the 2% boost they saw in 2018.

The annual COLA is based on the percentage increase in the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the current year over the average CPI-W for the third quarter of the previous year in which a COLA became effective.

Unlike last year, when Civil Service Retirement System participants received the full 2.8% COLA while Federal Employees Retirement System enrollees only received a 2% increase, the 1.6% increase applies to participants in both FERS and CSRS.

That’s because FERS retirees only receive the full COLA if the difference in the CPI-W is 2% or less; if the difference is between 2% and 3%, they receive a 2% increase; and if the change is 3% or higher, FERS participants receive 1 percentage point less than the full increase.

Late last year, Rep. Gerry Connolly, D-Va., introduced the Equal COLA Act, a bill that would ensure FERS and CSRS retirees received the same cost of living adjustment each year. Connolly reintroduced the bill (H.R. 1254) last February, although it has yet to receive a hearing.

The COLAs will take effect next January.  If you are thinking about Retirement and want a Free Retirement Review or need any assistance, we can help you.  Please Contact Us to request your free consultation.

2020 Open Season Coming Soon – Time to Start Thinking About it.

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Among the signs that fall is upon us is that health insurance open season looms in the not-too-distant future. The 2020 open season will run from Nov. 11 to Dec. 9, 2019. It makes sense to do some homework before the start of open season because, as usual, you’ll have a lot of options.

The 279 health plans available in the Federal Employees Health Benefits Program include:

  • 18 fee for service plans open to all
  • 4 fee for service plans with availability limited to certain groups
  • 257 HMO plans
  • 19 high deductible health plans
  • 28 consumer driven health plans

Plan brochures and plan comparison tools will be available in early November, before the start of open season. The 2020 rates for all FEHBP plans are available now.

There’s a new indemnity benefit plan called GEHA Elevate that will fill a spot that has been open for 30 years in FEHBP. Indemnity plans allow you to visit almost any doctor or hospital you like. The insurance company then pays a set portion of your total charges.

The lines between preferred provider organization plans and health maintenance organization plan continue to blur.  Today, you may find that a traditional fee for service plan such as Blue Cross/Blue Shield Basic Option requires the use of network providers (similar to an HMO) for the plan to provide coverage.

Plans such as Aetna Direct, which is classified as an HMO, work well for retirees nationwide who are enrolled in Medicare Parts A & B. It does not require a referral to see a specialist and coverage is available outside of the network providers.

Laurie Bodenheimer, acting director of health care and insurance at OPM, said this week that only 5% to 6% of federal enrollees change plans during open season, adding that she wished the percentage was higher. She admitted that switching can be a daunting task, and people enrolled in plans currently accepted by their doctors may be reluctant to change. Others are put off by the confusing jargon in the health insurance world.

Two health plans will no longer participate in FEHBP in 2020: MVP Health Care, which covers 3,200 employees and more than 4,000 retirees in New York; and Highmark Choice Co. (also known as Keystone Health Plan West), which  covers 718 employees and 323 retirees in Pennsylvania. Enrollees in these plans will have to select a new plan during open season. Otherwise, they will be automatically enrolled in the lowest-cost nationwide plan option, which for 2020 is GEHA Elevate.

Blue Cross/Blue Shield’s standard option remains the most popular FEHBP plan with retirees, with more than 930,000 retiree enrollments as of March 2018. But it’s also one of the most expensive. Blue Cross/Blue Shield’s basic option was most popular among current employees, with 807,000 enrollments.

Some plans will significantly increase premiums in most areas in 2020. They include:

  • Rural Carrier Benefit Plan
  • Aetna HealthFund Value Plan
  • Aetna HealthFund High Deductible Health Plan
  • Aetna HealthFund Consumer Driven Health Plan (in some areas)
  • Aetna Open Access High Option Plan
  • Health Net of California High and Standard Option Plans (in some areas)
  • Humana Health Plan Basic, Standard and High Option Plans
  • Humana CoverageFirst Value and Consumer Driven Health Plans
  • Humana Medical Plan High and Standard Option Plans
  • Humana Employers Health Plan of Georgia Basic, Standard, and High Option Plans
  • District of Columbia M.D. IPA
  • Hawaii Aetna HealthFund Value Plan

Some plans will be reducing premiums in 2020:

  • APWU High Option
  • GEHA High Option
  • MHBP Standard and Value Options
  • SAMBA High and Standard Options
  • Aetna HealthFund Consumer Driven Plan (in some areas)
  • United Healthcare Insurance Company High Deductible Health Plan
  • Health Net of California Basic Plan
  • Aetna Open Access Basic and High Option Plans (in some areas)

As open season nears, we’ll look in more depth at how you can assess your options. If you are close to retiring and need some assistance, we can help guide and direct you as well.

