Posted on Friday, 8th September 2023 by Dennis Damp

The Postal Service Health Benefits (PSHB) Program will replace Federal Employees Health Benefit (FEHB) Program coverage for eligible Postal Service employees, Postal Service annuitants, and their eligible family members starting in 2025.

This new separate program, within the Federal Employees Health Benefits (FEHB) Program, is administered by the Office of Personnel Management (OPM). One of the key elements of this new plan is the requirement for those under a certain age to sign up for Medicare Part B to retain their PSHB health care coverage in retirement.

This requirement could be added to
federal employee’s FEHB Plans down the road.

Postal Service Financial Reforms

Public Law 117–108—APR. 6, 2022, provides stability to and enhance the services of the United States Postal Service. Title One, Section 101 establishes the Postal Service Health Benefits Program (PSHB). There are significant changes, especially for those approaching 65 with this new plan.

Eligible Postal Service employees and Postal Service annuitants must enroll in a PSHB plan during the PSHB Program Open Season in late 2024. Postal Service employees and Postal Service annuitants currently enrolled in FEHB plans who do not enroll in a new PSHB plan during Open Season in 2024 will automatically be enrolled in a PSHB plan.

Other Insurance & Benefit Programs

Fortunately, enrollment in a PSHB plan will not impact or disrupt enrollment in other insurance and benefits programs, including:

• Federal Employees Dental and Vision Insurance Program (FEDVIP)
• Federal Flexible Spending Account Program (FSAFEDS)
• Federal Employees’ Group Life Insurance (FEGLI), or
• Federal Long Term Care Insurance Program (FLTCIP)

The New Medicare Part B Participation Requirement

There are two sets of rules to follow concerning Medicare enrollment, one for those still employed and another for annuitants. The rules are also based on age at the time of retirement.

The requirement to sign up for Medicare Part B is limited to postal employees that retire on or after January 1, 2025, and you are under 64, you WILL BE required to enroll in Medicare Part B when you become entitled to Medicare Part A (typically at age 65) to remain enrolled in a PSHB plan.

There are two fact sheets published by OPM for active employees and annuitants, the following information is excerpted from these documents.

USPS Active Employee Requirements

If you are an active employee age 64 or older as of January 1, 2025, you ARE NOT required to enroll in Medicare Part B to continue your PSHB health insurance coverage once you retire. However, upon your retirement and entitlement to Medicare Part A (typically at age 65), you will have the option to enroll in Medicare Part B during a special enrollment period.

• If you are the primary subscriber, your covered family members will not be required to enroll in Medicare Part B to stay on your PSHB plan; however, enrollment in Medicare Part B may reduce your overall costs for health care-related expenses and may provide better value for you and your family.

If you are an active employee under the age of 64 as of January 1, 2025, to continue your PSHB health insurance coverage in retirement, you WILL BE required to enroll in Medicare Part B after you retire and become entitled to Medicare Part A (typically at age 65).

• If you are the primary PSHB enrollee, your covered family members will also be required to enroll in Medicare Part B when you retire, upon their entitlement to Medicare Part A, if they wish to remain covered by your PSHB insurance.
• If you retire on or after January 1, 2025, and you are under 64, you WILL BE required to enroll in Medicare Part B when you become entitled to Medicare Part A (typically at age 65) to remain enrolled in a PSHB plan. The Social Security Administration (SSA) will mail you a notice when you are eligible to enroll in Medicare Part B during your initial enrollment period. Your initial enrollment period starts three months prior to your 65th birthday and ends three months after your 65th birthday. If you are the primary PSHB subscriber, your covered family members will also be required to enroll in Medicare Part B upon their entitlement to Medicare Part A, if they wish to remain covered by your PSHB insurance.

There are exceptions to the requirement to enroll in Medicare Part B as an annuitant. These exceptions will also apply to your covered family members. Annuitants may be responsible for providing proof of eligibility for the applicable exception(s) to the designated agency. These exceptions are:

• You are residing outside of the United States and its territories. You are required to follow the policy and procedure set forth by the Postal Service to be eligible for this exception; or
• You are enrolled in health care benefits provided by the Department of Veterans Affairs; or
• You are eligible for health services provided by Indian Health Services.

USPS Annuitant’s Requirements

If you are an annuitant as of January 1, 2025, and not currently participating in Medicare Part B, you ARE NOT required to enroll in Medicare Part B to continue your health insurance coverage in the new PSHB Program. Participation in Medicare Part B is voluntary; however, enrollment in Medicare Part B may reduce your overall costs for health care-related expenses and may provide greater value.

• Your covered spouse and eligible family members will also not be required to enroll in Medicare Part B even if they are age 65 or older; however, enrollment in Medicare Part B may reduce overall costs for health care-related expenses and may provide greater value.
• Note: If you are an annuitant as of January 1, 2025, and are already enrolled in Medicare Part B, you ARE required to remain enrolled in Medicare Part B to continue coverage under PSHB.

If you are an annuitant entitled to Medicare Part A (typically at age 65) prior to January 1, 2024, and have not enrolled in Medicare Part B, you and your covered, eligible family members may be able to participate in the special enrollment period (SEP) for Medicare Part B that starts on April 1, 2024. Those who enroll during the SEP will not need to pay the late enrollment penalty. Eligibility letters will be sent to annuitants and eligible family members in early 2024.

