Weekend Reading on Your Federal Benefits 34-18.jpg

(for the week of August 18th – August 24th)

You’re too busy during the week to keep up on all the news around your employee benefits and pay. My weekly summary of the most interesting and relevant news stories could help you and includes my comments and insights.

By the way, if you’ve read something about your employee benefits that you think is important or interesting, share it. And, let me know about news sources that you follow. Have a great weekend.

George Ray
Federal Benefits Online

In this week’s benefits news for Feds, we get clarification from OPM on how to remove a family member from your health insurance, learn the four things you should know about your pay raise (or freeze), consider how to avoid overestimating your retirement income, and answer the question ‘would you recommend the government as an employer?’ Let’s get started.

Removing a Family Member from FEHB

Fedsmith.com

This week the Office of Personnel Management issued Benefits Administration Letter (BAL) 18-201 which covers new rules on removing eligible individuals from an existing enrollment in the Federal Employees Health Benefits (FEHB) Program. If you want to read the BAL, you can find a copy here.

The letter indicates that a spouse or an adult child can be removed from your FEHB Self and Family or Self Plus One plan during the plan year (in some situations, but not always) and provides information on what documentation is required to do that. If you have this situation, the BAL and Ralph Smith’s article at Fedsmith should help to provide some explanation.

4 Things You Should Know about Your Federal Pay Raise, or Freeze

From Federalnewsradio.com

Nicole Ogrysko at Federal News Radio nicely summarizes what you should know about next year’s pay raise (or freeze) so far in four points:

The President’s called for a pay freeze, but his proposed workforce fund would minimize the potential impact (if only the House and Senate would approve it).
August 31st is the deadline (the Friday before the Labor Day weekend) for the President to have his say on the matter.
The President’s plan is an alternative because the Federal Employees Pay Comparability Act is supposed to automatically set the rate of pay for the coming year based upon a formula-- but few Presidents have followed the formula.
Congress is currently divided over your Federal pay. The Senate has passed a 1.9% increase, but the House has remained silent. Two Democrats (from Hawaii and Virginia) have re-introduced the Federal Adjustment of Income Rates (FAIR) Act in January which calls for a 3% raise for Federal employees next year.

All we can say at this point is that we’ll know more soon, but now at least you’ve got the bullet-point version.

Would You Recommend the Government as an Employer?

From ChiefHRO.com

Jeff Neal of ChiefHRO asks a valid and thoughtful question in his blog this week. Would you recommend the government as an employer? I do believe his question is aimed at Federal employees since you work there and would probably know better than anyone else. How would you answer that question?

It probably depends a lot on many factors such as which agency you work in, if you enjoy the work you do, who your co-workers are, etc. Jeff provides both the reasons you might recommend a government job, as well as reasons you may not. There are some excellent employee benefits that many folks in the private sector would love to have like a pension plan, lots of time off, and a good chance you’ll have health insurance in retirement. Inflexible pay, slow promotions, and politics are some reasons Mr. Neal thinks are negative aspects of working in government. In the end, I would agree that it boils down to where you work, what you do, and who you work with. What do you think?

Don’t Overestimate Your Expected Income

From Govexec.com

The title of this article is an important suggestion from Tammy Flanagan which comes to us from her regular column at Government Executive. I find that most Federal employees are going to be in pretty good financial shape when they retire—usually with adequate income to live comfortably for a very long time. With a combination of a pension (FERS or CSRS), money saved in the Thrift Savings Plan, and some Social Security income (mostly for the FERS retirees), they usually have much fewer worries than private sector employees who frequently lack an important piece, the lifetime income from a pension.

As Tammy also reminds us, there is a difference between gross income and net income. We don’t live on the gross, we live on the net—what’s left after taxes and deductions for insurance, etc. She recommends that we take those Federal taxes, state taxes, and other deductions (like Medicare Part B deducted from Social Security check) into consideration when figuring out how much you’ll have to live on during retirement. You can get an estimate of your Social Security from ssa.gov/myaccount and the TSP’s site has calculators to help you estimate your income. Figuring out what you’ll have as income from your pension and how much it will cost to provide a survivor benefit can be a bit trickier, but it’s figurable with a bit of work. (Become a student in my online FERS benefits course to get my help and personal answers to your questions. The link is here and down below too.)

While Tammy says ‘One rule of thumb is to never withdraw more than three or four percent of your account balance in a single year’, I would say it’s not quite as simple as that. In fact, she does link to a Kiplinger article titled ‘Why the 4% Withdrawal Rule is Wrong’ which explains that a rule of thumb is just that—a general rule that may simplify things a bit too much and won’t likely work in every situation. Here’s hoping your financial situation in retirement affords you the flexibility you want to live the life you choose.

See you next week. Thanks!

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