For example, when John and Liz were retiring and they saw the prices of health insurance, it was better for them to let the Federal Health plan go and they chose Medicare and Medicare Supplement which saved them about $238 per month, and still had Zero out of pocket, no more copays.  If you would like your Free Retirement Review or just have simple questions, please Contact Us now for assistance.

Feds Will Pay 5.6 Percent More Toward Health Care Premiums Next Year

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Federal employees will pay an average of 5.6% more for their health insurance premiums in 2020, a dramatic uptick from the historically low increase workers saw this year.
The government’s share of Federal Employees Health Benefits Program premiums will rise by 3.2%, the Office of Personnel Management announced on Wednesday, and the government will cover an average of 70% of each enrollee’s total premium costs. While the enrollee share of the rates increased just 1.5% in 2019, they jumped by 6.1% in 2018. About 8.2 million former and current federal employees, and their family members, are currently enrolled in FEHBP.
Non-postal federal workers will pay an average of $8.74 more per paycheck for their insurance in 2020. Those in “self-only” coverage will pay $4.72 more per paycheck, while those with family plans will see an average increase of $14.20.
U.S. Postal Service employees will pay an average of $10.31 more for their premiums, with exact increases dependent on their plan.
Laurie Bodenheimer, OPM’s acting director of health care and insurance, noted that the exact amount federal employees end up paying will depend on the plans for which they sign up. While the average premium was predicted to increase by 1.5% in 2019, employees ended up paying just 0.42% more on average, based on the plans they actually chose.
OPM added two new plans for employees nationwide, as well as 16 new options in local areas, as a result of its offering an indemnity benefit plan for the first time in 30 years. Those “fee-for-service” plans allow enrollees to go to virtually any health care provider and receive reimbursement for a set percentage of their costs. After a competitive bidding process, GEHA won the opportunity to provide the indemnity plans.
Bodenheimer conceded that “at this point in time” the indemnity benefit plans are not different from existing fee-for-service plans. Having an additional carrier to offer nationwide plans, she added, is itself a significant upgrade.
Officials said the sharper increase for 2020 rates was a result of Congress reinstituting the Health Insurance Provider’s Fee, which it waived last year. The fee was created as part of the Affordable Care Act to help fund state exchanges and is paid for by insurance companies. Officials also pointed to rising drug costs as contributing to the overall rate increases.
“Today’s announcement is the culmination of a yearlong effort,” OPM Director Dale Cabaniss said. “Our employees have worked tirelessly on behalf of all feds to secure them world-class healthcare and give them the knowledge to make informed decisions for their families.”
American Federation of Government Employees National President J. David Cox criticized OPM for failing to further rein in the growth of costs.
“The Trump administration has failed to do its job of providing affordable health insurance to its workforce,” Cox said. “Shifting more health-care costs onto federal workers and retirees will force growing numbers to choose between keeping their health insurance or paying for rent and other costs of daily living.”
All told, OPM will offer 279 health care options to enrollees, an increase of 14 from 2019. Individuals will not have that many options—as available plans vary by region—but every enrollee will be able to choose from 18 nationwide plans. About 5-6% of FEHBP enrollees opt to change their plan each year, a portion OPM believes is too low.
“We wish it was higher,” Bodenheimer said.
About 6,300 enrollees will be forced to sign up for a new plan after two carriers dropped out of the program. If those individuals fail to make a new selection, OPM will automatically enroll them in a GEHA plan.
New features in FEHBP next year will include more benefits for mental health and substance abuse treatment, Bodenheimer said. Plans will offer more services to help enrollees quit smoking, as well as enhanced services for individuals with chronic conditions. OPM has also improved its plan comparison tool, which enrollees will be able to access one week before the Open Season period begins.
Enrollees in the Federal Employees Dental/Vision Program will pay 5.6% more on average for their dental plans, and 1.5% more for vision. Bodenheimer applauded the growth FEDVIP has seen in recent years, including 1 million new enrollees last year driven driven largely by merging it with a previously separate program for retirees.
OPM will run open season, the annual period in which all federal employees and retirees can make changes to their health care enrollments, from Nov. 11 through Dec. 9.

If you need any assistance during this open enrollment or thinking about retirement, please feel free to Contact Us to schedule your Free Retirement Review today!

How a Broken Pay System Forced Postal Supervisors to Take USPS to Court

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The U.S. Postal Service has a serious middle management problem.