If you retire between October 31, 2024, and December 31, 2024, and are entitled to Medicare Part A (typically at age 65), you will have the option to enroll in Medicare Part B during a specific eight-month special enrollment period immediately following your retirement date. If you wish to enroll, you MUST contact the Social Security Administration (SSA) to initiate enrollment if you are over the age of 65.

As a general rule, spousal and family member PSHB coverage is based on the primary subscriber’s eligibility. If the primary subscriber is not required to join Medicare Part B, neither will dependent family members.

Additional Information

• PSHB Overview
• USPS Employee’s Fact Sheet
• Information for Employees
• USPS Annuitant’s Fact Sheet
• Information for Annuitants

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• Annuity Expectations – Before and After
• Master Retiree Contact List
• TSP Guide

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: FEHB, Health Care, Medicare Part B, New Health Care System for Postal Employees, PSHB
Posted in BENEFITS / INSURANCE, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Friday, 1st September 2023 by Dennis Damp

How did I ever find time to work before retiring? A lament expressed by many retirees, including myself. Life was much simpler, slower paced, with fewer technological advancements when I was young and full of vim and vigor. That ship has long since sailed.

Frustration Times 10

A friend forwarded me Steeler Tickets via email last week for the Jacksonville game this October.  I’ll be taking my grandsons to their first Steeler game. I had an iPhone-7 and it’s IOS (Operating System) wouldn’t transfer the tickets to the phone’s wallet.

If you don’t transfer the tickets to the wallet, you may not be able to access Ticket Master or the Steeler’s website the day of the game. Everyone and their uncle will be trying to get into the stadium with their cell phones; web-based systems are prone to crashing when you need them the most.  The wallet stores the scannable tickets on your phone, so you don’t have to connect to the internet to enter the stadium. Just open your wallet app.

I decided to upgrade my 5-year-old phone to an iPhone 13. They offered a special if I transferred my business lines to them as well and I agreed. A free second phone to replace my office’s landline was included and my monthly costs would only increase $20. Sounded reasonable.

I spent almost 7 hours over a two-day period to get this done. Two hours that first morning, a 2 o’clock appointment the same day that lasted until 5 pm, and then another two hours three days later to set up my new mobile business account. I’ve bought cars and homes in less time than it took to effect these changes.

You would think the process would be intuitive and fairly quick, it isn’t.  There were a few bright spots, with previous upgrades I lost contact information, photos, and many of my apps didn’t transfer correctly.

This time around the transfer to both phones was flawless, no lost data and I only had to reload one app of the 110 on my phone! It took over an hour for each phone transfer. A pleasant surprise even though the wait was unacceptable, and they had the most uncomfortable chairs without back supports in their waiting room.

The Truth and Nothing but the Truth

When we look under the hood so to speak, the substance of a process or program is exposed. Often times what we uncover reveals the truth of the subject without the frills that are meant to distract and persuade us to support an untenable proposition.

Inflation is insidious and steals more from us each and every day. The Inflation Reduction Act passed by Congress last year had little to do with reducing inflation. Its main purpose was to reduce carbon emissions, invest in clean energy, tackle the climate crisis, and to achieve the Biden Administration’s climate goals, including a net-zero economy by 2050!

Yes, there are elements to the bill that have merit. It wasn’t meant to fight inflation, yet the title persuaded many to support it.

Prices Continue to Soar

I worked on a number of projects this year and the costs for materials have gone through the roof. A gallon of paint, midgrade, was $45 on sale, a small container of spackling compound cost $6.95, the price I paid for a quart container before the COVID crisis hit.

The cost of electricity, natural gas, homeowner insurance, car insurance, gasoline and so much more continue to move higher with few exceptions. One of our homeowner’s insurance policies increased 340% this year from $750 to $2,985!

Eggs are one of the few success stories, they are down to just over a dollar a dozen. While shopping this week a 10 oz can of coffee was $6.95, a year ago a 25.6 oz container of Maxwell House coffee was on sale for $6.95.

Men’s haircuts are averaging $25 in my area, I took my son and a friend to breakfast recently, nothing out of the ordinary, and the bill was over $40.

Mortgages are approaching 8%; many desiring to move or upgrade are hesitant to give up their 3% mortgages for the higher rates available today. Unfortunately, a good number of first-time buyers are priced out of the market.

In 1985 when I had Permanent Change of Station (PCS) orders to move to a new duty station, the lowest mortgage rate was 11 percent. When we closed, the couple selling us the property laughed when the agent said the total payout for a $65,000 loan over 30 years was $250,000! I refinanced several times after the closing as rates declined. Are we heading down this same path today? Time will tell.

The list goes on and on so when you hear inflation is improving, I’m sure if you look under the hood, you will find what my wife and I run into each and every day. It isn’t getting better.

Climate Crisis – Real, Imagined or Both

Our climate is a function of the earth’s size, magnetic poles, the polar icecaps, orientation to the sun, ocean currents, the earth’s axis and temperature differences that set everything into motion and so much more. The world’s climate has constantly changed since the beginning of time.

Anytime we suffer from a climate event: storms, draughts, floods, hurricanes, tornadoes, and other anomalies, it is a crisis for those impacted. The question is, can man affect climate change that is a natural order of the planet and how all of its elements interact.

I’ve gone through a number of climate anomalies including hurricane Camille that hit Biloxi Mississippi where I was stationed in 1969. The storm devastated the area and I was placed on many cleanup details, entire communities were gone or washed away.

