Looking Ahead

By Tammy Flanagan

December 22, 2006

This will be my last column of 2006, so I thought I'd take the opportunity to look ahead to what's going to happen in 2007. There are the usual annual changes to anticipate in Social Security, Medicare and federal retirement benefits programs. And there are a few things that folks hoped would change, but won't.

Social Security

Here's a look at the key annual changes:

Medicare Part B

The standard monthly premium for Medicare Part B, the optional program that covers physician care and outpatient services, will be $93.50 in 2007. That's an increase of $5, or 5.6 percent, from this year. In 2007, about 4 percent of Medicare Part B enrollees with higher incomes will pay a higher Part B premium based on income. The income-related Part B premiums for 2007 will be $105.80, $124.40, $142.90, or $161.40, depending on the extent to which an individual's income exceeds $80,000 (or a married couple's income exceeds $160,000). The highest premiums will be paid by the less than 1 percent of beneficiaries whose incomes are over $200,000 (or $400,000 for a married couple).

Federal employees who are 65 and over qualify for Medicare, but if they are covered by the Federal Employees Health Benefits Program through their current employment (or if they are covered by a currently employed spouse's insurance), they do not need to enroll in Medicare Part B. For this group, Medicare is the secondary payer for medical care, and enrollment can occur when the employee (or currently employed spouse) retires without a penalty (as long as enrollment occurs within eight months of the retirement date).

Retirees age 65 and over should consider Medicare Part B and FEHBP together. Due to the premiums, this decision may involve rethinking which FEHBP plan will work best to supplement Medicare's coverage. To learn more about coordinating Medicare and FEHBP, see the following columns from earlier this year: Medicare ABCs (April 21) and More on Medicare (April 28).

CSRS and FERS

Here's the rundown on annual changes:

Thrift Savings Plan

The Internal Revenue Service annual limit on what employees can contribute to their thrift accounts will be $15,500 for tax year 2007, up from $15,000 in 2006. FERS employees need to be sure not to exceed the $15,500 limit before the end of the year so they won't lose matching agency contributions. You can find additional information on these limits on the TSP Web site. The limit on catch-up contributions for 2007 remains unchanged at $5,000.

Changes That Didn't Happen

Here are the big changes that didn't happen in 2006:

Well, that's it for this year. It's been a pleasure writing the column. Thanks for the comments and questions you've posted throughout the year and for forwarding these articles to others who might benefit from the information. Best wishes for a happy holiday season and a healthy and prosperous New Year!

Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.


By Tammy Flanagan

December 22, 2006

http://www.govexec.com/pay-benefits/retirement-planning/2006/12/looking-ahead/23387/