In late July, the National Association of Postal Supervisors filed a federal lawsuit against the U.S. Postal Service, challenging its administration of the pay system that covers approximately 50,000 managers and supervisors. It is the first time in nearly 45 years that NAPS, on behalf of the postal managers and supervisors it represents, has sued the Postal Service over pay.
NAPS went to court because the Postal Service has violated the law’s requirement that it pay managers and supervisors a salary comparable to the pay of their private sector counterparts and that it pay them more than the workers they supervise. These managers and supervisors help to assure the prompt and efficient delivery of mail and the reliability of postal operations. Without a “supervisory differential” in pay, the incentive of craft workers to become supervisors is sorely undermined, and without compensation comparable to the private sector, the Postal Service cannot recruit well-qualified supervisors from outside the Service.
NAPS was prompted to file the lawsuit after the Postal Service in May 2019 issued the final terms of its 2016-2019 pay package for all personnel under the Executive and Administrative Schedule (EAS), which covers the nearly 50,000 managers, supervisors and other middle-management employees who are not members of collective bargaining units. The terms of the Postal Service’s pay package were largely the same as it had first proposed in 2017, before more than a year of “consultation” with NAPS’s leaders and before a review by a three-member fact-finding panel convened in 2018 at NAPS’s request by the Federal Mediation and Conciliation Service. The fact-finding panel extensively reviewed the fairness of the Postal Service’s pay system for its managers and supervisors and unanimously found that the so-called “pay-for-performance” system the Postal Service had devised and applied to all postal managers and supervisors is “seriously flawed.”
Instead of accepting the panel’s recommendations, the Postal Service rejected nearly all of them, resulting in NAPS’s executive board voting unanimously to file a lawsuit contesting the Postal Service’s EAS pay policies and practices. In the lawsuit, filed in federal district court in Washington, NAPS also seeks a court ruling directing the Postal Service to recognize NAPS as a rightful representative of postmasters and EAS Headquarters and Area personnel. Unfortunately, the USPS denial of NAPS’s right to represent all EAS and postmasters is part of a continued effort by USPS executives to “divide and conquer” the EAS mid-level management ranks.
In its April 2019 factfinding report, the federal mediation panel unanimously concurred with NAPS on nearly all matters, strongly validating NAPS’s complaints about Postal Service EAS pay policies. The panel found that the Postal Service’s [pay for performance] system is “seriously flawed in that it does not accomplish its objectives or comport with the requirements of the [Postal Reorganization Act].” It also found that the Postal Service does not properly calculate the supervisory pay differential, which “has resulted in many thousands of Field EAS managers and supervisors receiving less than the Service’s own 5% target differential.” And it found that “the [pay for performance] program negatively impacts the Service’s ability to attract and retain qualified and capable supervisory and managerial personnel and fails to promote the maintenance of a well-motivated workforce.”
Experts in human resources continually stress the importance of worker engagement. Engaged workers create a positive impact on the bottom line of the enterprise, improving customer service, reducing absenteeism, and lowering accidents. The Postal Service has declined to put those principles into action, or even to become alarmed that its own Pulse Survey of the USPS workforce, conducted by Gallup, placed its employees in the bottom percentile of engaged workers in the nation. The Postal Service has taken no meaningful action despite the Gallup survey finding for the past several years that 99% of other large American companies have better employee engagement.
Postal managers and supervisors have grown increasingly frustrated over their pay and the lack of respect given by USPS executives to their role within the organization. At NAPS’s biennial national convention in August 2018, delegate frustration boiled over about the EAS PFP system that has produced years of paltry annual pay increases, including no pay raises for any EAS personnel in 2011 and 2012 and no pay raises for thousands of EAS personnel in 2015, 2017, and 2018. In contrast, all union-covered postal workers receive annual cost-of-living pay adjustments under agreements negotiated with the Postal Service. Further, unlike the rest of the agencies in the federal government, the USPS does not provide area wages or locality pay adjustments to workers in higher-cost areas, such as San Francisco, New York or Washington, D.C.
Now, a federal court will decide whether the panel was correct in finding that the Postal Service has violated—and continues to violate—the law’s requirements.

Lawmakers Question TSP Foreign Investment Decisions, and More

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Senators from both parties this week called on the agency that administers the federal government’s 401(k)-style retirement savings program to reconsider its decision to shift the Thrift Savings Plan’s international (I) Fund to an index that invests in Chinese companies.

