Key Takeaways
- Health Insurance Premiums: The Federal Employees Health Benefits (FEHB) program has implemented an average premium increase of 13.5% for 2024. Reviewing your plan during Open Season is crucial to ensure it still meets your needs and budget.
- Retirement Contributions: The Thrift Savings Plan (TSP) contribution limits for 2024 have increased to $23,000, with an additional $7,500 catch-up limit for employees aged 50 and over. These limits will rise to $23,500 in 2025, offering even more opportunities for savings.
Understanding the Big Picture
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Health Benefits: What’s Happening in 2024 and 2025
Premium Increases in 2024
The FEHB program introduced a significant average premium hike of 13.5% for 2024, marking one of the largest increases in recent years. Rising healthcare costs and expanded benefits are driving this adjustment, and it’s more important than ever to evaluate your plan during Open Season to confirm it still aligns with your needs and budget.
Expanded Health Plan Benefits
While premiums are increasing, some FEHB plans are enhancing their coverage. For example, certain plans now include improved fertility treatments, maternity benefits, and additional mental health services. These expansions can provide valuable support for enrollees, so it’s worth reviewing your plan to see if these updates apply to you.
Future Outlook for Health Coverage in 2025
The transition to the Postal Service Health Benefits (PSHB) program continues into 2025. For USPS employees and retirees, this means all health coverage will shift to the PSHB system, and Medicare Part B enrollment will be mandatory for many Medicare-eligible participants. Understanding these changes and preparing for potential costs will help you avoid disruptions in coverage.
Retirement Contributions and Benefits: Updates to Know
Increased TSP Contribution Limits
For 2024, you can contribute up to $23,000 to your TSP account, and those aged 50 or older can take advantage of an additional $7,500 in catch-up contributions. These limits will increase slightly in 2025, rising to $23,500, giving you even more room to grow your retirement savings.
How to Maximize TSP Savings
If you’re not yet contributing the maximum, consider increasing your contributions incrementally. Start by raising your percentage during annual pay raises or bonuses. Those close to retirement should prioritize catch-up contributions to ensure they’re fully utilizing the opportunities available.
Cost-of-Living Adjustment (COLA) for Retirees
In 2024, retirees under FERS and CSRS are benefiting from a 3.2% COLA, helping to offset inflation’s impact on their purchasing power. Social Security recipients, meanwhile, will see a 2.5% COLA in 2025, which translates to an average monthly increase of over $50. These adjustments ensure retirement income keeps pace with rising costs, providing financial stability.
Pay and Compensation Updates in 2024
Annual Pay Raise
Federal employees are seeing an across-the-board pay raise of 4.7% for 2024, with an additional 0.5% locality pay adjustment in certain areas. This increase reflects inflationary pressures and aims to maintain competitive pay within the public sector.
Locality Pay Expansion
More regions have been added to the locality pay system in 2024, resulting in increased compensation for employees in those areas. If you’ve recently moved or changed positions, verify whether your location qualifies for these adjustments, as it could make a meaningful difference in your take-home pay.
Future Trends in Compensation
While 2024 focuses on standard pay increases, 2025 may bring additional updates to locality pay or performance-based incentives as agencies aim to retain top talent. Staying informed about these developments can help you anticipate changes to your income.
Social Security: Present Impacts and Future Prospects
Current Earnings Limits
For federal employees under full retirement age, the Social Security earnings limit for 2024 is $22,320. Earnings above this threshold will reduce your Social Security benefits temporarily. For those reaching full retirement age in 2024, the earnings limit increases to $59,520, and only earnings before your birthday month are counted.
Windfall Elimination Provision (WEP) and Government Pension Offset (GPO)
If you’re impacted by WEP or GPO, you might see changes in the future. The Social Security Fairness Act, which aims to repeal these provisions, has been passed by the House of Representatives. If this legislation becomes law in 2025, it could result in increased Social Security benefits for public sector workers who have been affected by these offsets.
Open Season: Key Deadlines and Opportunities in 2024
Open Season Basics
Open Season for FEHB, FEDVIP, and PSHB runs from November 11, 2024, to December 9, 2024. This is your annual opportunity to review, change, or update your healthcare, dental, and vision coverage for the upcoming year.
Review and Compare Plans
Given the premium increases and potential changes in benefits, it’s essential to reassess your current plan during Open Season. Use this time to compare costs, coverage levels, and available options to ensure your plan aligns with your healthcare and financial needs.
Preparing for 2025
If you’re affected by the PSHB transition, this Open Season is critical. Ensure you understand the implications of mandatory Medicare enrollment and explore options that minimize disruptions to your coverage.
Staying Ahead of Changes in Federal Benefits
Proactive Steps for 2024
- Maximize Your Savings: Increase your TSP contributions to take advantage of the higher limits and secure your financial future.
- Evaluate Your Health Plan: Review your FEHB plan during Open Season and consider switching if your current coverage no longer aligns with your needs.
- Stay Informed: Regularly check updates from the Office of Personnel Management (OPM) and your agency to remain aware of new developments.
Planning for 2025 and Beyond
With TSP limits increasing and new regulations affecting Medicare integration, keeping an eye on future changes is essential. Begin planning now to make the most of these opportunities as they arise.
Looking Ahead: Adapting to Federal Benefits Changes
The landscape of federal employee benefits is continuously evolving. From health insurance premium hikes to retirement savings opportunities, staying informed and proactive will help you navigate these changes effectively. Use Open Season to make informed decisions, adjust your financial strategy to meet new limits, and prepare for upcoming shifts in 2025. Taking these steps ensures you’re positioned for success in both the present and future.
