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Key developments in the world of federal employee benefits: health, pay, and much more.

An End to Pay Raise Suspense, Life and Health Insurance Open Seasons, and More

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For loyal followers of the annual federal employee pay raise, Wednesday started out as a suspenseful day. President Obama said when he released his fiscal 2017 budget plan that he wants to give civilians a 1.6 percent boost next year, but he had until midnight on Aug. 31 to formally announce his proposal. As of noon that day, there was no word from the White House. But then by mid-afternoon, Obama had released his formal request for a 1 percent base increase for civilians and a 0.6 percent locality bump. He issued a separate plan providing a 1.6 percent boost in monthly basic pay rates for military service members.

Some civilian feds might have hoped he would miss his deadline. If he hadn’t informed Congress of his alternative pay plan on time, then the increase mandated by the 1990 Federal Employees Pay Comparability Act would have kicked in. Under FEPCA, the raise would have been determined by the change in the Employment Cost Index minus 0.5 percent. In 2017, that rate would have been 2.1 percent.

Congress also still has an opportunity to change the pay raise. Lawmakers in both chambers have introduced legislation that would give federal employees a 5.3 percent pay hike across-the-board in 2017, but those bills are not likely to gain any traction when Congress returns to a busy fall after summer recess. The fiscal year ends on Sept. 30, and Congress has yet to agree on any fiscal 2017 spending bills.

The next big step in Obama’s plan is finding out the specifics of the locality pay rates, which vary by region. Obama will issue those details by Nov. 30.

The other pay and benefits news of the week largely revolved around federal employee insurance programs.

The Office of Personnel Management is holding two open seasons for benefits changes over the next few months. The first is for the Federal Employees’ Group Life Insurance Program; it will run from Sept. 1 through Sept. 30. If you’re not sure whether you should take advantage, Retirement Planning columnist Tammy Flanagan has advice for you. Click here to see how much life insurance she recommends, and here to determine whether you need to be covered in the first place.

Open season for the Federal Employees Health Benefits Program will run from Nov. 14 through Dec. 12. This window also applies to changes for dental and vision benefits, as well as flexible spending accounts. OPM’s much-anticipated annual announcement about changes in premium rates is expected to come in late September.

Speaking of dental and vision insurance, OPM late last week released a final rule that allows agencies to cover students and recent graduates in the Pathways Programs under FEHBP and the Federal Employees Dental and Vision Insurance Program (FEDVIP). The rule took effect Aug. 25. It comes just after OPM released a report showing the Pathways Programs – established in 2010 to consolidate a patchwork of hiring processes aimed at students or recent graduates – have been effective in recruiting and retaining employees. Nearly 90 percent of the young workers hired through the Pathways Programs stayed in government for at least two years, the report found. 

In another health-related proposed rule, certain federal employees on unpaid leave would be required to pay as they go to maintain their coverage under FEHBP. If necessary, agencies would be able to advance a portion of employees’ basic pay to cover their FEHBP contribution for the period of leave without pay. Employees would have to reimburse the agency upon returning to work.

While employees who go on leave without pay now can choose to keep their FEHB payments current when they’re out, generally agencies pick up the entire FEHBP tab – the government and employee contributions – for employees on LWOP. Employees incur that debt, and then repay their portion of the FEHBP contribution when they return to work.

The proposed rule exempts several categories of LWOP, including leave taken under the Family and Medical Leave Act, the Federal Employees Compensation Act, and the Uniformed Services Employment and Reemployment Rights Act. It also would not apply to employees furloughed because of a lapse in appropriations, or government shutdown.

The draft rule, which OPM published on Tuesday, is really aimed at helping agencies provide health care coverage to temporary and seasonal federal workers while also keeping an eye on their budgets. In 2015, a new policy requiring agencies to expand FEHBP coverage to previously ineligible workers took effect. Under that regulation, all temporary, seasonal and intermittent employees who are scheduled to work at least 130 hours in a calendar month and work at least 90 days are eligible for FEHBP coverage.

OPM is accepting comments through Oct. 31.

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