Posted on Thursday, 17th April 2025 by

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Federal employees and annuitants wait in the wings with each new Congress for the next shoe to drop. Federal employees fear their benefits are going to be cut! Most of the time, these rumors are unfounded and go by the wayside.

It may be different this time around. With the House and Senate passing the budget bill, only a majority is needed to pass the final bill after reconciliation, and the filibuster can’t be used to block it.

The following actions are not official proposals but have been tossed around by various committees over the years. Nothing is set in stone, and we won’t know what is in the bill until later this year, possibly as early as Memorial Day.

What’s May be on the table

  • Potentially increasing federal employees’ FERS contribution rates to 4.4% for all FERS employees.
  • Changing an employee’s high three years of earnings to the high five years to lower a new retiree’s monthly annuity.
  • Eliminate the FERS supplement to Save between $5 billion and $13 billion over a ten-year period.
  • The “Federal Employees Health Benefits Protection Act” proposes that OPM audit family members enrolled in the FEHB program and remove individuals not eligible for FEHB health benefits. This may extend to the PSHB program as well.
  • Switch the FEHB program from its current shared premium model to a flat-rate “voucher” model.
  • Require current FEHB enrollees to sign up for Medicare Part B to retain their FEHB coverage when they sign up for Medicare. Similar to what the PSHB now requires, there are several exceptions.
  • There could also be a push to force FEHB participants into Medicare Part D or Medicare Advantage plans.
  • Convert new federal employees to be at-will if they don’t accept a higher FERS contribution rate, thereby removing their merit-based civil service protections.

These are a few of what may lie ahead; only time will tell what changes will make it across the finish line. Organizations like NARFE and the federal unions will lobby for the status quo.

Where do we go From Here?

The federal workforce has been under assault since January, starting with deferred resignations, the loss of merit system protections for designated security positions, and the planned implementation of Agency RIF and Reorganization Plans (ARRPs).

USAID, along with specific DEI units within each Department, and others, have been disbanded, and employees furloughed or placed on administrative leave until the administration determines what to do with them. More to come as DOGE and the new agency heads continue to streamline operations across government.

We also don’t know what parts of any changes will be grandfathered or phased in over time, and there may be exceptions for specific categories or groups to lessen the impact on federal employees and annuitants.

If included at all, many proposals may not be fully implemented. Both parties have addressed these issues to some degree over the years. In the not-too-distant future, there should be clarity about what is and isn’t included.

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Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, investment, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center.

Over time, various dynamic economic factors relied upon as a basis for this article may change. The information contained herein should not be considered investment advice and may not be suitable for your situation. 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.

Last 5 posts by Dennis Damp

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Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION | Comments (1)


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One Response to “Potential Benefit Cuts – It’s Not Time to Panic”

  1. Nancy Says:
    April 19th, 2025 at 4:53 pm

    This year we finally opted out of SiverScript and got back on the GEHA pharmacy plan but I bet next year, it won’t be an option. I can hear my husband now, “Find out what Dennis is doing!”

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