Sens. Marco Rubio, R-Fla., and Jeanne Shaheen, D-N.H., sent a letter Monday to Michael Kennedy, chairman of the Federal Retirement Thrift Investment Board, asking the agency to reverse its 2017 decision to base the I Fund’s investments on a stock index that includes companies from a broader swath of countries, including China. Rubio and Shaheen objected to the change based on the Chinese government’s history of human rights abuses and other national security concerns.

“The FRTIB’s decision to track this [new] index constitutes a decision to invest in China-based companies, including many firms that are involved in the Chinese government’s military, espionage, human rights abuses and ‘Made in China 2025’ industrial policy, and therefore poses fundamental questions about the board’s statutory and fiduciary responsibilities to American public servants who invest in federal retirement plans,” the senators wrote. “This change, which is expected to be implemented next year, will expose nearly $50 billion in retirement assets of federal government employees, including members of the U.S. Armed Forces, to severe and undisclosed material risks associated with many of the Chinese companies listed on this index.”

The lawmakers noted that several companies included in the new index produce weapons systems for the Chinese military, surveillance cameras used to monitor Uighur Muslims in Xinjiang province, and that some companies have been barred from operating in the United States or have been targeted by U.S. sanctions.

“Were the members of the board aware at the time of the motion to adopt the new index for the I Fund that constituent firms of this index were previously subject to U.S. government sanctions?” the senators asked. “Since the board’s November 2017 vote, the U.S. government has censured constituent firms of the [index]—or the controlling shareholders of such firms—through such measures as designation to the Entity List and federal procurement prohibitions.”

TSP spokeswoman Kim Weaver said in an email that the agency has received the letter.

“We are reviewing it and we will respond in a timely manner,” Weaver said.

Elsewhere on Capitol Hill, senators representing Maryland and Virginia on Tuesday joined the growing outcry from lawmakers regarding the recent decision by the Agriculture Department to reduce the buyout and early retirement payments offered to Economic Research Service and National Institute of Food and Agriculture employees who declined orders to relocate to Kansas City by the end of September.

Democratic Senators Mark Warner and Tim Kaine of Virginia, and Ben Cardin and Chris Van Hollen of Maryland blasted the department for failing to inform employees who had applied for Voluntary Early Retirement Authority and Voluntary Separation Incentive Payments that maximum buyouts would be $10,000 rather than the originally offered $25,000 until one week before the acceptance deadline.

“USDA has stated that its decision to reduce the amount per VSIP was made in order to accommodate all employees who were eligible to receive the buyout,” they wrote. “However, USDA has failed to explain why employees were not notified earlier that VSIP offers would be significantly less than $25,000, considering the agency already knew that more than half of ERS and NIFA employees had declined to relocate by the time VSIP applications were due. We are troubled that USDA did not relay this information to its employees sooner considering the impacts this decision can have on an individual career.”

The senators asked Agriculture Secretary Sonny Perdue how much the department budgeted for VSIP and VERA payments, how the department came to the decision to reduce the maximum buyout payment, and why officials waited until a week before the August 26 deadline to inform employees of the change.

The letter was published just one day after Government Executive reported that, in order to cope with the mass exodus of employees who refuse to move to Kansas City, the department is looking to hire retired former employees on a part-time basis to preserve continuity of service. Those hired under the Reemployed Annuitants program would work from the Washington, D.C., area and receive both a salary prorated to what they made before they retired and their full defined-benefit annuity payments.

So what do you think? So should you question TSP on it’s new Foreign Investment decisions, or should you look at some other alternatives?  We have some great ideas and would offer you to come and explore them with us.

Request your consultation today for more information.

Why did USDA reduce buyouts with so little notice?

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Senators representing states surrounding the U.S. capital called on the U.S. Department of Agriculture Aug. 27 to explain not only why it decided to dramatically reduce the buyout amount offered to departing research agency employees, but also why it gave them very little time to accept that amount.

USDA announced June 13 that it planned to move its Economic Research Service and National Institute of Food and Agriculture from their current offices in Washington, D.C., to Kansas City.

Employees that notified USDA that they would rather leave federal service than move with the agency were eligible for a voluntary separation incentive payment, which the agency initially said would be offered on a limited basis at the $25,000 maximum allowed by federal policy.

Employees had from July 22 to July 29 to notify the agency whether they planned to accept the payment, which prohibits them from working for the federal government for five years.

USDA sent employees formal documentation of their planned VSIP payments Aug. 20, at which point employees were informed that they would be receiving $10,000, rather than the $25,000 initially offered. Employees were given until Aug. 26 to notify the agency of whether they still planned to accept the lower payment.

