LEGISLATIVE HIGHLIGHTS  by William (Bill) Sisco  ...........

COLA Projection for 2002  It won't be a jumbo COLA, but cost-of-living adjustment for civil service and military retirees will be bigger than most in recent years.  Retirees and surviving spouses covered by the Civil Service Retirement System and military annuitants will receive a 2.6 percent increase in their January retirement checks. People who retired under the newer Federal Employees Retirement System and who are 62 or older will receive a 2 percent increase.

The Social Security Administration and the Office of Personnel Management announced the benefit increases, based on inflation data released Friday by the Labor Department.  The annual adjustment is one of the pillars of the government's retirement system. The COLA goes to nearly 2.4 million federal retirees and survivors and about 1.8 million military retirees across the nation. In the Washington area, about 223,000 federal civilian retirees and survivors will see their monthly checks rise.

At the start of this year, CSRS retirees received a 3.5 percent COLA, and FERS retirees got 2.5 percent. Those increases were the largest for most retirees in a decade.  The new increase, which takes effect in January, falls more in line with typical increases in the 1990s. But the 2002 COLA will be the second-largest since 1997, when CSRS retirees received a 2.9 percent increase.  According to the latest OPM data, the typical CSRS retiree receives a monthly benefit of $1,969. The 2.6 percent COLA will result in an increase
of $51.

AVERAGE FERS ANNUITY

The average annuity  is $714, and the 2 percent COLA will mean a $14 increase next year. The average CSRS survivor annuity is $1,005 a month, and it will rise by $26. The average FERS survivor annuity is $308, and it will go up by $6.   In most cases, the 2002 COLA should cover rising health insurance premiums facing retirees in the Federal Employees Health Benefits Program. Such comparisons are based on averages, of course, and may not apply to people with lower retirement benefits.

INSURANCE PREMIUMS

Monthly premium for the popular Blue Cross and Blue Shield standard option will increase $14.86 for individual coverage and $30.16 for family coverage. Retirees enrolled in another popular plan -- the Mail Handlers Benefit Plan standard option -- will see monthly premium increases of $8.08 for individual coverage and $17.53 for family coverage.

In a separate announcement, the government raised monthly Medicare premiums by $4, bringing the premium to $54. The premiums are deducted from most retirees' annuity checks for insurance coverage of doctor office visits.

2003 COLA Count Kicks Off

The count toward the 2003 federal retiree cost-of-living adjustment has started, with a drop in the consumer price index for October translating into a projected decrease of 0.1 percent. There's no such thing as a negative COLA, however. The drop also has no effect on the January 2002 COLA, which will be 2.6 percent for those retired under the CSRS retirement system and 2.0 percent retired under the FERS system.

MORE RELATED

The COLA for the nation's 45 million Social Security beneficiaries, like that for CSRS retirees, will go up by 2.6 percent. Under Social Security, the average monthly benefit for an individual will rise by $22, to $874; for couples, the average benefit will increase $36, to $1,454. The maximum Social Security benefit for a worker retiring at 65 in January will be
$1,660 a month, up from $1,536 this year.  The COLAs are based on the percentage change in the consumer price index from the third quarter of 2002 to the third quarter of 2001. CSRS retirees and survivors whose annuities began in December 2000 or earlier will receive the full COLA. Individuals whose annuities began in 2001 will receive a prorated COLA.

FERS retirees live under different rules.  People hired by the government after 1983 were required to join FERS. They receive Social Security coverage and are eligible for full participation in the Thrift Savings Plan as part of their retirement package.  When the change in the consumer price index is between 2 percent and 3 percent, the FERS COLA is set at 2 percent. Generally, only FERS retirees age 62 and older receive the FERS COLA, with the exception of disability retirees, certain military reserve technicians, special group employees (such as law enforcement officers, firefighters and air traffic controllers)
and survivors.

Military retirees who were on the active-duty payroll at the start of this
year also get the 2 percent COLA. These individuals entered the armed forces
before Sept. 8, 1980, and retired after Jan. 1, 2001.

HEALTH PLANS TO DROP 135,000 FEDERAL WORKERS AND RETIREES

Thousands of federal workers and retirees must choose new health care coverage for 2002 because their health insurance companies are dropping them, the Office of Personnel  Management announced.

In all, 137,488 federal workers and retirees are being dropped, either because health maintenance organizations are dropping out of the Federal Employees Health Benefits Program (FEHBP) or because large carriers have chosen to pull out of certain markets.  Aetna U.S. Healthcare is dropping 52,475 federal enrollees in 18 areas across the country, and Prudential is dropping 15,824 enrollees in five areas.

Twenty-eight HMOs are dropping out of the FEHBP.  The George Washington University Health Plan, is going out of business, leaving 16,115 federal enrollees in the Washington area without coverage as of the beginning of 2002.  Free State Health Plan, which is also going out of business, is dropping 10,411 enrollees.

IMPORTANT PENDING LEGISLATION

The most urgent NARFE issue is the Premium Conversion Bill, H.R. 2125.  This bill would give annuitants the same pre-tax benefit for health insurance premiums that active employees were given by Executive Order.  Fairness alone demands that this bill be passed.  It is not reasonable to give active employees a tax benefit in their high earning years that is not given to annuitants on a fixed income.  At the present time, this bill has 59 sponsors so it needs all the help we can give it.

Another bill with 280 cosponsors, H.R. 664, the Government Pension Offset Bill (GPO), is a close second.  It already has 62 more cosponsors than needed to pass if the bill can be moved to the floor from committee for a vote.

The Bush administration has sent its strongest signal to date that it wants authority to close more Defense Department bases, in a Pentagon message to Congress that raised the possibility that President Bush would veto any Defense Department authorization bill that does not include that provision. The Senate version of the bill in conference (S-1438) would set up a base closings commission to report in 2003, while the House version (HR-2586) would not. As in the past, the administration said that despite previous rounds of closings the agency still has between 20 and 25 percent too much infrastructure and that the money would be better spent elsewhere.  Many in Congress, though, want to either put off the decision until next year or have the process begin with a list of bases that would be considered untouchable.