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federal early retirement - voluntary early retirement for federal employees

Senate Panel Approves 60% Increase in Buyout Payments for Feds

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The Senate Homeland Security and Governmental Affairs Committee passed a bill on Wednesday that would raise the maximum buyout payment for federal employees from $25,000 to $40,000.

The legislation comes as agencies look for ways to downsize their workforces in response to directives from the Trump administration. Congress set the original Voluntary Separation Incentive Payment at $25,000 in 1993, and it’s remained unchanged since.

The committee approved the legislation by voice vote on Wednesday. If passed by Congress, the bill would also tie payments to the Consumer Price Index, and adjust them annually for inflation.

The Defense Department piloted a similar one-year buyout increase for its civilian employees in fiscal 2017, but the new bill would extend the increase to civilian and military employees across government.

The $15,000 bump in VSIPs could make leaving government more appealing to employees as agencies look for ways to decrease the size of their workforces. Agencies were required to submit reorganization plans to the Office of Management and Budget by Sept. 30, and although leaders have said the plans would focus more on increasing efficiency than reducing the workforce, tight budgets may make some cuts inevitable.

The Environmental Protection Agency has already contacted 1,200 employees with early retirement and buyout offers. The Interior Department and other agencies have also indicated plans to move forward with similar measures.

The White House asked Congress for an identical $15,000 raise in agencies’ buyout limits earlier this year ahead of the National Defense Authorization Act. The proposal wasn’t included in either the Senate or the House version of the NDAA, but the new bill would provide the requested incentives for workforce reductions.

While he welcomes any opportunity for federal employees to retire “with a few extra dollars in their pockets,” Steve Lenkart, executive director of the National Federation of Federal Employees, said he worries that the legislation risks helping to create a vacuum in agency leadership as top employees leave their posts ahead of schedule.

“At a time when most agencies are trying to fill critical vacancies, the increase in buyout payments may exacerbate the worker deficit especially in the upper ranks, which can lead to brain drain and a loss of institutional knowledge,” Lenkart told Government Executive. “This is exactly what some in Congress are trying to do. A better way is to plan strategically and execute a plan over a period of time defined in years, not months. As we’ve seen time and time again, Congress is no expert on running government.”

Health benefits

Feds Will Pay 6.1 Percent More Toward Health Insurance Premiums in 2018

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Federal employees and retirees can expect to contribute an average of 6.1 percent more toward their health care premiums next year, the Office of Personnel Management announced Wednesday.

Enrollees in the Federal Employees Health Benefits Program with coverage only for themselves will on average pay $5.57 more per bi-weekly pay period next year. Those with full family plans will pay $12.17 more per pay period, while people in self-plus-one coverage, which is entering its third year of existence, will pay $12.55 more every two weeks.

The average increase in the government share of premiums in 2018 will be 3.2 percent, officials said. OPM’s contribution to insurance premiums is roughly 72 percent, and is based on a weighted average of the plans enrollees choose.

Overall, counting both employee and government contributions, health insurance premiums across government will increase 4 percent next year, which marks a slowdown from this year’s 4.4 percent increase. Alan Spielman, OPM’s director of health care and insurance, said the slower growth on the agency’s side of premiums is related to enrollees in low-cost plans driving down the formula that determines the maximum amount the government will contribute to premiums.

“A majority of people are now enrolled in plans that are impacted by that cap [on government contributions],” Spielman said. “So 70 percent of enrollees are in plans where they’re paying more than 25 percent of their premiums, but they have opportunities to move between plans. . . The formula is weighted by enrollment, and enrollment in less expensive plans can have that effect.”

OPM said there were no major changes in the coverage that will be provided by FEHBP plans in 2018, although the number of plans that include coverage of telemedicine has continued to increase, particularly in the areas of mental health and behavioral health.

Spielman acknowledged that the larger premium increase for enrollees in self-plus-one plans than for those seeking to insure whole families seems counterintuitive. But he said it likely stems in part from an older risk pool, as well as the fact that it is still a relatively new and underutilized option. Although more than 600,000 people are already enrolled, around 400,000 people currently in family plans are eligible for self-plus-one.

“In most cases, the cost isn’t higher, it’s lower [in self-plus-one],” he said. “There are a small number—39 in 2018—that have this inversion where the reverse is true, but that’s only 39 out of 262 plans we offer.”

The exact increase in premiums for 2018 will vary depending on the plan employees choose. In the Blue Cross and Blue Shield Standard Option, which is the most popular plan, self-only enrollees will pay $7.17 more per pay period; enrollees in family coverage will pay $17.72 more per pay period, and those in self-plus-one will pay $17.04 more every two weeks.

In the Federal Employees Dental and Vision Insurance Program, where there is no government contribution, dental plans will increase by an average of 1.26 percent next year. But the average premium for vision plans will decrease 0.48 percent.

National Active and Retired Federal Employees Association President Richard Thissen said in a statement that while premium increases next year are “modest,” they still hurt feds’ take-home pay.

“Over the last several years, federal workers have endured a three-year pay freeze and insufficient pay raises that have widened the gap between public- and private-sector pay,” Thissen said. “During this time, FEHB premiums have steadily increased, as we are witnessing with the 6.1 percent average increase for enrollees in 2018. Decreasing the purchasing power of America’s 5 million-strong federal family not only impacts their quality of life, but also has an economic impact on their communities across the country.”

J. David Cox, national president of the American Federation of Government Employees, said the announcement marks another year of eroding federal employees’ standard of living.

“The premium hikes announced today by the federal government far eclipse any increase in wages or Social Security payments next year,” Cox said in a statement. “These rate hikes mean less take-home pay for current and retired federal workers and another year of difficult decisions by many families on how to pay their bills.”

Open season for 2018 will run from Nov. 13 through Dec. 11. For more information on premium increases by individual plan, visit OPM’s website.