Lawrence: Welcome to The FED Weekly for 5 - 11 October 2025, your essential
weekly briefing on the policies and proposals shaping your career,
your benefits, and your retirement.
Whether youâre a current federal employee navigating changes in the civil service,
or a retiree keeping a close watch on your hard-earned pension and healthcare, this
is your source for the latest news from Capitol Hill and the executive branch.
Each week, we cut through the noise to bring you the critical updates on budget
negotiations, pay raises, workforce policies, and the legislative battles that
directly impact the federal community.
Let's get you up to speed on what happened this past week.
Issues That Affect Current and Retired Federal Workers
The Fiscal Shock of 2026 Health Premiums
The U.S.
Office of Personnel Management (OPM) released its annual announcement
regarding the Federal Benefits Open Season on Thursday, October 9, 2025.
This announcement confirms that the Open Season for the Federal Employees
Health Benefits (FEHB) Program, the new Postal Service Health Benefits (PSHB)
Program, and the Federal Employees Dental and Vision Insurance Program
(FEDVIP) will run from Monday, November 10, through Monday, December 8, 2025.
The data accompanying this announcement delivered a significant fiscal shock
to the entire federal community.
Federal employees and retirees enrolled in the FEHB Program will
face an average increase of 12.3%
in their share of the premiums for 2026.
This marks the second consecutive year that beneficiaries have been
hit with a double-digit percentage increase in health care costs.
To quantify this burden, civilian federal workers enrolled in âSelf Onlyâ plans
are projected to pay an additional $15.43
per biweekly paycheck, while those with âSelf Plus Oneâ plans face an
average additional cost of $34.21
per pay period, and those with family coverage will pay $38.81
more per paycheck.
For retirees and employees on fixed or suspended incomes, this unexpected,
steep rise in fixed costs dramatically complicates financial planning.
The cost hikes extend beyond the primary FEHB program.
Enrollees in the PSHB Program will see their premium share
increase by an average of 11.3%
in 2026.
Furthermore, OPMâs announcement noted premium increases for ancillary
benefits, with dental coverage through FEDVIP rising by 3.3%
and vision premiums increasing by 0.5%
on average.
This announcementâreleased the day before furloughed federal employees
missed their first full paycheck on Friday, October 10âhighlights the intense
financial pressure facing the workforce.
Active employees are not only dealing with an immediate collapse of their
income stream but are also being forced to confront rising mandatory
expenses for the coming year.
For annuitants, who rely on fixed retirement income, a 12.3%
increase in health care costs represents a serious erosion of their purchasing
power, placing a severe constraint on their budgets that will likely far exceed
their 2026 cost-of-living adjustment, a topic we will address in Section 2.
Plan Options and Discontinuations
The Open Season announcement also confirmed the available
plan landscape for 2026.
The FEHB Program will feature 47 participating carriers offering a total
of 132 plan options, and the PSHB Program will have 17 carriers with 75 options.
The FEDVIP program will offer 11 dental carriers with 21 options and
five vision carriers with 10 options.
Crucially, OPM confirmed that six FEHB plans, one PSHB plan, and one FEDVIP
plan will no longer be available in 2026.
Enrollees in these discontinued plans are strongly advised by OPM to actively
choose new coverage during the Open Season, as failure to do so could
result in a lapse or default enrollment.
Within specific plans, there are significant structural changes.
For example, within the Federal Employee Program (FEP) Blue Focus, the Medicare
Prescription Drug Program will not be available in 2026, and the catastrophic
out-of-pocket maximum will double for Self Only plans to $10,000, and for Self Plus
One and Self & Family plans to $20,000.
These structural changes underscore the critical importance for all federal
employees and retirees to review their benefits closely during the upcoming
Open Season, even if their plan is not among those being discontinued.
Thrift Savings Plan Updates and Charitable Giving
The Thrift Savings Plan (TSP) provided an update this week
concerning participant statements.
The agency announced on October 3, 2025, that the third-quarter 2025
participant statements, which cover account activity from July 1 through
September 30, 2025, will be available online by the end of October.
Separately, the OPM confirmed the continuation of the 2025 Combined
Federal Campaign (CFC), which allows federal employees and military
personnel to support charitable causes.
The campaign is running from October 1, 2025, to December 31,
2025, despite the ongoing shutdown.
OPM noted that it is currently reviewing the programâs administrative
costs and participation rates, signaling that potential changes may
be implemented for the 2026 campaign.
Issues That Affect Retired Federal Workers
2026 COLA Announcement Delayed by Shutdown
The Social Security Administration (SSA) typically announces the COLA for the
following year in mid-October, based on inflation data from the third quarter.
The official announcement for the 2026 COLA was scheduled for October 15, 2025.
However, the ongoing government shutdown caused a temporary halt to the data
collection activities of the federal Bureau of Labor Statistics (BLS).
