#8 – Agencies, 1.7%, YE SS

Agencies, 1.7%, and YESS all on today’s Fednobabble.com.

Welcome to today’s Fenobabble, where we take your questions and explain the federal retirement benefits and make them understandable for humans and under 20 minutes and we take these questions from the Fednobabble.com website where you can go and submit them or from the workshops.

I do. So let’s jump into question number one. What happens with health insurance when I retire? Is there a uniform answer or is a per agency? Cassie, what do you think, what happens with health insurance when I retire? Well, it depends on what you choose to do with your health insurance options.

So it is it depends. Yes, there is no uniform answer because as long as somebody has met their five year rule, they can continue to take it in retirement. And is long as you’re not a postal employee, then the government’s going to pay the same amount. The premiums stay the same. The only difference is you don’t pay on a twenty six paper basis. You’re paying per month. So it looks a little bit higher on a monthly basis as opposed to paying every two weeks.

But I think that’s to be expected. But the the cost amount that’s covered with the government is the same. This is not a per agency. Yeah, you know, the per agency thing is really, really interesting because. Almost well, I’ll say this, almost everything works the same for federal employees, no matter what agency you work for until it doesn’t. Right, right. And and they’re few and far between. But it does depend every now and then per agency and and trying to nail those down.

When it does and when it doesn’t, it can be pretty difficult. And so sometimes you don’t know when it. So I would just say overall, assume that it’s the same for everyone until you hear otherwise and that otherwise, unfortunately most of the time won’t come from H.R. because H.R. knows what that agency’s H.R. does and assumes that it is the same for every agency, that that kind of information typically only comes from people like you and I Cassie who we work with, people from all federal agencies, and it doesn’t matter what agency you come from.

And then then you start noticing the differences and, oh, you know, you it doesn’t work like this for you, even though it works like that for everyone else or vice versa. So. You have to have something contrast to contrast it with. Yeah, I also think that working with a financial professional who is seasoned and padded with working with federal employees, they are also going to know most exceptions, like postal employees, is very common when where they’re vaguely in FEHB are just different while working.

But then it’s not when they’re not working. And so that’s one example where it’s a per agency basis. Right, because it’s just the postal service. So it’s not like my agency here in Washington State or Seattle, Washington or whatever is different than the one in Norfolk, Virginia, or something like the Postal Service is. It’s it’s just the agency of us. Yeah, right. And that’s most of those employees. Right. All of there are certain impulse employees that qualify for a different exception, and they still have to pay the same as any regular first employee.

And so but any trusted advisor or any adviser, really, who has had experience with federal employees and has been working with them for a while, they’re going to know these certain exceptions that are common in their area. And I didn’t turn off my phone. So just one moment somebody is calling.

Well, I should say I did turn off one phone, but then I didn’t turn down the other phone.

Gotcha.

How many phones do you have Cassie to personal and business? Yeah. And so I will also say that’s one of the things I love about your report, is that you catch these things as well. And when you run the report, you’ll throw those in and say this is different than normal. This is not the same. Beware, because you want to make sure that you’re setting them up. Right, for this situation.

Absolutely. And this is oh, man, I’m looking at all of these different things.

If there are different types of employees, if there is CSRS Offset, whose Social Security and Social Security, whose Social Security and CSRS deductions are not being taken out properly, if they’ve had option C with vaguely for longer than they should have or any of those different things, we’re looking at those and we are getting that information back to the advisor to how.

On how to properly plan for those types of employees, so that way they can go back to you guys and say, hey, check it out, this is what needs to be fixed. Here’s how we can take care of that. And let’s move forward with getting this benefit taken care of and whatever needs to happen. So, yeah, perfect.

Good, good. All right. Question two. I have a I have one year under law enforcement. Will I get one point seven for that year?

My other years are under Fer’s. Now, when this person is talking about this, it is the it is the pension formula because for the first 20 years in the pension formula they use instead of one point zero or one point one, they use one point seven.

Yep, all special Proration employees, firefighters, law enforcement, air traffic controllers, Customs and Border Protection, they’re a little bit different, but for the most part, they are required to have 20 years in that special provision service. To in order to have the one point seven factor, so the answer, unfortunately, is no, right.

