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

Keeping Hope Alive

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Last week lawmakers left employee groups disappointed when they stripped a gargantuan tobacco regulation bill of language that would have resolved an inequity in how sick leave is treated in the two major federal retirement systems, and made it more attractive for employees in the newer system to return to government after a stint in the private sector.

Luckily for federal employees, these provisions aren't necessarily lost for good. There is a decent chance they could crop up later this year as amendments to other bills, supporters say.

In addition to the measure that would have allowed Federal Employees Retirement System members to count unused sick time toward their retirement benefits, a provision could resurface that permits FERS workers to redeposit retirement funds collected after leaving government upon returning for a second round of service. There is one caveat: workers would have to redeposit not only the amount they took upon leaving, but also the interest the money would have earned had they left it with the government.

One big hurdle in tacking these measures onto other bills, however, will be bringing them in compliance with pay-go rules, which require that all new entitlement programs or tax cuts be offset by spending cuts or revenue increases.

In the tobacco bill, the cost of implementing the provisions would have been offset by increased revenues from a Roth 401(k) option added to the Thrift Savings Plan, at least in the short term. (In a Roth account, workers contribute income that already has been taxed in contrast to a traditional retirement account, which is not taxed until the money is withdrawn.) Of course, once Roth contributors retire, they would withdraw that money tax-free, counteracting the government's earlier gains. But the Congressional Budget Office only estimates the cost of a bill for 10 years after it is enacted.

If lawmakers want to attach the provisions to a different bill, they will have to couple them with new revenue-generating or cost-cutting proposals.

But despite this challenge, it is unlikely the tobacco bill will be the last that's heard of the provisions, supporters say.

SSI Solution

Soldiers and other uniformed service members who receive combat pay soon might not have to worry about whether that pay would prevent their family from collecting Supplemental Security Income.

The proposed rule change, posted in the Federal Register on June 11, would designate that combat pay not be factored in to the calculation of whether a service member or his or her family would qualify for SSI, which is administered by the Social Security Administration and is available to those who are elderly, disabled or have limited income.

"These proposed rules would protect spouses and children of members of the uniformed services from a reduction in, or loss of, benefits because their spouse or parent serves in a combat zone," the notice stated. According to the proposed rule, most military members probably are not eligible for SSI benefits themselves, but their family members may be. Current rules already discount "hostile fire pay," but the change would broaden that to include all types of additional pay given for serving in a combat zone.

"We determined that it would be inequitable to deem that pay as income and reduce family members' benefits or potentially render the family member ineligible for SSI," government officials wrote in the notice.

Citizens can submit comments on the proposal until Aug. 10 via the Web site Regulations.gov, by fax to (410) 966-2830, or by mail to:

Commissioner of Social Security
P.O. Box 17703
Baltimore, Md. 21235
Comments also can be hand-delivered to SSA's Office of Regulations at 922 Altmeyer Building, 6401 Security Blvd., Baltimore, between 8 a.m. and 4:30 p.m.
 
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