The storm hit on August 17, 1969, three months before I married the love of my life. I was looking forward to bringing my fiancée down to the gulf coast after our marriage and wrote Mary about the amusement park on the beach, restaurants on long piers that jetted out into the water, and the beautiful coastline drive. All vanished during the storm.

Mini Ice Age

Did you know that a little ice-age impacted the world from the mid 1300 hundreds to 1850. There were few carbon-based fuels used other than wood, coal and peat to blame the crisis on. Nature calls the shots, and we have to react to it as best we can.

According to Britannica, “The Little Ice Age, though synonymous with cold temperatures, can also be characterized broadly as a period when there was an increase in temperature and precipitation variability across many parts of the globe.”

Yes, climate changes and we should be good stewards of our earth, explore ways to mitigate potential climate related events, recycle, use renewable energy where it makes sense because carbon-based fuel supplies aren’t infinite. However, we must be cautious not to tip the scales too far in any direction without considerable forethought.

Every weather event today is sited as a reason to aggressively move towards a net zero economy and to fast track the move towards all electric vehicles. The following articles and book discuss climate change and the first two explain some of the perceived misconceptions and how politicians use it to drive their agenda.

The third one is the Environmental Protection Agencies’ (EPA’s) climate analysis. Two somewhat different perspectives, all voices should be heard to come to consensus on the path forward.

It would be virtually impossible to develop a model to accommodate all aspects that impact earth’s climate. The more input received and considered, the better understanding we will have of this complex subject.

• Running Hot and Cold: Climate Doomsdays across Three Centuries
• Hot Talk, Cold Science (2021) by Fred Singer
• Climate Change Causes – EPA

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• Annuity Expectations – Before and After
• TSP Guide
• Budget Work Sheet
• Medicare Guide
• Social Security Guide

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: Climate Change, Inflation, iPhone Upgrade
Posted in FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 18th August 2023 by Dennis Damp

The Office of Personnel Management (OPM) released three videos recently to help federal retirees navigate their online retirement services accounts. Those planning their retirement should be aware of the process; when you leave sign up to access your annuity and benefits information online.

This initiative is designed to assist federal employees transition from active service to retirement and encourage retirees to take advantage of this feature. The intent of these videos is to reduce login errors for federal retirees managing their retirement accounts online according to Kiran Ahuja, the OPM Director.

The process can be confusing and my article titled “ALERT – OPM Services Online Access Changes” walks you through the sign on process and these changes. OPM’s videos provide additional help when signing up for an account.

OPM Videos

• How to register for a Login.gov account through Services Online
• How to access and link your Services Online account with your existing Login.gov credentials
• How to access and link your Services Online account with your existing Login.gov credentials

Services Online Benefits

Services Online lets annuitants (federal retirees or their spouses, ex-spouses, and children) manage their account online. You can view and print out your annuity statements, initiate or change allotments, download 1099R tax forms, set federal and state tax withholdings, and much more.

This service also has the capability to reduce OPM’s call center traffic. If you ever called for assistance, you know what I’m talking about. It’s difficult getting through and when you do the wait times are excessive. Much of the time a visit to OPM’s Services Online will resolve your concerns.

Services Offered

There is a laundry list of services, downloadable annuity verification letters, and others that you can take advantage of. Here is a master list of what the site provides with a short description for each entry:

• Annuity Statements (Select the desired payment date and that month’s payment appears, you can print out a copy for your records.)
• Annual Summary of Payments (The Summary of Payments and total paid to date. Payment descriptions, that month’s amount, total amount to date, click “Year to Date Totals” for a complete list by month for each item.) A very useful report.
• Direct Deposit (Direct Deposit allows your annuity payment to be sent to the financial institution of your choice) Just click on “Change” to make changes or to switch to another financial institution.
• Life Insurance (This is your current proof of life insurance on file.)
• 1099-R Tax Form (A form 1099-R for the current tax year and for four previous years can be printed or downloaded to your device.)
• Federal Tax Withholdings (Federal income tax to withhold from your payment.) You can change this at any time.
• State Tax Withholdings (You may change the withholding amount for your State Income Tax and/or select a new State for the withholding.) Some states do not tax annuities.
• Checking and Savings Account Allotments (You may start a new allotment, change an existing allotment amount, or stop an existing allotment.)
• Organizations Allotments (You may start a new allotment, change an existing allotment amount, or stop an existing allotment to an organization, where you have a membership.)
• Transaction History (A history of your recorded transactions.)
• Retirement Card (Print out a Retirement Card to carry if desired.)
• Documents (How to Guides, Booklet Request, 1099R Request, Annual Notice of Annuity, Annual Summary of Payments, and Disability Earnings Survey)

Summary

I highly recommend all retirees sign up for this service, it saves time and frustration when dealing with OPM. After you get acquainted with the sign in process, as described in my article and view the new videos, it’s easy to access and provides abundant services.

Each year I request a new Blue Book using the request form under the Documents tab on the site and it provides updated information for your annuity and benefits.  I received my first book March 12, 2005 several months after I retired and I keep it to compare it to the new one I order each January. It is very revealing and is a must for your heirs, add it to your estate planning binder.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• Annuity Expectations – Before and After
• TSP Guide
• Budget Work Sheet
• Medicare Guide
• Social Security Guide

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: Federal Retiremnet, OPM Services Online, Retirment Services
Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 11th August 2023 by Dennis Damp

Please forward this to others needing retirement planning assistance.

