Winter decisions

While the Senate needs to make some decisions this winter about federal pay raises, pay reform for the proposed Homeland Security Department and a change to the Thrift Savings Plan, you have some decisions to make about health insurance, TSP contributions and long-term care insurance.

Members of Congress have headed home for the Nov. 5 elections. When they come back in November to complete unfinished business, most of the action affecting federal pay and benefits will be in the Senate.

The House has already approved a 4.1 percent average pay raise for federal workers in January. The House has already approved pay reform for the proposed department-giving the head of homeland security authority to create a new pay system. And the House has cleared a bill that would let federal workers age 50 or older to contribute more money to their Thrift Savings Plan accounts starting next year.

The Senate has yet to OK any of those measures. The pay raise is tucked inside the 2003 Treasury-Postal appropriations bill, which has passed the Senate Appropriations Committee but not the full Senate. That bill may be combined into an omnibus appropriations bill with some or all of the 11 remaining fiscal 2003 spending measures that Congress still needs to pass. The TSP contributions bill is a stand-alone measure that has the backing of Sen. Daniel Akaka, D-Hawaii, Sen. Barbara Mikulski, D-Md., and Sen. John Warner, R-Va. Neither the pay raise or the TSP bill face major opposition in Congress.

Civil service issues, including pay reform, are holding up Senate approval of the new Homeland Security Department. It faces the most uncertain future of the three major federal pay and benefits measures. Most Democratic lawmakers are fighting for civil service protections in the new department, while most Republicans are calling for more flexibility for the political appointees of the executive branch over homeland security civil servants.

While the Senate is hashing out those issues, federal workers have some pay and benefits decision of their own to make.

First, they have to pick a health insurance carrier for 2003. The Federal Employees Health Benefits Program open season runs from Nov. 11 to Dec. 9. Premiums are going up an average of 11.1 percent in 2003, the third consecutive annual increase above 10 percent. Employees can compare the premiums and benefits of numerous plans to either increase the number of services they receive or lower their biweekly premium costs.

Second, they have to decide how much money to contribute to the 401k-style Thrift Savings Plan next year. The TSP open season runs from Oct. 15 to Dec. 31. The biweekly limit on contributions for 2003 will be 13 percent for federal workers in the Federal Employees Retirement System and 8 percent for employees in the Civil Service Retirement System, up to an annual Internal Revenue Service limit of $12,000. The decision on how much to contribute would be more informed if employees knew what their pay raises were going to be in January.

Third, federal workers have to decide whether they want to take advantage of the federal long-term care insurance program.

Through the insurance program, about 9 million federal employees, military personnel, retirees and their family members can get coverage for nursing home stays and other types of day-to-day care for chronic illnesses or disabilities. Such care is not normally covered under standard health insurance.

The new program is sponsored by the Office of Personnel Management and run by Long-Term Care Partners of Portsmouth, N.H., a partnership of insurance companies John Hancock and MetLife. The open season runs from last July to December 31.

So far, the companies have received about 100,000 applications, an OPM official said.

But last month, the OPM group got some direct competition. On Sept. 30, C N A, a Chicago-based insurance company, launched a group life insurance product for federal workers, to compete directly with the OPM program. "We wanted to provide federal employees with choice," said John O'Leary, C N A's vice president for business and market development, group benefits.

C N A competed for the OPM contract, but wasn't selected. The company then held focus groups with federal workers and decided to offer a program with different benefits and premiums from the OPM program. The C N A federal long-term care product, for example, offers a shorter waiting period for home health care benefits than the OPM-sponsored plan does and also offers spousal and domestic partner discounts. On the flip side, the C N A product is available to a smaller audience than the OPM-sponsored plan-only under-60 federal workers, retirees and their spouses. (People over 60 could apply for C N A's individual long-term care benefits, but not the federal group plan.) The OPM-sponsored group program is available to workers and retirees over 60, as well as employees' and annuitants' adult children, parents, parents-in-law and step-parents.

All of these decisions could keep a federal worker busy this winter. But keep next summer in mind, too. That's when new flexible spending accounts will be available to federal workers. The flexible spending accounts will lower employees' tax bills by letting them stow away money from their paychecks before taxes are taken out for medical and child care expenses.