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Here’s What’s Making Headlines for Federal Employees This Month

Jeff Boettcher
August 27, 2025

Key Takeaways

Significant policy shifts and legislative changes are currently shaping the landscape for government employees in 2025. Staying informed and adapting your retirement planning and benefits strategy is essential to secure your financial future.
From potential FEHB contribution changes to workforce reduction plans, understanding the broader implications of these shifts can help you make well-informed decisions.

Introduction

Staying informed about current news and updates is essential for government employees, particularly when it comes to retirement planning, benefits, and workplace policies. In 2025, numerous legislative proposals, policy changes, and adjustments to benefits are making headlines. From alterations in FEHB contributions to Social Security updates and workforce reduction plans, here’s a comprehensive breakdown of what you need to know this month and how these changes could impact your financial stability and retirement planning.

Proposed Changes to FEHB Contributions

Discussions about altering the federal government’s contribution model to the Federal Employees Health Benefits (FEHB) Program have intensified in 2025. Lawmakers are pushing for a transition from the current percentage-based contribution system to a flat-rate voucher model. If adopted, this change could result in:

Increased out-of-pocket costs for employees and retirees who heavily rely on FEHB plans.
Inequities in benefits depending on geographic location and plan choice.
Reduced government spending on health benefits, potentially leading to diminished coverage quality.

This shift could significantly affect retirees and those nearing retirement who depend on FEHB coverage as a primary health insurance source. Understanding how this proposal could impact your budgeting and financial planning is crucial. Keeping an eye on potential timelines for implementation and any adjustments to contribution structures will help you prepare accordingly.

Locality Pay Adjustment Concerns

Recent legislative proposals include removing locality pay from the ‘high-3’ average salary calculation used to determine retirement annuities. If enacted, this measure could dramatically reduce pension benefits for employees working in high-cost areas. The potential consequences of this change include:

Lower overall annuity amounts, especially for those nearing retirement after long careers in high-cost-of-living regions.
Financial strain for employees who have dedicated their careers to positions with higher locality pay adjustments.
An urgent need to revisit retirement planning and evaluate additional savings options to maintain financial stability.

For employees approaching retirement, understanding how this potential change could affect your annuity calculations is vital. Reviewing your high-3 average salary and comparing it with projected estimates can help you determine whether additional savings measures or investment adjustments are necessary.

TSP G Fund Subsidy Elimination

Another hot topic involves a proposal to eliminate the government subsidy for the Thrift Savings Plan’s (TSP) G Fund. Designed to provide a low-risk investment option for federal employees, the G Fund’s reliability has long been attractive. However, removing subsidies could:

Result in lower returns for conservative investors who depend on the G Fund’s stability.
Prompt employees to explore riskier investments to compensate for potentially reduced growth.
Necessitate a comprehensive review of investment strategies to ensure long-term financial security.

Given the G Fund’s historical reputation as a stable and low-risk investment vehicle, the potential elimination of subsidies is concerning. Employees relying on the G Fund as part of their retirement strategy may need to reconsider their broader investment approaches to safeguard their financial future.

Social Security Adjustments for 2025

Significant changes to Social Security are already in effect for 2025, following legislative updates aimed at enhancing retirement security. Key updates include:

The repeal of the Windfall Elimination Provision (WEP) under the Social Security Fairness Act, ensuring full Social Security benefits for previously affected retirees.
A Cost-of-Living Adjustment (COLA) increase of 3.2%, resulting in an average monthly benefit boost of $59.
A rise in the maximum taxable earnings limit to $176,100, up from $168,600 in 2024.
The 2025 earnings limit for early retirees now set at $23,480, offering greater flexibility in supplementing income without penalties.

These adjustments are intended to provide better financial protection and flexibility for retirees. Understanding how these changes impact your retirement benefits is essential for accurate financial planning.

Medicare Changes and Their Implications

Government employees approaching Medicare eligibility in 2025 should be aware of several significant changes, including:

A $2,000 annual out-of-pocket cap for prescription drug costs under Medicare Part D.
An increased Medicare Part B premium of $185 per month, along with a deductible of $257.
A higher inpatient hospital deductible of $1,676 under Medicare Part A.
The elimination of the Medicare Part D coverage gap (donut hole), offering improved financial protection for high medication costs.

Understanding these changes is critical for managing your healthcare budget effectively. Reviewing your plan options and considering how new cost structures might affect your out-of-pocket expenses will help you plan accordingly.

Executive Order Revoking Collective Bargaining Rights

In 2025, President Donald Trump issued an executive order revoking collective bargaining rights for a substantial portion of federal employees. This decision affects departments including Agriculture, Defense, Health and Human Services, Justice, State, Veterans Affairs, the Environmental Protection Agency (EPA), and the U.S. Agency for International Development (USAID). This order impacts roughly 67% of the federal workforce and 75% of unionized workers. Federal employee unions are actively challenging this order in court.

Mass Layoffs and Buyout Offers

Under Secretary Robert F. Kennedy Jr., the Department of Health and Human Services (HHS) has implemented layoffs affecting approximately 10,000 employees across agencies like the FDA, NIH, and CDC. This workforce reduction effort is part of a broader restructuring plan aimed at consolidating divisions and reducing the workforce by 24%. Additionally, several agencies have initiated buyout offers to employees as part of their downsizing strategies. At least seven agencies are providing voluntary separation incentives before proceeding with additional layoffs.

Preparing for the Future

With so many developments unfolding in 2025, staying informed and adaptable is more important than ever. Regularly reviewing your retirement plans, benefits, and financial strategies will help you remain prepared for potential changes.

For professional guidance and assistance, reach out to a licensed agent listed on this website.

Jeff Boettcher

For over 20 years, Jeff Boettcher has helped his clients grow and protect their retirement savings. "each time I work with my clients, I'm building their future, and there are few things that are more important to a family than a stable financial foundation."

Jeff is known for his ability to make the complex simple while helping navigate his clients through the challenges of making the right investment decisions. When asked what he is most passionate about professionally, his answer was true to character, "Helping my clients – I love being able to solve their problems. People are rightfully concerned about their retirement income, when they can retire, how to maximize their financial safety and future income." Jeff started Bedrock Investment Advisors for clients who value a close working relationship with their advisors.

A Michigan native, Jeff grew up playing sports throughout high school and into college. While Jeff is still an 'aging' athlete, Jeff will take more swings on the golf course than miles running these days. He creates family time, often with weekly excursions to play golf, a hobby he shares with his three young children.

Disclosure: Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.