Those planning their retirement and annuitants require accessible resources to find answers to their retirement questions. The new year is fast approaching and many feds are now determining their best date to retire.

Retirement planning is of and in itself a complicated process with many avenues to explore. Fortunately, help is available; what service you require depends on the complexity of the issues and the level of assistance you personally need.

LEVELS Of ASSISTANCE

• General Assistance (Try these resources first)
• Comprehensive Guidance
• One-on-One Counseling / Assistance

GENERAL ASSISTANCE

OPM

The Office of Personnel Management (OPM) is the HR department for the federal government; they administer the retirement benefits program. Active federal employees can research various aspects of retirement on OPM’s site. However, they must contact their agency’s HR office for retirement forms, processing, and guidance.

Recently OPM issued a Retirement Quick Guide, A Reference for Voluntary Retirement that you will find helpful. Download a copy and keep it with your retirement paperwork.

OPM services the retirement community; If you are an annuitant (retiree), call or use their online services portal to obtain current benefit information, related documents, and payment statements online if registered for their service.

It is difficult getting through to them by phone and when you do, expect long waits. OPM is the only entity that can effect desired changes or update your records.

• Phone Number: 1-888-767-6738, TTY: 855-887-4957 weekdays only.
• Email: retire@opm.gov
• Website: https://www.opm.gov/retirement-services/
• Annuitant’s Online Services: https://www.servicesonline.opm.gov/

NOTE: OPM’s Services Online changed how you access your account last year.

Federal Employee’s Retirement Planning Guide

I launched this site in 2004 when I was planning my retirement. It is designed to help federal employees and retirees find the information they need to make informed benefit and retirement decisions.

A site visitor commented after finding the retirement answers he needed, “I spent 3 hours on the web looking for answers to questions concerning federal retirement. After a Google search yielded your address, it took only 20 minutes to find all of my answers! Thank you!!!”

How to Find Essential Retirement and Benefits Information on This Site

Abundant retirement planning guidance is compiled from a multitude of federal agencies: OPM, Social Security, Medicare, TSP, the Department of Labor and others. Use the main menus and search box at the top of each page to find benefit clarifications, financial planning guidance, FERS / CSRS eligibility determination and annuity estimates, general explanations, examples, and suggestions that you won’t find elsewhere. The related blog and weekly email newsletter offer guidance on current topics of interest.

• Website: https://www.federalretirement.net/
  • The Ultimate Retirement Planning Guide
• Retirement Planning Blog https://www.fedretire.net
• Subscribe to our FREE Retirement Planning E-Mail Newsletter

COMPREHENSIVE GUIDANCE

Retirement Planning Seminars

Contact your HR department to sign up for a retirement planning seminar. They cover CSRS and FERS employees, (including Special provisions) and may be offered in Full or Half-day sessions. The information is generally divided into seven key areas:  CSRS or FERS retirement annuity, Thrift Savings Plan (TSP), Voluntary Contribution Plan (VCP) – CSRS and CSRS Offsets only, Federal Employees Group Life Insurance (FEGLI), Social Security, Federal Employees Health Benefits (FEHB), Federal Employees Dental and Vision Insurance Program (FEDVIP) and disability programs.

Federal Employee’s Retirement Planning Software (https://fedretiresoftware.com/)

This easy-to-use and reasonably priced software is uniquely designed for federal employees (full-time, regular CSRS & FERS) to calculate your federal benefits up to and throughout retirement. You can also add income and/or expenses from other sources.

This calculator is used by tens of thousands of federal employees as well as Federal HR departments to make informed retirement planning decisions. Checkout their Sample Report to get a better understanding of how comprehensive their calculator is for federal employees planning their exit.

ONE-ON-ONE COUNSELING / ASSISTANCE (Finding someone to talk to)

Often, individuals need to talk with an expert to address complex issues and make informed decisions about what is best for their situation. Here is a list of those you can contact to help you address your concerns when the research you’ve done hasn’t provided an answer.

Call Your Agency’s HR Department (Federal Employees)

Federal employees with retirement questions should contact their HR department, OPM only services annuitants and survivors. Your HR department will provide annuity estimates for multiple target retirement dates, explain your benefit options, and arrange for you to attend a retirement seminar.

Columnists

Many columnists, like myself, reply to email questions. Generally, I’ll send a reply with links to relevant sections of my website, related blog articles, and to OPM guidance that will help. When I’m asked to provide one-on-one counselling, I refer them to the professional counselors listed below.

Retirement Planning Consultant – All Areas

A professional federal benefits consultant can address your concerns and answer any questions that you may have. If they don’t have the immediate answer, they have the contacts and resources to obtain them.

Retire Federal, a consulting firm owned by Tammy Flanagan, a federal benefits expert who has been assisting feds since her days of employment with the Federal Bureau of Investigation. She and her staff of experienced counselors offer invaluable fee-for-service personal consulting for civilian federal employees and annuitants on pre-retirement retirement prep to post-retirement decisions and events.

Their staff will assist you with a thorough review of your pre-retirement tasks and help you decide about Medicare Part B and which FEHB plan will coordinate best for your situation. They can address your concerns, answer questions, recommend options, provide details as to why one path is preferred over another, and put your mind at ease.