“USDA has stated that its decision to reduce the amount per VSIP was made in order to accommodate all employees who were eligible to receive the buyout,” Sens. Mark Warner, D-Va., Ben Cardin, D-Md., Chris Van Hollen, D-Md., and Tim Kaine, D-Va., wrote in a letter to USDA Secretary Sonny Purdue.

“However, USDA has failed to explain why employees were not notified earlier that VSIP offers would be significantly less than $25,000, considering the agency already knew that more than half of ERS and NIFA employees had declined to relocate by the time VSIP applications were due. We are troubled that USDA did not relay this information to its employees sooner considering the impacts this decision can have on an individual’s career.”

The senators also questioned where the agency was getting the funds for the VSIP payments and how much total they had budgeted for those payments.

Agencies generally tend to offer the maximum allowed for VSIP payments, as the nearly 37,000 employees receiving VSIP between fiscal years 2012 and 2017 averaged $24,470 per payment.

The senators wrote that while they in general opposed the ERS and NIFA move, they at the least hope that the agency will reconsider their VSIP offers and opt to provide the maximum allowable for departing employees.

Thinking about taking a Buyout, or thinking about retiring, let us assist you with a Free Federal Retirement Review, we have been helping Federal Employees for many years get into retirement without any questions unanswered before making the decision.  Request your Free Retirement Review today!

Who knows, I might have already met you at one of the Seminars that the USDA has put on for the last few years during the Summer USDA Meetings, would like to talk again!

Pay & Benefits USDA Slashes Buyout Payments for Scientific Agency Employees By 60 Percent Ahead of Relocation

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The Agriculture Department this week informed employees at two scientific agencies who applied for buyouts following their decision not to relocate to Kansas City that they would receive significantly less money than originally promised.
In June, USDA officials told employees at the Economic Research Service and the National Institute of Food and Agriculture that it would offer “a limited number” of Voluntary Early Retirement Authority and Voluntary Separation Incentive Payments to those who declined to move to Kansas City by the end of September. VSIP payments would be capped at $25,000, the maximum allowed by law, the department said in a memo.
When employees accept buyouts, they receive a lump sum equal to the amount offered by the agency, or their total severance pay, whichever is less. Additionally, employees who accept buyouts cannot work for the federal government for at least five years, or they will be required to repay the government the entire amount of their VSIP payment.
But this week, the department sent employees their VSIP acceptance letters, which noted that the maximum buyout payment would be only $10,000, a 60% cut from what was initially offered. Employees have until August 26 to decide whether to accept the buyout.
Due to the volume of applications and in an effort to afford all employees who applied the opportunity to receive the incentive payment, the amount provided for all applicants has changed from $25,000 to $10,000, USDA wrote.
ERS and NIFA employees had until July 15 to tell the department their initial intentions regarding whether they would agree to relocate to Kansas City, although they have until the end of September to make a final decision. Employees interested in early retirement or buyout payments were required to apply between July 22 and July 29.
It is unclear why the department did not announce a decrease in the maximum buyout payment ahead of that window, given that officials knew that more than half of ERS and NIFA employees already either declined to relocate or did not respond to their relocation orders.
An Agriculture Department spokesperson told Government Executive that the department decided it would be more equitable to allow all employees who applied to receive a buyout, rather than offering a larger sum to fewer people on a first-come first-served basis.
“The department maintained we would offer a limited amount of VSIPs and ultimately decided to offer a VSIP to every employee who applied and were found to be eligible to receive a VSIP,” the spokesperson said.
The department did not answer questions about how much was budgeted for VERA and VSIP, when it realized the volume of buyouts would be higher than could be accommodated at the $25,000 level, or why officials did not inform employees until this week.
The spokesperson said that although the VSIP acceptance form is due on August 26, employees can change their mind “and decline the VSIP payment up until their separation or retirement date.” Employees also are still able to change their mind and accept relocation orders.
In a statement, American Federation of Government Employees National President J. David Cox, whose union represents ERS and NIFA workers, sharply criticized the department’s handling of buyout payments. The department’s VSIP process began prior to USDA’s recognition of the agencies’s bargaining units and thus was not part of the agreement reached between the parties earlier this month to ease the impacts of the planned relocation.
“It’s no secret that employees are extremely upset by USDA’s decision to relocate these two agencies halfway across the country,” Cox said. “Two-thirds of employees rejected the agency’s orders to move by Sept. 30, so USDA should have planned better for that reality and budgeted accordingly. Employees now have less than a week to decide whether to accept the reduced buyout, which also bars them from working at another federal agency for five years. Many of these employees have spent their careers devoted to agricultural research and furthering their agencies’s missions, and they deserve to be treated better than this.”