They will not get the one point seven for that one year, the most of the time have to have 20 years of special provision in service in order to qualify for that. One point seven factor kbps are different because they’ve only been considered law enforcement since July six of two thousand eight. And so that’s a little bit of a different story. They get an exception because obviously it hasn’t even been 20 years. Right. And, you know, there’s there’s some other factors that go along with the special provision employees as well.

And so in this transition time of going from the regular first system to law enforcement officers and being considered special provision employees, and then there’s some different calculations there. But overall, though, if you worked just generally one years as a firefighter or one year as a law enforcement officer, one year as air traffic controller, you’re not getting that one point seven factor that time.

Yeah, I remember meeting someone at one of our workshops in person workshops and and they cut a little out of what they got a little concerned also because they had 19 years.

So as much as a law enforcement and you said so ah wait a minute. Nineteen years that, that doesn’t put me in my 20. Well I get one point zero one point seven.

I said you’ll get a one point zero that goes Oh no, I have to get back in somehow for one year as the law enforcement. I said if you can just one year a lot more, one more year law enforcement, you’re going to get a decent bump up to your pension that you had to go back and figure out how to make that happen. Oh, my goodness. Right. So many people don’t realize they think, oh, well, maybe I had five years and I had 10 years or one year even, and then I’ll still qualify for that higher pension factor.

But that’s simply not the case unless you had a special waiver or something like that. I mean, like I said, there’s always different exceptions for these types of things. But generally the rule is you must have 20 years of special provision service in order to get that higher pension factor.

So, yeah, and going back to the concept of the last question, again, like you mentioned, CBO, that’s a little different. That agency, it’s going to be treated differently. So, again, like you said, for the most part, that’s how it works. But there are exceptions as well. Yeah, OK, question number three, what is with this Social Security thing for the end of this year and the beginning of next year?

I mentioned this in one of my workshops and some as I said, you know, you’re going to have to I said here, here’s real basics, but you’re going to have to talk to your financial professional about this.

And they just said, whoa, whoa, whoa, whoa, wait a minute. What is this? So Cassie, why don’t you explain this a little bit, OK?

There’s a lot of heat going on about this. I assume there would be.

Oh, yes. OK, good.

So let me just lay out what the program is before we get into all of the heat that’s going on with that.

OK, but essentially the president signed an act where Social Security will be deferred from September 1st to December. Thirty first four months.

Yeah, three, four months, OK, now it’s only deferred.

So that’s six point two percent that normally comes out of your paycheck for Social Security or a SDI you’ll receive that in your paycheck. OK, but from January 1st until April. You’ll pay double into Social Security, so rather than just having the six point you withdrawn, you’ll have the twelve point four taken out in your paycheck.

OK, why? This makes sense. I’m still trying to figure that out, but I don’t apply government or I don’t apply logic to government policy.

We never try to do that here. So let me let me just kind of put this into numerical perspective, if I could. From September 1st to December 31st for these September, October, November, December, for these four months here, federal employees have no way out of this.

By the way, this is not that if if they make less than forty four thousand a month, is that right?

4000 gross. Yes. However, you have to think about all the pre-tax things that are taken out before the gross income is in effect. Right. I mean, if you’re TSP your health care. Health care.

Yeah, right.

And then four thousand and then is the four thousand.

I was reading something the other day where they had higher than anticipated federal employees in this program because they didn’t it into the pre-tax. Right, however. USPS has decided not to agency specific, again, specific, right, so the employee themselves have no option to opt out, but apparently the whole agency as a whole can because it has decided they’re not going to do this.

OK, but then I was just reading something this morning, and I was just barely a brief overview as I had kids running in and that was saying there’s something on that in the house or whatever about it possibly having an option to opt out or something. I don’t know. Either way, there is a lot going on with this.

I cannot guarantee that it’s going to last because this just wasn’t a well thought out plan.

No, no. And so, again, let me let me go back to numerical perspective here.