Ms. Flanagan is also the Senior Benefits Director for the National Institute of Transition Planning, Inc. which has conducted pre-retirement seminars and workshops since 1987.

Since 2006, Tammy has authored the popular weekly “Retirement Planning” column for Government Executive online magazine with more than 250,000 subscribers. She was selected as one of Money Magazine’s “Money Heroes” of 2012 for the service that she provides to help federal employees prepare for life after retirement.

Retirement Planning and Divorce Related Issues for Federal Employees – Consultant

Ann Ozuna is a retired Personnel Management Specialist. She founded Personnel Solutions Federal Benefits Counseling upon retirement from federal service in 1996.

Her federal benefits consulting firm specializes in educating federal employees on retirement benefits and assisting employees with CSRS/FERS regular and disability retirements. They also work with employees/retirees and their lawyers on divorce matters. Federal retirement is not under the same law as private sector retirements.

In addition to her 25-year federal personnel career, she holds an MBA from Gonzaga University and the Senior Professional in Human Resources (SPHR) and Chartered Federal Employee Benefits Consultant (ChFEBC) designations.

• Divorce Considerations
• Don’t Get Burned by Your Old Divorce Decree
• Contact: (509) 993-2283, Email: RetireLady@asisna.com

If you need answers to retirement questions or don’t know what options are best for you and your family, use the resources listed above or other reputable services.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• Annuity Expectations – Before and After
• TSP Guide
• Budget Work Sheet
• Medicare Guide
• Social Security Guide

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: Federal Employee Counseling Services, Federal Retirement, Retirement Planning Assistance
Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Friday, 21st July 2023 by Dennis Damp

The 2023 FEHB Open Season will run from November 13 through December 11, 2023. Open Season starts every year on the Monday of the second full work week in November and ends on the Monday of the second full work week in December.

OPM sent a FEHB Program Carrier Letter to all FEHB providers on March 1, 2023. This letter outlines the policy goals and initiatives for the 2024 FEHB Program. A follow-up letter provides technical guidance and instructions.

OPM GOALS

As excerpted from their guidance letter, “OPM’s focus for the upcoming plan year are on the following critical Program priorities: Fertility Benefits, FEHB and Medicare Coordination, and Pharmacy Benefit Design.”

They further state, “OPM is continuing to emphasize the importance of Gender Affirming Care and Services, Maternal Health, Prevention and Treatment of Obesity, and Mental Health and Substance Use Disorders.”

PREMIUM IMPACT

The average increase for our FEHB plans in 2023 was 7.2% while Medicare premiums actually decreased approximately 3% after the previous year’s 14% increase!  In March, Medicare Trustees forecasted monthly Part B premiums would increase to $174.80 in 2024 from $164.90 this year, a 6% increase.

The carriers will again be challenged this year by inflation and to provide expanded coverage requested by the administration. Over the last decade the average annual FEHB increase was 4% according to OPM.

The additional costs for gender affirming care, obesity treatments, and other coverage will require higher premiums across the board, especially when OPM is waiving the “cost neutrality clause,” as noted below.

This expanded coverage was sanctioned by executive orders, not by the Congress. The government pays the majority of our premiums, this new coverage increases spending and our country’s deficit. Congress authorizes and controls spending, a President can approve or veto their bills, they don’t have cart blanch authority to do whatever they desire.

It seems all Presidents, in recent memory, used executive orders to usurp the legislative branch and implement changes that Congress wouldn’t pass.

COST NEUTRALITY

According to OPM’s cost neutrality clause, “When proposing an increase in benefits, Carriers must propose corresponding benefit reductions to offset any potential increase in premium, with limited exceptions directed by OPM.”

They provide an example in the clause, “If a Carrier were to propose decreasing a cost sharing in one benefit and this increase in benefits would have an additional cost impact, the Carrier would have to have also proposed benefit decreases in other areas with an equal or greater reduction in cost than the benefit increase in the same plan option”

OPM will issue waivers to the cost neutrality requirement for proposals of coverage outlined in their program carrier letter. We could end up paying substantially more next year when you factor in inflation and expanded coverage.

EVALUATE YOUR CURRENT FEHB PLAN

It’s a good time to review your current plan’s coverage and ask yourself if they met your needs and expectations this year. Ask these questions:

• Did I have coverage issues?
• What additional coverage will I need next year?
• Was I able to get the medications / prescriptions needed?
• Did I have to pay high prescription copayments?
• Where my deductibles, copayments and coinsurance excessive this year?
• Are the labs, doctor’s offices, hospitals, and outpatient facilities available in my immediate area and covered by my current FEHB plan?
• Did I have to travel out of my area to see a provider or have procedures performed?
• Was customer service helpful and easily accessible?
• Did I encounter unanticipated expenses that I thought were covered in my current plan.
• Are you signing up for Medicare this or next year? if so, you may want to consider moving to a lower cost FEHB plan.
• Explore Medicare signup options

Answering these questions will help you prepare for the upcoming open season. If you had problems this year, look for plans that will better suit your needs in 2024

Conclusion

The new 2024 premium rates will be announced in October; we don’t know how much they will go up overall. However, it seems inevitable that increases are coming our way.

A recent news cast talked about how Medicare subscribers are using health care services more since COVID is behind us. Many senior citizens weren’t able to get the care they needed and are now scheduling the many services they missed these past two years.

