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The New Year Brings Good News for Federal Worker Compensation

While health care costs are rising and telework took a hit, everyone will see a decent raise and new parents will soon get paid parental leave.

The year that began with the longest partial government shutdown in history ended on a surprisingly high note for federal employees. In addition to a pay raise, President Trump signed into law the most significant improvement in federal benefits in decades—12 weeks of paid parental leave for the birth, adoption or fostering of a child. There were other changes as well, both good and bad: health care costs are rising, there are changes to the Thrift Savings Plan investment program, and some work-life balance programs are going away. 

Here are the highlights: 

Paychecks will get bigger. Starting with the first full pay period of 2020, which begins Jan. 5, feds will see a 2.6% increase to their basic pay and an average 0.5% increase dispersed across the various locality pay areas. That translates to an average 3.1% raise for federal workers. In late December, the Office of Personnel Management published the 2020 pay tables and locality pay area definitions outlining the precise pay rates in various regions across the country. OPM also published a handy general schedule salary calculator to help feds figure out their precise raises.

New parents will get paid time off. Beginning on Oct. 1, federal workers will be entitled to 12 weeks of paid parental leave for the birth, adoption or fostering of a child. This new benefit puts feds in the ranks of high-performing private sector employers and should help agencies in the war for talent. OPM is now working out the details of how the program will be administered. American Federation of Government Employees National Secretary-Treasurer Everett Kelley described the agreement as a “watershed moment,” noting that the union has been advocating for the benefit for decades. 

Your health care costs are going up. OPM estimates employees will pay an average of 5.6% more for their health insurance premiums in 2020, but the government’s share of Federal Employees Health Benefits Program premiums is also going up—by 3.2%. The government also will cover an average of 70% of each enrollee’s total premium costs. Of course the actual increase in insurance costs for individuals depends on what plans they’ve signed up for. And there’s some good news as well: FEHBP will include more benefits for mental health and substance abuse treatment and plans will offer more services to help enrollees quit smoking.

Telework is taking a hit. The Trump administration has sought to rein in telework across government, despite long-established practice at some agencies and strong promotion by OPM. Most recently, the Social Security Administration decided to end its six-year-old telework pilot program in November, leaving roughly 12,000 workers scrambling to make alternative arrangements. Officials cited two reasons for Commissioner Andrew Saul’s decision: long wait times for customers and an inability to evaluate employee performance. However, an inspector general evaluation found that telework actually improved productivity for employees at teleservice centers. Congress has urged SSA to reconsider the decision.

Employees will have new TSP withdrawal option. In September, the agency that administers the federal government’s 401(k)-style retirement savings program, the Thrift Savings Plan, implemented the TSP Modernization Act, allowing participants to make multiple post-separation partial withdrawals. Federal workers ages 59 and a half and older may make up to four in-service withdrawals per year under the new rules. Participants may also choose whether their withdrawals come from their Roth accounts, traditional accounts, or a combination of both. Those who have already begun receiving monthly payments can now change the amount and frequency of their payments at any time.