Federal Health Care, Retirement Could Get Cut Under New Budget Package
As House and Senate negotiators look toward starting the budget reconciliation process, which would allow bare Republican majorities to advance their agenda, cuts to federal pay and benefits are on the line.
Under the House budget framework, the House Oversight and Government Reform Committee must cut at least $50 billion in spending over ten years. That would likely hit federal employees.
“Given the only major mandatory spending under the committee’s jurisdiction is federal retirement and health benefits, cuts of such a magnitude would necessarily come from cuts to federal retirement and health benefits,” the National Active and Retired Federal Employees Association (NARFE) wrote in a letter to Congress.
Among the possible changes are cuts to the Federal Employees Health Benefits Program (FEHB). Proposals include the following:
Switching the FEHB program from its current shared premium model to a flat-rate “voucher” model. The government’s price sharing would be tied to inflation rather than weighted average premiums. That means employees could be on the hook for more as the government would not have to necessarily pitch in additional funds. Supporters say it would save about $16-18 billion.
Auditing participants and removing individuals found ineligible for health benefits.
Among the possible cuts on retirement:
Eliminating Federal Employee Retirement System (FERS) supplemental payments. Currently, federal employees who retire before Social Security payments receive the supplemental until Social Security kicks in at age 62. This could hit law enforcement and first responders hardest, as many have a mandatory retirement age of 57.
Raising the FERS contribution to 4.4 percent. It would not change annuities, but would result in federal employees paying more into the system each paycheck. House lawmakers say it could save $44 billion.
Another proposal would convert feds to at-will employees if they do not accept the higher contribution rate.
Federal employee organizations are urging opposition as Congress considers what to put into the final budget legislation.
The Federal Law Enforcement Officers Association (FLEOA) notes that these are only proposed cuts and are not law. It told members that “we are fighting each day to ensure that whatever cuts the House Oversight Committee proposes, it does not impact your pay and retirement status or benefits.”
The International Federation of Professional and Technical Engineers (IFPTE) also urged members to oppose the legislation saying the changes will “erode the value of benefits over time and undermine retirees' economic security.”