Margaret L. Baptiste, president of the National Active and Retired Federal Employees Association (NARFE), in testimony before the National Commission on Fiscal Responsibility and Reform, today urged the  18-member, bipartisan commission to protect the compensation and retirement value of benefits for federal workers, retirees and their spouses and survivors.

Speaking before the Commission created by President Obama to craft proposals to reduce the long term debt, Baptiste noted that while entitlements will be a focus of the group,  federal retirement and health benefits differ from other entitlement programs.  “There is one significant difference: civil service retirement and health benefits are earned by employees, and designed to attract and retain a skilled workforce. They are not modeled on social insurance, health-based, or means-tested.” Baptiste said.  

Over 2.3 million retirees and survivors depend on either the Civil Service Retirement System (CSRS) or the newer Federal Employees Retirement System (FERS).  “The federal service has always been a program of shared costs between the agency and the worker. Regrettably, the public is often misinformed -- believing federal employees get 'free' or overly generous benefits.” President Baptiste told Commission members.  In past, however, civil service pay and benefits have taken outsized reductions during budget cutting legislation, particularly with regard to Cost of Living Adjustments that were canceled in the 1980s without similar action to other federal programs. 
Responding that everyone is concerned about the fiscal future facing American, Baptiste observed that the cost of federal retirement programs will barely increase as a share of the Gross Domestic Product in contrast to Social Security and health costs due to increasing retirements on the less costly FERS model.

“In federal personnel programs, that goal must be balanced against the skills, retention and productivity of the next generation of employees -- also a long-term balance. Outsized reductions diminish the federal workforce needed to meet the complexities of globalization, and to make government more efficient and responsive to the taxpayers. Please keep these competing elements in mind as you develop a new fiscal blueprint for America.” Baptiste remarked. 

The Commission is schedule to make its recommendations December 2010. Should any proposal receive 14 votes, its recommendations will be considered in an expedited procedure by both the House and Senate without amendment.

NARFE, one of America’s oldest and largest associations, was founded in 1921 with the mission of protecting the earned rights and benefits of America’s active and retired federal workers. The largest federal employee/ retiree organization, NARFE represents the retirement interests of nearly 5 million current and future federal annuitants, spouses, and survivors.      

FOR INFORMATION:
Dan Adcock (703)838-7760x201
leg@narfe.org

Margaret L. Baptiste, president of the National Active and Retired Federal Employees Association (NARFE), today praised Sen. Benjamin L. Cardin, D-MD, for introducing legislation (S. 3341) in the Senate that would allow dependent children of federal workers and annuitants to remain on their parents’ federal health insurance plan to age 26. The bill is a companion to a bill introduced in the House of Representatives on May 4 by Rep. Chris Van Hollen, D-MD.
Baptiste also thanked Sens. Barbara A. Mikulski, D-MD; Susan M. Collins, R-ME;  Mark R. Warner, D-VA; John F. Kerry, D-MA; Jay Rockefeller, D-WV; Daniel K. Akaka, D-HI; Tim Johnson, D-SD; Jeff Bingaman, D-NM; Ted Kaufman, D-DE; Mary L. Landrieu, D-LA; and Debbie Stabenow, D-MI, for also sponsoring the “Federal Employees Health Benefits Program (FEHBP) Dependent Coverage Extension Act.”

The comprehensive health care legislation recently signed into law includes a requirement that, by September 2010, group health plans cover dependent children on their parents’ health insurance up to age 26. While many insurers have decided to extend dependent coverage even before the September deadline, the law authorizing the FEHBP prevents the Office of Personnel Management from allowing federal workers and annuitants to extend coverage for their dependent children until January 2011.

Baptiste said that Cardin’s and Van Hollen’s bills would resolve this inequity by amending the FEHBP law so that coverage may be extended to young adults during the current contract year.

“Today, dependent children of federal workers and annuitants lose their health coverage when they turn 22 years old, just when they graduate and begin looking for employment with health benefits in the current tough job market,” Baptiste said. “FEHBP should start covering our kids now, just as other insurers have started doing in the private-sector. That’s why NARFE, as a matter of equity, endorses Senator Cardin’s and Congressman Van Hollen’s ‘Federal Employees Health Benefits Program Dependent Coverage Extension Act.’ We encourage Congress to swiftly approve this important legislation.”

The NARFE Legislative Program for the 111th Congress (2009-2010), approved by delegates to the Association’s most recent biennial national convention, held September 2008 in Louisville, KY, states: “NARFE supports legislation to provide that children of Federal civilian and military employees and retirees be permitted to remain under government-sponsored medical insurance plans until age 25 or the age generally allowed by larger medical insurers.”

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NARFE, one of America’s oldest and largest associations, was founded in 1921 with the mission of protecting the earned rights and benefits of America’s active and retired federal workers. The largest federal employee/ retiree organization, NARFE represents the retirement interests of nearly 5 million current and future federal annuitants, spouses, and survivors.

FOR INFORMATION:
Dan Adcock  703-838-7760                                                                                 

National Active and Retired Federal Employees Association (NARFE) President Margaret L. Baptiste praised John Berry, director of the Office of Personnel Management (OPM), for consulting with NARFE on a proposed Medicare-related pilot project in the Federal Employees Health Benefits Program (FEHBP).  The proposed project would test the viability of a voluntary “sub-option” within the FEHBP that would pay all or part of a Medicare Part B (as appropriate) for Medicare-eligible federal annuitants. The proposal was released yesterday in OPM’s “2010 FEHBP Carrier Letter” (also known as the “Call Letter”).