Because the BLS was unable to finalize and release the September inflation
reportâspecifically the Consumer Price Index for Urban Wage Earners and Clerical
Workers (CPI-W), which is the benchmark used for the COLA calculationâthe official
2026 COLA announcement has been delayed.
While annuity payments themselves are not directly affected by the lapse in
appropriations, the shutdown directly impacts the governmental function
required to provide essential economic information, creating uncertainty for
retirees attempting to budget for 2026.
COLA Projection and FERS Disparity
Despite the delay in the official announcement, the latest available
data, specifically the August 2025 CPI-W figure, provides a strong
indication of the impending COLA rate.
The running tally toward the 2026 COLA reached 2.78
percent, calculated by comparing the average third-quarter CPI-W
to the same period in 2024.
While this 2.78
percent figure is a positive indication, it must be viewed in the context
of the retirement system rules.
If the finalized rate remains near this projection, the full 2.78
percent would be applied to annuities under the CSRS.
However, FERS retirees are subject to different rules: if the rise
in the CPI-W is between 2.0%
and 3.0%,
the FERS COLA is capped at 2.0%.
This FERS-CSRS disparity is highly relevant when viewed alongside the 12.3%
FEHB premium increase announced on October 9.
A FERS annuitant receiving a mandatory 2.0%
COLA would see the overwhelming majority of that adjustment, and
potentially more, swallowed by the 12.3%
rise in their health care premium share, resulting in a net decrease in their
effective disposable income for 2026.
This comparison illustrates how rising mandatory benefit costs can
compound existing structural inequities within the federal retirement system.
Legislative Update: Retirement Service Credit
A piece of legislation aimed at addressing historical gaps in retirement
credit remains pending in Congress.
H.R.
1522, known as the Federal Retirement Fairness Act, addresses a long-standing
issue for many FERS employees.
The bill seeks to amend Title 5 of the U.S.
Code to allow civilian service performed in a temporary position
after December 31, 1988, to be counted as creditable service under the
Federal Employees Retirement System.
For employees who held these temporary appointments early in their careersâoften
before converting to permanent statusâthis legislation is critical,
as it would potentially allow them to "buy back" this time and increase
their total service credit, thereby boosting their final annuity calculation.
The bill was introduced on February 24, 2025.
While no substantial action was reported during the week of October
5 through 11, the bill remains active, with Representative Ms.
Randall assuming first sponsorship in July 2025.
Issues That Affect Current Federal Workers
Shutdown Escalation: Missed Pay and Mass Layoff Notices
By Friday, October 10, 2025, federal workers began missing their full,
scheduled paychecks since the lapse in appropriations began on October 1.
This financial milestone created severe strain across the workforce, which was
simultaneously compounded by the threat of mass firings from the administration.
On Friday, October 10, employees began receiving formal notices informing
them they would be laid off in 60 days.
CBS News confirmed that more than 4,000 workers across at least seven
federal agenciesâincluding the Department of Homeland Security, the
Department of Education, the Treasury, and the Department of Health and
Human Servicesâcould receive these Reduction in Force (RIF) notices.
This RIF process, managed by the White House Office of Management and
Budget (OMB) and OPM, signaled a clear intention to use the funding crisis
to enact permanent structural cuts.
OMB directed agencies to consider issuing RIF notices to employees in
programs that satisfied three conditions: discretionary funding lapsed on October
1, 2025; other funding (such as H.R.
1) was unavailable; and, most tellingly, the program was not consistent
with the President's priorities.
The inclusion of the "President's priorities" criterion elevates the
RIFs beyond typical budgetary necessity and transforms the shutdown into an
attempt at permanent, ideologically driven workforce realignment.
This context confirms the fears expressed by furloughed workers, who noted that
while they had experienced furloughs before, this was the first time they
were checking their email daily for threats of being "fired en masse".
The issuance of mass RIF notices directly contradicts OPMâs stated goal,
announced by Director Scott Kupor on October 7, to aggressively recruit
highly skilled technical talent.
The stability and longevity previously offered as a key recruiting narrative for
government service is now demonstrably compromised by the ongoing mass
layoff threats, which fundamentally complicates the agencyâs ability to
attract cutting-edge technology workers.
Legislative Response: Emergency Relief for TSP
In response to the dire financial situation created by the missed
paychecks, Congressional Democrats introduced legislation designed to
protect federal workers' retirement savings from the short-term crisis.
Representative Don Beyer introduced the House version of the Emergency
Relief for Federal Workers Act of 2025, with a companion bill introduced
in the Senate by Senator Tim Kaine.
The legislation attempts to alleviate immediate financial
pressure by turning the Thrift Savings Plan (TSP) into a protected
emergency fund during the shutdown.
The core provisions of the Act are highly specific to shutdown relief:
Penalty-Free Withdrawals: The bill enables furloughed participants to
withdraw up to $30,000 from their TSP accounts without incurring the customary
10% early withdrawal penalty, provided the shutdown lasts at least two weeks.
While federal income taxes would still apply, waiving the penalty shields
employees from the most punitive charge.
