Anger Over Skyrocketing Long-Term Care Premiums, the $333B Plan to Cut Feds’ Pay and Benefits, and More

A weekly roundup of pay and benefits news.

Advocates for federal employees and retirees have joined lawmakers in demanding answers on skyrocketing premiums in the Federal Long-Term Care Insurance Program. The National Active and Retired Federal Employees Association on Monday announced that it has sent letters to three congressional committees seeking hearings on the premium increase, which will average 83 percent, or $111 more per month, for enrollees who don’t change their level of coverage.

“I am stunned at the extent of the increase and angry that this type of financial pressure is being placed on federal employees and retirees,” said NARFE National President Richard Thissen, in a statement. “This situation should not have occurred and signals the need for change in the structure of FLTCIP to prevent federal employees and retirees from ever facing such huge, unexpected increases again.”

NARFE asked the House Oversight and Government Reform Committee, Senate Homeland Security and Governmental Affairs Committee, and Senate Special Committee on Aging to look into why premiums jumped so much, and what can be done to mitigate the increases and prevent similar problems in the future.

Some lawmakers have also demanded answers on the increase. Virginia Democratic Reps. Don Beyer and Gerry Connolly wrote a letter July 22 to the Office of Personnel Management asking what happened and stating that the premium jump warrants “a reconsideration of how we structure FLTCIP so that price spikes at this extreme can be avoided.”

New premium rates take effect Nov. 1, and FLTCIP enrollees have until Sept. 30 to make a decision about whether they will keep their current level of coverage, scale it back to receive a lower premium or leave the program. For those having trouble making the decision, Retirement Planning columnist Tammy Flanagan tackled the topic last week. Click here to read her column.

Another big topic on federal employees’ minds is likely the upcoming presidential election. Federal workers’ pay and benefits didn’t come up much at the Democratic National Convention last week, but Republicans and conservative-leaning analysts continue to hammer on the issue.

The right-leaning Heritage Foundation last week fleshed out recommendations from an earlier report, suggesting $26 billion in cuts to federal employees’ pay alone. The think tank noted the federal government is not subject to market forces that drive private sector pay, and said this contributes to civil servants being overpaid. Heritage also criticized the automatic annual across-the-board raises and within grade step increases afforded General Schedule employees. Step increases are almost never denied, the analysts said, because employees can appeal that decision to the Merit Systems Protection Board or through a union grievance.

Heritage suggested performance improvement plans no longer be required for employees denied a step increase. A denial should only be appealed within the agency, Heritage said, not to MSPB or through a grievance. Managers should instead have more leverage to give performance bonuses to top notch and in-demand employees.

In addition to reforming pay, Uncle Sam could save $202 billion over 10 years by cuts to retirement benefits, $37 billion by eliminating the government subsidy in the Federal Employees Health Benefits Program for retirees, $42 billion from changes to the amount the government contributes toward the FEHBP premiums of current employees and $68 billion from changes to paid leave, Heritage found.

Federal employee advocates called the report “out of touch with reality” and said federal employees’ pay actually lags behind the private sector in some industries, and that private sector companies often offer benefits the government does not.

One benefit the government has started offering many employees recently, is the option to telework.  But the value of allowing federal employees to work remotely is anyone’s guess. Federal agencies do not collect data on all the benefits or costs involved in letting staff work remotely, the Government Accountability Office found in a new report.

GAO suggested that the Office of Personnel Management issue guidelines to help agencies start to make cost-benefit assessments. “In the current fiscal climate,” GAO said, “cost savings is an important measure of the success of telework programs.”

OPM agreed to issue the recommended guidelines and to require agencies to report on net cost savings, so you can expect to see more soon on how much allowing federal employees to work from home is really worth.