Hopefully, premiums won’t increase as much as I and others anticipate, only time will tell. I’ll send out a newsletter to announce the new rates when they are released.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• Annuity Expectations – Before and After
• Master Retiree Contact List
• TSP Guide

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: Federal Retirement, FEHB Premiums, Medicare Premiums
Posted in BENEFITS / INSURANCE, ESTATE PLANNING, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Friday, 14th July 2023 by Dennis Damp

Social Security recipients are required to pay taxes on their combined income if it exceeds the following limits according to the Social Security Administration.

You will pay tax on 50 to 85 percent of your Social Security benefits, depending on your income and based on Internal Revenue Service (IRS) rules. If you:

• file a federal tax return as an “individual” and your combined income is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
  • If you earn more than $34,000, up to 85 percent of your benefits may be taxable.
• file a joint return, and you and your spouse have a combined income that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
  • If you earn more than $44,000, up to 85 percent of your benefits may be taxable.
• are married and file a separate tax return, you probably will pay taxes on your benefits.

Determining Your Combined Income

Add your nontaxable interest and one half of your Social Security benefit to your adjusted gross income to determine your Combined Income:

Adjusted Gross Income
+ Nontaxable interest
+ ½ of your Social Security benefits
Your combined income

Your combined income is the total of your adjusted gross income including 50 percent gross Social Security benefits, plus tax-exempt interest, any exclusions from income such as interest from qualified US savings bonds and the foreign earned income or foreign housing exclusions.

Unfortunately, the Social Security combined income amounts haven’t been adjusted for inflation in 40 years and many Social Security recipients are paying federal income tax on their Social Security retirement benefits.

Caution: If you do have to pay taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS or choose to have federal taxes withheld from your benefits. I recently increased my federal tax withholding for my annuity and Social Security benefit to avoid a penalty when I file my taxes next year.

Medicare Part B (MAGI)

Medicare’s Part B enrollee’s monthly premiums are determined annually using modified adjusted gross income (MAGI) computations. Premiums are determined for 2023 from the enrollee’s 2021 tax return because Social Security and Medicare won’t have the tax return data for 2022 until taxes are filed with the IRS mid-2023.

Premiums for Part B are determined by your Modified Adjusted Gross Income (MAGI). The more you earn the higher your Part B premium. For most beneficiaries, the government pays a substantial portion—about 75 percent, and the beneficiary pays the remaining 25 percent.

If you’re a higher-income beneficiary, you’ll pay a larger percentage of the total cost based on the income you report to the Internal Revenue Service (IRS). You’ll pay monthly Part B premiums equal to 35, 50, 65, or 80 percent of the total cost, depending on MAGI which is the total of your household’s Adjusted Gross Income plus any tax-exempt interest income you may have.

In 2023, monthly Medicare Part B premiums begin at $164.90 per month. An Income Related Monthly Adjustment Amount (IRMAA) is added to your payment if a single individual’s MAGI was greater than $97,000 during 2021 and for a married couple filing jointly, if their MAGI during 2021 exceeded $194,000. Medicare Part B monthly premiums can be as much as $560.50 this year for those enrollees in the top income threshold.

Social Security notifies enrollees annually of their benefit changes including voluntary tax withholding, and their Part B premiums if applicable. I received my last notice November 23, 2022.

Unexpected / Unfortunate Consequences

Unlike Social Security taxing thresholds, the income limits are adjusted annually for part B Medicare premiums. This should also be the case for taxing thresholds for our Social Security benefits. The cost of living has risen considerably over the past 40 years.

$100 in 1983 is equivalent in purchasing power to about $306.33 today according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 32.68% of what it could buy back then.

You would think that NARP and NARFE would be championing this initiative. To be fair, the Social Security taxing thresholds should be tripled from where they are today!

Retirees are caught off guard when an Income Related Monthly Adjustment Amount (IRMAA) is added to their Medicare premium and end up paying more income taxes on their Social Security benefit. This can be triggered when the annuitant starts taking Required Minimum Distributions (RMDs).

This could also happen if you sell a vacation or business property, and stocks that have significant capital gains. Working part-time or owning a small business in retirement will also increase your income, oftentimes to levels resulting in increased taxes and higher Part B premiums.

References:

• IRS Publication 915: Social Security and Equivalent Railroad Retirement Benefits
• Medicare Guide
• Social Security Guide CSRS
• Social Security Guide FERS

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• Annuity Expectations – Before and After
• Master Retiree Contact List
• TSP Guide

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in UNCATEGORIZED

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Posted on Friday, 7th July 2023 by Dennis Damp

Retirees continue to suffer the brunt of inflation’s wrath with little relief on the horizon. Yes, the feds continue to say inflation is waning but few of us feel a sense of relief from the high cost of everything today, especially big-ticket items: housing, rent, gas at the pump, utilities, travel in general, and visits to the grocery store or to restaurants.

It isn’t only those on fixed incomes, most are finding this new reality difficult to navigate. Many are priced out of the new home market. In the suburbs of Pittsburgh, they are selling new 3-bedroom 1500 to 2,000 square foot homes with a bath and a half for the high $300,000 to $500,000 range!

My son and I went to breakfast in Myrtle Beach recently, thirty dollars for omelets, toast and coffee! That afternoon we went out for an early dinner at J Peters Grill & Bar and had the best meal I’ve had in ages. I ordered grilled salmon, broccoli, a large side salad and croissant; my son had steak, broccoli and side salad. The bill came to $32 after a 10% military discount and that was reasonable considering the exceptional service and food they served.

