Benefits: Good, Bad News

In voting on the fiscal 1998 budget agreement Wednesday, the House Government Reform and Oversight Committee delivered both good news and bad news for federal employees: They would not have to pay more for health benefits next year, but they would have to ante up more for retirement.

The committee approved an amendment offered by Rep. Constance Morella, R-Md., that would save federal employees and retirees from paying an average of $276 in additional annual premiums for their health insurance.

Currently, the government covers 71 percent of the premiums for the medical coverage that almost 10 million federal employees and retirees receive through the Federal Employees Health Benefits Program (FEHBP).

The government's share of employees' health premiums is determined by averaging the premiums for the five largest health plans and the premium for an Aetna health plan that pulled out of FEHBP in 1989. That formula expires next year.

Morella's amendment would establish a permanent formula to keep the government's portion of premiums around 71 percent.

"The amendment is fair, it is stable, and it does not depend on carriers that may or may not drop out of the program," Morella said. "It is unconscionable for us to ask federal employees, who have endured downsizing, layoffs and budget cuts, to bear the additional burden of unfair increases in their health care costs."

Without the amendment, the government's portion of premium payments would drop to about 64 percent.

National Treasury Employees Union President Robert Tobias called the amendment "welcome relief."

"Congresswoman Morella's amendment is worth its weight in gold to federal employees and retirees," Tobias said.

However, NTEU and other federal unions oppose other parts of the budget agreement, in particular a provision requiring federal employees to pay an additional .5 percent of their salary toward retirement benefits. On a voice vote, the committee approved that proposal, which is projected to save $4.8 billion in federal retirement costs over the next five years.

Payroll deductions for retirement would increase starting in January 1999. Budget projections show that the average employee contribution would increase by about $100 a year.

In addition agencies would be required to contribute 1.5 percent more per year toward the Civil Service Retirement System.