Key Takeaways
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Several valuable federal employee benefits are subject to phaseouts, reductions, or legislative change in 2025 and beyond. Timing and action matter more than ever.
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You can still take advantage of many perks such as pension enhancements, premium health coverage coordination, and retirement incentives—but they may not last indefinitely.
Federal Perks Are Changing—Don’t Assume They’re Guaranteed
- Also Read: FEGLI Premiums Are Rising as You Age—Here’s What Federal Employees Should Do About It
- Also Read: Annual Checklist for Reviewing and Updating Your FEHB Health Plan
- Also Read: New Rules for Federal Employees in 2025: What You Need to Know to Stay Ahead
Ongoing legislative proposals, shifting funding priorities, and cost-containment pressures are leading to modifications in long-standing programs. If you’re not proactive, you could miss out on opportunities that soon may not be offered at all.
1. The Clock May Be Ticking on Enhanced Retirement Contributions
In 2025, TSP contributions remain generous—but there are hints that this won’t always be the case. Currently, eligible employees can defer up to $23,500 annually, with catch-up contributions reaching as high as $11,250 depending on your age. However, proposals under consideration in Congress suggest modifying the government’s match or shifting toward a flat-rate contribution system.
What this means for you:
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The current 5% government match remains in place, but any change could significantly impact your future earnings.
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If you’re not already contributing at least 5% to your TSP, you’re essentially leaving money on the table.
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Now is the time to maximize your contributions, especially if you’re in your peak earning years.
2. Long-Term Care Insurance Options Are Still Frozen
The Federal Long Term Care Insurance Program (FLTCIP) has been suspended for new enrollees since December 2022, and that suspension continues into 2025. While current policyholders remain covered, there’s no option for new participants to enroll.
Why this matters:
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Long-term care costs continue to rise nationwide, with private facility costs often exceeding $100,000 per year.
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Without access to FLTCIP, you may have to consider other, more expensive alternatives—or risk going without coverage.
3. The Special Retirement Supplement Has a Sunset Clause
If you retire under the Federal Employees Retirement System (FERS) before age 62 and meet eligibility criteria, you may receive the Special Retirement Supplement (SRS). But this benefit has been targeted for elimination in several budget proposals.
Current status in 2025:
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Still available for qualifying early retirees under FERS.
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Typically paid until you turn 62, when Social Security becomes available.
However:
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Legislative efforts to phase it out are ongoing.
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If you’re banking on this supplement, consider whether accelerating your retirement plan makes sense or whether you need to build a buffer elsewhere.
4. FEHB and Medicare Coordination Is Still Favorable—For Now
Federal retirees have traditionally enjoyed one of the most robust healthcare arrangements in the country. You can keep your Federal Employees Health Benefits (FEHB) into retirement and, if eligible, coordinate it with Medicare for near-comprehensive coverage.
In 2025:
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Medicare Part B premiums are $185 per month.
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FEHB plans generally reduce or waive certain out-of-pocket costs if you enroll in Medicare.
But:
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Some 2025 proposals call for a restructuring of government contributions toward FEHB, shifting to a flat-rate voucher model.
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That could leave retirees paying more out of pocket depending on the plan selected.
Be sure to review how your FEHB plan coordinates with Medicare. If you’re near age 65 or already enrolled, the decisions you make now could affect your long-term costs.
5. Buyback Rules for Military Service Still Offer Pension Boosts
If you served in the military before entering civil service, you may be eligible to “buy back” your military time for credit toward your FERS or CSRS pension. In 2025, this option remains available—but with growing scrutiny.
Important reminders:
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You typically have three years from your civilian hire date to complete the buyback without interest.
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Buybacks can increase your pension eligibility and monthly annuity significantly.
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Delays in processing have been widely reported, so don’t wait until the last minute.
The earlier you start this process, the more you stand to gain—and the more you may avoid future legislative restrictions.
6. Disability Retirement Processing Is Under Review
The Office of Personnel Management (OPM) is reviewing the efficiency and cost structure of federal disability retirement in 2025. While no changes have been finalized yet, there is growing pressure to reduce long-term payouts.
If you’re considering disability retirement:
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Review current qualification rules and medical documentation requirements.
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Consider filing sooner rather than later if you’re eligible, as the benefit structure could change.
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Work with a professional to ensure your documentation and timelines are correct.
7. Social Security Fairness Act Has Already Changed the Game
As of January 2025, the Windfall Elimination Provision (WEP) has been repealed. This means government employees covered by CSRS who paid into Social Security through other jobs no longer face reduced benefits.
What this means for you:
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CSRS retirees may see their Social Security benefits increase by hundreds of dollars per month.
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You may need to recalculate your retirement income projections to reflect this.
However:
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The Government Pension Offset (GPO) remains in place, which still affects Social Security spousal benefits for many.
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Keep an eye out for updates, as advocacy groups continue pushing for GPO repeal as well.
8. RMD Rules Give You a Slightly Bigger Window—But Don’t Get Comfortable
In 2025, Required Minimum Distributions (RMDs) from your TSP or other tax-deferred accounts begin at age 73. This gives you more time to let your retirement funds grow—but you’ll still need a plan to avoid large tax hits.
Key planning notes:
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TSP withdrawals are subject to ordinary income tax.
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Large RMDs can push you into a higher tax bracket.
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Consider drawing down strategically before RMDs begin.
Also, keep in mind that future laws could reduce the RMD age back to 72 or change distribution formulas.
9. Catch-Up Contributions Are Still in Flux
For years, federal employees aged 50 and older have been able to make catch-up contributions to their TSP. In 2025, these limits are still generous—but recent legislative efforts propose either capping them or tying them to specific income levels.
Current structure in 2025:
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Catch-up limits range from $7,500 to $11,250 depending on your age bracket.
What’s being debated:
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Linking catch-up eligibility to taxable income.
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Replacing traditional catch-up rules with Roth-only options.
Check how these discussions might affect your strategy—and make use of the current rules while they still apply.
10. Some Benefits Disappear When You Leave—Know What to Keep
Some perks only last as long as you remain employed. In 2025, this includes:
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Flexible Spending Accounts (FSAs) for healthcare or dependent care, which generally end upon separation unless you elect COBRA.
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Certain life insurance coverages that reduce significantly or disappear in retirement unless you choose to continue them (with rising premiums).
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Commuter benefits, telework subsidies, and relocation incentives—all of which vanish once you leave federal service.
Understanding what ends and what can be converted is key. Work with your HR office or a licensed professional to decide what’s worth continuing and what isn’t.
Why Timing and Knowledge Still Matter in 2025
The structure of federal retirement is still strong, but changes are underway—and likely to continue. What was true five or ten years ago may not hold in the next five. Whether it’s phasing out the Special Retirement Supplement, adjusting FEHB contributions, or freezing FLTCIP access, each change could affect your future security.
You don’t have to navigate it alone. Now is the time to:
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Review your entire benefits portfolio.
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Make catch-up contributions where eligible.
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Assess whether retiring early will affect your long-term income.
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Ask if any benefits you’re entitled to now might disappear in the next year or two.
Reach out to a licensed professional listed on this website to walk through your options and avoid missing out on what could be thousands in future income.