From in August, they people are paid one amount in September through December, they’re going to see a six point two increase overall to their paycheck. In December, they will see a. Twelve point four percent reduction from what they were getting in December from their penny. Absolutely. That’s that’s significant. And this is very significant.

I mean, if you’re having two hundred dollars taken out for Social Security. Yeah, right, then you’re going to have four hundred dollars taken out and then what about taxes? And so that was one of the things that was included in that thing that I was looking at. The article this morning was, well, what if employees have taxes to pay and things like that?

Then that dips into to the amount that they have to save for taxes in. Right. Because that’s around that same time. And so there’s just a lot going on on the committees.

And I know there’s some people pull in to get this taken out because it’s just. Kind of ridiculous myself, in my opinion. Yeah, yeah, when I when when you first alerted me to this because I didn’t know about it and you told me about this, I was beside myself that there’s no option to to get out of this for federal employees. Well, besides postal now, I guess. But wow. Wow. To be sure, I don’t know if someone wants that.

I think that’s great. But if someone doesn’t want it, which I would assume that most federal employees would not want that to happen because they’re still working right then. Now. And I will say President Trump created this. And I’m assuming that OPM or whomever decided that the federal government workers were going to this was going to happen to federal government workers. So President Trump made it an option.

And whoever made this a reality just I don’t know who that is or what I’m assuming it was at the OPM level. But wow, the things that they just make happen.

One thing I want to include, too, is if somebody separates during the next OK, if you are going to be retiring or separating from service and delaying your retirement or just walking away and taking revenge, whatever that looks like, if you separate from the federal government and you are subject to the Social Security deferral program.

Excuse me, where they are, where you’re receiving that extra money, you’re still going to be responsible for the extra Social Security amounts that were deferred beginning of next year.

Out of pocket, out of pocket, I don’t know what that looks like, there’s not they didn’t explain how that was going to work out, whether they’re going to take it out of if you get a second job or something, whether they’re going to take it out of there or if they’re going to build new. Right. How does that work? You know, it that’s unclear. They just simply state that you’ll still be responsible to make up for those deductions that weren’t taken from your paycheck.

So you know what, we have we have this episode slated for a little later, I think we might have to move this way up so that people get the information ASAP.

Yes, I think this one is super important to get up and going because people need to understand exactly how this works. Right.

If they are retiring, especially if they’re retiring this year, because then their annuity is not going to start right away and they’re going to be subject to those interim payments, plus a twelve point four percent, whatever that means for security deductions.

Right.

This could seriously put somebody in a really bad financial spot that they might just want to delay retirement another four to six months just because they don’t want to have to deal with that increase or receiving that bill if they don’t have enough savings or what have you. And so this is something that really need to be that really needs to be strategized with somebody who understands how to work the different financial markets together. So that way, you know, if somebody is not really screwing themselves, to be honest, the first three months of retirement.

Yep.

And that’s why, again, that’s why we make these these reports available so that people I mean, I don’t want to say, especially if you are retiring right now, because this could go for someone who just started their federal employee services. Well, to make sure they’re on track. But, boy, that’s going to help those who are retiring really soon, especially by the end of the year, to make sure that they are on track. And so if anyone goes to Fednobabble.com and signs up, we will put you in touch with one of our one of the advisors and our trusted network that will reach out to you and Cassie.

We’ll do the report and go through it and make sure everything is good.

And then they’ll then the advisor again will sit down with you and just make sure that you have the numbers that you thought you had, that things like this because things like this don’t show up on an H.R. report. This is out of the scope of that. But these are the kind of things that you’ll be able to see. So go there to Fednobabble.com. And if you want to ask a question, you can also go to Fednobabble.com and submit that.

And if we use your question, we will give you some Fenobabble paraphernalia, some dirt or or, I don’t know, something like that. That’ll be fun.

Yes. And don’t forget to, like, subscribe share with your co-workers. They need to understand how this all is going to work with them as well, because maybe they don’t understand the Social Security deferral program either. So please, whatever you can do to help make sure that other people get empowered and get their questions answered as well. So great.

All right. Thanks for joining us, everyone. Take care. And we’ll see you next.