Restoration of Funds: The legislation includes a critical provision allowing
workers to put the funds they withdrew back into their TSP account later.
This provision is vital, as standard TSP hardship withdrawals do not
permit repayment, thereby ensuring that short-term financial necessity
does not permanently compromise long-term retirement security.
Loan Protection: The bill ensures that TSP loans remain available to
affected employees, overriding the existing rule that often restricts
loan access if a shutdown is expected to last longer than 30 days.
Furthermore, it mandates that TSP loan payments, typically deducted
from payroll, must be automatically suspended during the shutdown.
Once appropriations are restored, the missed payments would be deducted
directly from the employeeâs back pay.
This also protects employees by prohibiting missed loan payments
from becoming taxable distributions subject to the 10% penalty.
Despite the importance of these protections, the bill was
introduced exclusively by Democrats.
Given the current political landscape, congressional analysts assess that the
bill is highly unlikely to receive a vote from the Republican-controlled
Congress, leaving employees reliant on the eventual, though legally
guaranteed, promise of back pay.
Structural Legislative Proposals Defining the Future Workforce
Beyond the immediate shutdown crisis, several pieces of legislation
were active this week, signaling a fundamental, long-term shift in the
structure of federal pay, performance management, and working conditions.
The 2026 Pay Raise Conflict
The debate over the 2026 pay raise intensified this week in light of the
massive premium increases announced.
On August 28, 2025, the President issued an Alternative Pay Plan for January 2026,
which overrides the Federal Employees Pay Comparability Act (FEPCA) formula that had
called for a much higher overall increase.
The President's plan dictates a 1.0%
base increase and freezes locality pay rates at 2025 levels for the vast majority
of General Schedule (GS) employees.
The administration made one notable exception: OPM was directed to use
its Special Salary Rate authority to provide an additional 2.8%
pay increase to certain law enforcement personnel, ensuring they
receive a total increase of 3.8%.
This 3.8%
increase aligns with the planned military pay increase for 2026, but
the decision to restrict this parity break tradition and restrict the
majority of the workforce to a 1.0%
raise is a major point of contention.
The American Federation of Government Employees (AFGE) argues that the current
federal salary average is 27% below comparable private sector jobs and has
endorsed legislation that would provide all federal employees with a 4.3%
pay adjustment in 2026.
By providing only a 1.0%
raise while civilian employees face a 12.3%
hike in health care premiums, the administration's pay plan
effectively guarantees a significant net decrease in spending power,
directly undermining workforce recruitment and retention efforts.
Performance, Pay, and Cuts Legislation
Two key House bills introduced this year seek to restructure
the workforce permanently:
H.R.
201: Federal Employee Performance and Accountability Act of 2025: This bill
proposes establishing a pilot program that fundamentally ties compensation to
performance ratings, moving away from the traditional GS steps and locality system.
Under this program, employees who significantly exceed established
performance metrics would receive a pay increase of up to 10%.
Conversely, those who rate below expectations would face a
mandatory 10% reduction in pay.
A key structural change is that employees participating in this pilot
would become explicitly ineligible for the annual or locality-based pay
increases authorized under current law, transforming the GS structure
into a high-risk, high-reward model.
H.R.
200 (Untitled): Pay Freeze and Reduction Mandate: This bill
mandates a hard, structural reduction in the federal workforce.
It prohibits increasing the basic pay of any federal employee
for one year after enactment.
Furthermore, it prohibits each federal agency from increasing its number of
employees beyond the level employed on the date of enactment, except for specific
positions related to law enforcement, public safety, or national security.
This bill, if enacted, would codify a permanent workforce reduction requirement
through attrition and mandatory cuts, reinforcing the political intent behind
the RIFs seen during the shutdown.
Telework Scrutiny
Another structural component of modern federal employment is facing
intense scrutiny in Congress.
S.
82, the Telework Reform Act of 2025, introduced by Senator Lankford,
proposes amendments to Title 5 aimed at heavily restricting and
monitoring telework eligibility.
The bill mandates several new requirements for agencies:
Telework agreements must be limited to a period of one year
and reviewed at least annually.
Policies must be established to address the extent to which telework
may be restricted based on performance deficiencies or disciplinary action.
Agencies must establish systems to confirm that employees are working
solely at approved worksites and provide mandatory annual training
that includes accurate reporting of remote work and telework usage.
The bill further stipulates that these new requirements could override existing
collective bargaining agreements, although current agreements would
remain enforceable until they expire or become subject to renegotiation.
This legislation signals a sustained effort to roll back the flexibility
that many federal employees rely on, despite telework being a critical factor
in workforce retention and morale.
And thatâs a wrap on this weekâs Federal Workforce Roundup.
The landscape for federal employees and retirees is constantly shifting,
with major decisions being made about everything from pay and job security
to retirement benefits and the very structure of the civil service.
Staying informed is your best tool.
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Thanks for tuning in.
Weâll be back next week to track the latest developments
and what they mean for you.
Until then, stay engaged and be well.