By the way, we paid $2.85 for gas in Myrtle Beach on May 20th, it was $3.65 in Pittsburgh two days earlier. Pennsylvania’s gas tax is one of the highest in the nation.

The Good Old Days

I recall paying 75 cents for two eggs, toast, and coffee at a local diner in Phillipsburg, PA when I started working for the FAA! I do realize this isn’t 1975, but “come on man,” as someone we all know laments often during his speeches.

At the time, I was living at a boarding house Monday through Thursday and searching for an apartment at my new duty station. My wife and son were back at our apartment in Pittsburgh.

Here is a short excerpt from my memoire, The Early Years, A Road Less Traveled. “I stayed at the Silent Night Home, a boarding house in Phillipsburg, renting one of their bedrooms for twenty dollars a week. All of the boarders shared a bathroom. The two-story, five-bedroom Victorian residence was in the center of town. The owners were snowbirds who traveled to Florida during the winters and turned over operation of the home to a caretaker while they were away. I volunteered to shovel the sidewalks and do odd jobs for a 50 percent reduction in rent.”

A Ray of Sunshine – Fixed Income

Near zero interest rates, over the past decade, left many on fixed incomes wanting for just about everything. The Federal Reserve kept interest rates artificially low far too long.

Fixed income investments offer decent yields that are either FDIC insured or purchased direct from the Treasury. They remain in favor due to the uncertainty in the equity markets and inflation is still well above the Federal Reserve’s 2 percent target rate.

A recent article in the June/July issue of the National Association of Retired Federal Employees (NARFE) extolled the merits of the higher rates now available for CDs, savings and money market accounts. Yes, there are good rates available if you look around, however T-Bills continue to outperform most options available, and I Savings Bonds aren’t far behind.

Savings Deposits and CDs

According to the Federal Deposit Insurance Corporation (FDIC), the national average savings account rate is 0.61% as of June 2023. Many online banks, credit unions, and regional banks are offering competitive rates for savings accounts and CDs from 3.5 to 5 percent and higher in some cases. Most higher rate CDs in my area are for terms from 6 to 13 months.

A good deal compared to just a year ago when most rates were less than 1 percent and they are FDIC insured. Certainly, worth considering, many are hesitant to sign up for a Treasury Direct account and purchase short term Treasury Bills online.

I-Savings Bond Rates 

I Bonds issued May 1, 2023 to October 31, 2023 earn 4.3%. This includes a .9% fixed rate. Still a good rate overall for one of the safest investments available. This new rate runs through October 31, 2023. As I mentioned in an earlier article on this subject, you can’t cash them in for one year. Plus, if you redeem them within the first five years you lose 3 months interest. My I-bonds issued in 1999 have a 3% fixed rate, they are earning over 7% now!

If you purchase an I-Bond by no later than October 31^st of this year, you’ll receive the 4.3% for six months from the date of purchase. The rate on your new I-Bond will change after six months to the new rate announced this coming November.

Treasury Bill Rates Continue to Rise

My article titled “Ditch your Bank’s Low Savings Rates” describes the advantages of Treasury bills compared to bank and credit union rates. I wrote the first article on this subject March of 2022 when my bank’s savings rate was .04%.

Today you can earn just over 5% on a 4, 8 or to 13-week T-Bill, the 26-week T-Bills are currently paying 5.445%. My last reinvestment for 13-week T-Bills yielded 5.274% on May 4^th of this year and my 8-week Bills reinvested at 5.144% on May 23^rd.

If you invested $50,000 in a 13-week T-Bill issued on 5/4/2023 that’s earning 5.274%, the Treasury withdrew $49,341 from your account. On the maturity date of 8/3/2023 they will deposit $50,000 into your account for a $659 profit.

Had you had this amount deposited in a bank savings account paying .61%, you would have earned $76.25!

I’m not sure when the Federal Reserve will reverse course, several additional rate hikes are planned this year. When rates start leveling off, it may be the time to move to longer term CDs or consider investing in 52-week T-Bills, or Treasury Notes that are issued in 2,3,5,7 and 10-year durations to lock in good yields

Treasury Bill Investment Rates

Projections

• 2023 TSP G-Fund Annual Rate of Return: 3.877%
• 2023 10-Year Treasury Yield: 3.73%
• 2023 Average Yield of Treasuries over 4 Year Maturity: 3.87%
• 2024 FERS COLA: 2.0%
• 2024 Chained CPI for Previous 12 Months: 4.3%

Note: Above values are subject to change up to November 2023.

These projections are provided by Wilbert J Morell III, a retired Navy Engineering Project manager. He tracks this data monthly and feels confident the 2024 Social Security and CSRS COLAs will be between 2% and 2.8% and the FERS COLA 2.0%.

It all depends on the path inflation takes over the remainder of this year and Federal reserve policy. Time will tell.

Summary

Now that CD rates are improving; if you can lock up your discretionary savings for 6 to 13 months or longer, they are a viable option. CDs can be cashed in before maturity, however the penalties can be significant.

Short term T-Bills continue to provide impressive yields considering how many banks continue to low ball their savings rates for established accounts. My bank offers a relationship APY of 1% for accounts from $250,000 to $499,999.99 and 1.25% for accounts from $500,000 to $999,999.99! Accounts below these thresholds yield a meager .04%. These banks are betting on the reluctance of many to move their savings and checking accounts elsewhere.

