Less take-home for feds, retirees

Tuesday - 7/24/2012, 2:00am EDT

Most federal and postal workers are likely to take a hit — maybe a fairly substantial one — in their take home pay next year.

The 0.5 percent pay raise that the White House proposed is not a done deal. After proposing a two-year pay freeze (2011 and 2012) the White House has called for a modest increase next year (it would be one of the smallest ever), in part to appease federal unions that have supported the President through thick and thin. But there is no guarantee even that small amount will become law.

Meantime, both the White House and Congress have proposed raising employee contributions to their retirement plan from 1.2 percent (the President's recommendation) to as much as 5 percent, if House Republicans get their way.

But few people are focusing on the 800-pound gorilla that is always in the room: Federal health insurance premiums. The FEHBP is the nation's largest, and overall most generous, health plan. It covers 8 million active and retired feds, dependent children (up to age 26) and in some cases grandchildren. Recently the FEHBP was ordered to provide coverage for seasonal, part-time federal forest firefighters.

While the cost of living, as measured by the Labor Department's complex Consumer Price Index, is flat, the cost of medical services, hospitals, medicine and doctors is going up. It is always higher than the rate of inflation and that is holding true this year.

In 2011, white-collar federal workers did not get a pay raise, but their health premiums went up an average of 7.2 percent.

This year (2012) was another year without a pay raise, but premiums went up 3.8 percent on average. That means some were up a lot more, some were flat and a handful cut premiums a little. Even that modest increase meant a biweekly premium increase of $2.32 for single coverage and $6.18 more — on average — for a family plan. Not a lot, but following the 2011 raise — and pay freeze — it hit some people harder than others. Often retirees were the hardest hit.

And retirees may get hit too. A few weeks ago the projected cost of living adjustment for retirees was 1.51 percent. But the CPI for the month of June was flat and that translates into a smaller projected retiree COLA for January, 2013. If living costs are unchanged through the third quarter months of July, August and September, the January 2013 COLA for federal, military and Social Security retirees will be 1.3 percent. Less if prices decline.

Mysteries of the CPI

Want to know what things cost? How the government determines the inflation/deflation rate. What's the deal with medical inflation. If so, click here.

Tip: Have lots of paper in the printer, because this is a very thorough and detailed report.


NEARLY USELESS FACTOID

By Jack Moore

Between 1912 and 1948, the Olympics included competitions in architecture, sculpture, painting, music and literature, according to Mental Floss. The founder of the modern Olympic games said he wanted to "reunite in bonds of legitimate wedlock a long-divorced couple — muscle and mind."


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