“If proven feasible, the Medicare sub-option could save some federal annuitants money and help to contain costs in FEHBP for workers, retirees and survivors,” said Baptiste.   “What’s more, we appreciate that, through our consultation with Director Berry, the call letter clarifies that the ‘sub-option’ would not open the door for separately rated annuitant plans, which we believe would result in retirees and survivors paying substantially higher premiums than other FEHBP enrollees.  NARFE would oppose the creation of any FEHBP plan for annuitants with premiums based on their age and health costs.”

The OPM letter stipulates: “We do not support splitting risk pools for annuitants and active employees and believe that these pilots can demonstrate ways of stemming cost growth through strengthened benefits coordination.”

The new coverage would be offered to Medicare-eligible annuitants as a sub-option of an existing FEHBP plan.  If an annuitant chose the sub-option of an insurance carrier’s “standard option,” they would pay the same premium share as a worker or retiree enrolled in the traditional standard option.  However, unlike the standard plan, the sub-option would pay all or part of a Medicare Part B premium, as appropriate.  As a result, an annuitant enrolled in the sub-option would save about $1,200 a year on Part B premiums.  However, a sub-option participant would be required to pay the same deductibles, co-payments and coinsurance as workers or retirees who are age 64 and younger and not yet eligible for Medicare.  With the exception of premiums and prescription drug co-payments, most annuitants age 65 and older who are enrolled in Medicare and a traditional FEHBP fee-for-service or preferred provider plan pay no out-of-pocket costs.  Therefore, the sub-option could be cost-effective for an annuitant who does not have high out-of-pocket costs.   In addition, annuitants might appreciate an option for what is basically seamless coverage, which mirrors what they had while they were on the payroll.

“Given the potential savings to federal annuitants, and the voluntary nature of the pilot, we believe that the Medicare sub-option ought to be given a chance.  We are pleased that the Call Letter clarifies that the sub-option will not automatically become a regular feature of FEHBP until OPM evaluates it and decides whether it merits continuation after the second year of the demonstration.  NARFE will continue to review the development of the new option with OPM as the pilot project moves forward,” Baptiste added. 

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NARFE, one of America’s oldest and largest associations, was founded in 1921 with the mission of protecting the earned rights and benefits of America’s active and retired federal workers. The largest federal employee/ retiree organization, NARFE represents the retirement interests of nearly 5 million current and future federal annuitants, spouses, and survivors.

FOR INFORMATION:
Dan Adcock 703-838-7760

National Active and Retired Federal Employees Association (NARFE) President Margaret L. Baptiste today expressed concern that federal annuitants and workers will be burdened by the large premium increases announced in the federal employee/retiree health insurance program. “The overall average Federal Employees Health Benefits Program (FEHBP) premium increase of 8.8 percent for 2010 will be difficult for federal annuitants to shoulder in a year when no cost-of-living adjustment (COLA) is expected and when the federal employee pay raise is anticipated to be minimal,” Baptiste said. 

Baptiste is also troubled that the share paid by employees and retirees in the program’s most popular plan (Blue Cross/Blue Shield Standard option) will jump by 12.4 percent for family plans and 15.1 percent for self-only coverage. 

“A 12-percent increase in our program’s most popular plan is bad enough in a no-COLA year for retirees and when workers are expected to receive a nominal pay increase,” said Baptiste, “what’s worse is that this comes at a time when some in Congress effectively want to end the FEHBP and enroll federal workers in an exchange system.”

Last week, Sen. Charles E. Grassley, R-IA, introduced an amendment to the Senate Finance Committee’s health reform bill that would require members of Congress and federal workers to leave the FEHBP and join health exchanges. NARFE opposes this amendment.
   
FEHBP Premiums Could Have Been Lower

“We recognize that the 2010 rate hike was within the range of increases in other large group health insurance programs and that the Office of Personnel Management (OPM) is serious about reducing prescription drug costs.  However, FEHBP premiums could have been lowered if it were not for OPM’s decision to reaffirm the previous administration’s policy of declining a payment available to other public and private employers who provide drug coverage as generous as Medicare’s,” Baptiste said. “Once again, this year, OPM and the Office of Management and Budget left $1 billion on the table -- a subsidy available to and accessed by private employers in the marketplace, which could be used to lower worker and annuitant premium costs,” she said.
The 2003 Medicare reform law provides such employers a payment as an incentive to retain their retiree drug coverage. A 2007 Government Accountability Office report found that premium growth in one of the largest FEHBP plans with many older enrollees could have been 3.5 to 4 percent lower in 2006 had the payment been accessed.  And, it could have reduced overall FEHBP premiums for the year by more than 2 percent. 

Medicare Part B Relief for Federal Annuitants

“While the FEHBP rate increase is bad news, we can take some comfort in the House’s approval on September 24 of NARFE-backed legislation (H.R. 3631) which would protect all federal annuitants – including retirees and survivors who are not eligible to receive Social Security – from the 2010 Medicare Part B premium increase,” Baptiste said.  “NARFE worked tirelessly behind the scenes on this legislation for the past three months.” 

NARFE, one of America’s oldest and largest associations, was founded in 1921 with the mission of protecting the earned rights and benefits of America’s active and retired federal workers. The largest federal employee/ retiree organization, NARFE represents the retirement interests of nearly 5 million current and future federal annuitants, spouses, and survivors.