The U.S Treasury updated their website recently and it has improved considerably after a difficult start up. Contacting them by phone still requires significant hold times.

Print out your T-Bill transactions and retain a hard copy for your records. I print the screen for each new purchase and reinvestment.

Tags: CD Rates, Fixed Income, I Bonds, T-Bills, The Good Old Day, Treasuries
Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 23rd June 2023 by Dennis Damp

Recently updated, and at times contradictory TSP guidance concerning this subject, was presented in my previous article. I would like to thank Tammy Flanagan, a former federal employee, professional federal benefits specialist, and friend for contacted me about this issue.

The Beneficiary Conundrum

How assets of TSP accounts are distributed to beneficiaries, upon the owner’s death, is determined by complex tax laws. When an annuitant dies, the TSP establishes a Beneficiary Participant Account (BPA) in the spouse’s name if married and/or sets up a temporary account for all non-spouse beneficiaries. Temporary account holders have 90 days to either withdraw the funds or roll them over into an inherited IRA.

A spouse manages their account, assigns beneficiaries, withdraws funds, sets up an annuity if desired or moves the funds to a private sector IRA.

So far, not bad!

BPA Beneficiaries – A Different Outcome

This is where I screwed up and relied too heavily on disjointed guidance and the TSP Thriftline without digging deeper. My apologies.

The TSP’s Guide for Beneficiary Participants, Death Benefit Guide, and the TSP’s Tax Rules About TSP Payments clarifies how assets are distributed to beneficiaries of a BPA. This plan is set up exclusively for the spouse of a deceased annuitant.

Death Benefit Guide

I found this clarification on page 9 of the TSP Death Benefit Guide in a blue box at the top of the page, “If a beneficiary participant dies, the new beneficiary(ies) cannot continue to maintain the account in the TSP. Also, the death benefit payment cannot be rolled over into any type of IRA or plan.” The only person that can be a beneficiary participant is the spouse of a deceased annuitant.

According to Kim Weaver, Director of External Affairs for the TSP, “…under Code 402(c)(9) and (11), the beneficiary of a spouse is not considered a beneficiary of the employee, which is a requirement for a rollover. Beneficiaries from BPAs are subject to a 10% withholding unless the recipient elects otherwise.

Guide to Beneficiary Participants

This guide clearly states on page 11, “Death benefit payments made from your beneficiary participant account must be paid directly to your beneficiary(ies) These payments are subject to certain tax restrictions and cannot be rolled over to an IRA or eligible employer plan. In addition, your beneficiary(ies) will have to pay the full amount of taxes on the taxable portions of the payment in the year it is received.”

Their Tax Rules About TSP Payments Guide also states this on page 14 under Death Benefits.

The Down Side

The inability of the beneficiaries listed on a BPA, the account of a deceased annuitant’s spouse, to transfer their funds to an inherited IRA can be a game changer for many. This can create a significant tax burden the year of the death for the beneficiaries, especially for those with large accounts.

A spouse with a large inherited BPA may find it prudent to explore moving their TSP to an IRA at another institution. This affords your IRA beneficiaries the ability to roll over their inheritance to an inherited IRA when the spouse dies. Beneficiaries can then take withdrawals over a number of years to reduce their annual tax liability.

I intended to stay with the TSP until I discovered this was still the rule. Now I’m considering rolling over my TSP so my wife won’t have to contend with this when I’m gone. Where am I going!  Hate to think about that but reality is what it is.

As mentioned in the previous article this can also happen to non-spousal beneficiaries of a deceased annuitant. If the beneficiary dies before electing to transfer their temporary account to an inherited IRA, all of the funds must be distributed immediately to the beneficiaries listed in their temporary account. The funds can’t be rolled over to an inherited IRA.

Temporary Account Heads Up

While talking with one of the three TSP customer service reps I called for guidance, one mentioned the following. If you intend to transfer your temporary account to an inherited IRA, initiate the process as soon as possible. It takes time to process and coordinate the transfer.

Recommendation

The retirement process takes considerable time and attention. There are so many variables and you can easily miss something significant along the way.

I highly recommend Tammy Flanagan’s civilian federal employee’s consulting services that she and her staff have consistently provided since 2006. They offer professional pre-retirement consultation and can help you navigate the decisions you will make as you begin your transition to retirement.

Tammy Flanagan and her associates at Retire Federal are all highly experienced federal retirement benefits experts. They are equipped to provide you one-on-one retirement counseling on all of the steps you will take leading to your retirement including; assistance with choosing your best date to retire, computing an estimate of your net income (CSRS or FERS, Social Security, and TSP), helping decide when to claim Social Security, assistance understanding your TSP withdrawal options, determining whether Medicare Part B is necessary and much more.

Conclusion

I revised the previous article on our blog to incorporate this guidance. If you printed a copy for your retirement file, discard it and print the update blog article. All of the newsletter articles are posted on our blog.

You will find, at the end of each printed blog article, a complete list of all web address links that are related to that article. One of our subscribers recommended that we add web addresses for all of the links we publish with each newsletter article. They are all available with the blog article printout.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• Annuity Expectations – Before and After
• TSP Guide
• Budget Work Sheet
• Medicare Guide
• Social Security Guide

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE

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