Weekend Reading on Your Federal Benefits 41-17

(for the week of October 7th – October 13th)

You’re too busy during the week to keep up on all the news around your employee benefits and pay. My weekly summary of some of the most interesting and relevant news stories could help you and includes some of my insights. You might just refer to it as “What’s George been reading this week?”

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

George Ray
Federal Benefits Online

In this week’s Federal benefits news, we get a perspective on health insurance costs, stay on top of improvements to the Thrift Savings Plan, and get schooled on how to use Medicare and FEHB in retirement. Let’s get started.

A Perspective on 2018 Federal Health Insurance Costs

From fedsmith.com

As Open Season approaches (November 13th - December 11th), get ready for the not-so-surprising and not-so-good news that comes each year around this time -- health insurance costs will be going up. And, of course, once again, they are increasing at a higher rate than your expected pay raise (or expected COLA, if you’re retired).

OPM says that FEHB program premiums will rise an average of 4% for the new year. By reviewing the Kaiser Family Foundation’s (KFF) 2017 Employer Health Benefits Survey (which surveys private sector employers), we find that health plan cost increases for employees in the private sector will be slightly lower this year on average than for Federal employees.

Of course, the issue that makes this hard to explain is the fact that increases in health insurance premiums have risen more than increases in the cost of medical care. The Consumer Price Index for Wage Earners and Clerical Workers (CPI-W) which is used to determine COLAs for Federal retirees and for Social Security beneficiaries includes medical care as a component. Costs for medical care in the index went up only .2% according to the most recent 12-month data ending in August.

The best thing you can do to prepare for Open Season is to review your current coverage to make sure that it’s appropriate for you and your family. Review your expenses from last year, get information about changes to your current plan, and compare plans and features to see if you can save money.

NARFE Applauds House Passage of TSP Modernization Act

From narfe.com

We’re continuing to follow the journey of the legislation that I first wrote about back in April (It’s About Time You Had More TSP Distribution Choices) that will provide more flexibility to the withdrawal options in your Thrift Savings Plan (TSP). The TSP Modernization Act passed through the House this week, and will now go on to the Senate for approval. If the law passes (it’s expected that it will), it would allow Federal employees and retirees to make multiple age-based withdrawals from their accounts and remain eligible for partial withdrawals after they leave government. And, those who have left government service would be able to make multiple partial post-separation withdrawals. The TSP Modernization Act also would provide greater flexibility by allowing the election of quarterly or annual payments and permitting periodic withdrawals that can be changed at any point during the year.

Many agree that these changes are sorely needed, as most retirees take their money out of the TSP due to its limited distribution choices even though the TSP offers a variety of investment options and has extremely low expenses. Don’t break out the champagne just yet, but this looks to be positive news for your TSP and your retirement.

How the TSP’s I Fund Could Be Broadened

From federalnewsradio.com

In addition to offering more TSP distribution options (mentioned above), the TSP board has been researching the possibility of broadening the investments in the International Fund (I Fund). The I Fund follows the MSCI EAFE (Europe, Australasia, and Far East) Index, which invests in developed countries around the world, but excludes Canada, and excludes all emerging markets.

In her comment piece, Lyn Alden makes an excellent case for making changes to the I Fund to reduce its risk profile and potentially increase its returns by using the MSCI’s World ex USA index. This index would add Canada (and provide a bit more diversification) while sticking to developed markets. Better yet, using one of MSCI’s ACWI ex USA indices would add South Korea, Brazil, and a host of other emerging economies that would broaden geographic exposure and further diversify the geopolitical risk of the fund. To see what all this means, just look at the maps in her article. A picture is worth a thousand words.

The Federal Beat

From govmatters.tv

Otto von Bismark said ‘Laws are like sausages, it is better not to see them being made.”; however, there are plenty of Feds who do want to know what’s going on in the kitchen (i.e., Congress) before they are served their sausages.

Federal News Radio reporter Nicole Ogrysko and Bloomberg Government editorial director Loren Duggan join Francis Rose for this 7-minute video edition of ‘The Federal Beat’ to discuss Federal retirement cuts contained in the House’s 2018 budget resolution, plus a group of bills impacting Federal workers now being considered by the full Senate. Nicole also has an excellent wrap-up complete with a colorful flow chart that includes mouse-over popups (so cool!) over at Federal News Radio (How the 2018 Budget Resolution Process May Impact You and Your Retirement). Don’t worry, the sausage isn’t made yet, and the flavor could still be palatable for Federal employees.

FEHB and Medicare Explained

From fedsmith.com

One of the most frequently asked questions at benefits training programs that I conduct has been about Medicare and whether Federal retirees need to enroll in it. As we talk during a session about the Federal Employees’ Health Benefits (FEHB) program, many employees who are nearing retirement want to know if they must sign up when they already have health insurance that will continue to cover them after they leave Federal service. For folks in the private sector (who typically don’t get to keep their employer-sponsored health coverage), this isn’t an issue.

This article from Alexis Hongamen does a great job of briefly explaining the various parts of Medicare, what is covered in each part, and the costs for enrolling. He also addresses the questions most asked by Federal employees about Medicare, which are ‘Why would I sign up for Part B?’ and ‘Why would I not sign up for Part B?’. I might suggest that his very straightforward discussion is worth printing and keeping in your retirement folder for future reference.

See you next week. Thanks.

There’s one place where you really do want to know how the sausage is made – your employee benefits. Use my comprehensive e-learning course “Understanding Your Federal Benefits” to take a look inside and become the boss of your benefits. And if you enroll now, you’ll also receive updated modules for whatever changes Congress may bring our way in 2018. There’s a free trial that gives you the course introduction and first module at no charge. Give it a look

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Issue 41-17