FERS SICK LEAVE CREDIT INCLUDED IN DEFENSE AUTHORIZATION CONFERENCE AGREEMENT

Report Includes Several Major Victories for Federal Employees

On October 7, House and Senate negotiators released the contents of the FY 2010 Department of Defense authorization bill (H.R. 2647) conference report authorizing funding for the DoD and the Department of Energy. The report contains several pay and retirement provisions of significance to PASS members. In particular, the report includes language regarding a sick leave credit for employees under the Federal Employees' Retirement System (FERS).

"This is a major victory for federal employees," said Rep. Jim Moran (D-Va.), who wrote the original legislation to give FERS workers credit for unused sick leave (see Legislative Update, March 6, 2009). "These revisions to the federal retirement system are long overdue.... I appreciate the conferees willingness to listen to our arguments for including these vital provisions to strengthen our civil service, many of whom work day-in and day-out directly alongside our men and women in uniform."

The FERS benefit will allow employees under the system to use their unused, accumulated sick leave when computing their annuities upon retirement, a benefit that has long been available to employees under the Civil Service Retirement System (CSRS). The provision would be phased in over a four-year period, with employees receiving 50 percent credit for unused sick time until December 31, 2013. Beginning on January 1, 2014, employees would receive full credit. "PASS has worked tirelessly alongside other federal employee unions to ensure that PASS members would be covered in this provision," said PASS National President Tom Brantley. "This is an important legislative victory that will benefit PASS members and all federal employees for years to come."

Also of interest to PASS members, the bill phases out cost-of-living allowances for federal employees working in Hawaii, Alaska and other non-foreign U.S. territories and moves these employees to a locality pay system. In addition, the bill includes language that authorizes federal agencies to reemploy federal employees under certain limited conditions and for a limited period of time without impacting their annuity checks. The bill requires that the comptroller general report on the use of this authority. The bill also allows employees who choose to work part time toward the end of their careers to use the higher salary figure to calculate retirement benefits. Furthermore, the conference report permits former federal employees under FERS who return to government service to redeposit their savings in the retirement system and earn credit for the years they already worked in government.

"The changes included in the conference report will enhance the federal retirement system's efficiency and effectiveness as a recruitment and management tool at a time when the government needs to be attracting the best and brightest individuals," said Rep. Edolphus Towns (D-N.Y.), chair of the House Oversight and Government Reform Committee.

The pay and retirement provisions were not without objection. In September, Moran and eight other members of Congress sent a letter to the Defense authorization conference committee in September emphasizing the importance of including these provisions, and Moran, Towns and Rep. Stephen Lynch (D-Mass.) threatened to withhold their signatures from the conference report if the provisions were not included. At press, the House had approved the report language by a vote of 281-146. After the report is voted on and approved by the Senate, it will be sent to the president for his signature.

HEALTH CARE LEGISLATION ADVANCES IN CONGRESS

Last week, the Senate Finance Committee began marking up America's Healthy Future Act of 2009, which was introduced on September 16 and seeks to lower health care costs and provide quality, affordable health care coverage. "It is the duty of the next President and the next Congress to reform America's health care system," said Senate Finance Committee Chair Max Baucus (D-Mont.). "Congress must take up and act on meaningful health reform legislation that achieves universal coverage while also addressing the underlying problems in our health system.  The urgency of this task has become undeniable."

The Senate Finance Committee debated several amendments that would affect federal employees and only accepted one amendment that would directly impact the Federal Employees Health Benefits Program (FEHBP). Sen. Charles Grassley (R-Iowa), ranking member of the Finance Committee, offered an amendment that would have removed all federal workers from the FEHBP and required them to purchase health insurance through state-based exchanges. After extensive lobbying efforts by federal employees groups, including PASS, the committee modified the amendment to allow members of the civil service the option to switch from the FEHBP to state-based exchanges, rather than making the move mandatory. However, members of Congress and their staff would be removed from the FEHBP by 2013.

Another amendment with the possibility to impact the FEHBP was filed but not offered by Sen. Ron Wyden (D-Ore.). The amendment would open the FEHBP to select low-income Americans in the private sector and add them to the general risk pool, which could adversely affect premium rates for all federal employees since federal employees are typically lower risk. While it is unclear as to whether Wyden will offer the amendment when the bill goes to the full Senate for a  vote, several federal employee groups are opposed to the amendment and will continue to lobby Senate lawmakers to ensure that final legislation does not include this language.

Another area of concern regarding the committee?s proposal is its consideration of an excise tax on higher-cost health care plans. Under the Senate Finance Committee proposal, basic health care plans with premiums over $8,000 for individuals and $21,000 for family coverage would be subject to a 40 percent excise tax on the difference between the actual premium and the cap of $8,000 and $21,000, respectively. The committee did raise the premium tax threshold for individuals to $9,850 and families to $26,000 for workers in high-risk occupations and retirees.

Unlike the Senate Finance Committee's proposal, a version passed by the House (H.R. 3200) contains a public insurance plan option, an employer mandate and progressive tax increases to pay for subsidies, which will enable low-income Americans to purchase insurance. The House bill would pay for the low-income subsidies through surtaxes on household incomes over $350,000 a year. However, the House is working to merge health care bills from three separate committees and the timing of House floor debate is unknown.

The Senate Finance Committee remains the last of the committees of jurisdiction in the Senate to work on health care overhaul; it is expected to complete work on its bill following an analysis by the Congressional Budget Office (CBO). Once the Senate Finance Committee completes work on its bill, Senate Majority Leader Harry Reid (D-Nev.) will merge the bill with the bill passed in July by the Senate Health, Education, Labor & Pensions (HELP) Committee and send the merged bill to the Senate floor for a vote. The HELP Committee bill contains a public insurance option, an employer mandate and no tax on insurance premiums. The Obama administration has signaled that it would like to conclude health care reform by year's end.