Lawrence: Welcome to The FED Weekly for 26 October to 1 November 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 Legislative Impasse and the Looming Threat to Retroactive Pay
The political standoff that triggered the shutdown on October 1, 2025,
remains fully entrenched, fueled by partisan disagreement over health care
policy and overall funding levels.
Congress continued to fail in resolving the appropriation
lapse during this period.
The Senate, requiring 60 votes to advance most legislation, voted 13
times on a House-passed resolution designed to fund the government until
November 21, but fell short of the necessary threshold, leaving roughly
730,000 federal employees classified as "excepted" working without pay.
Amidst this paralysis, legislative proposals emerged to alleviate
the burden on working employees.
The Shutdown Fairness Act (S.
3012) was actively debated.
This bill seeks to provide immediate appropriations to ensure that federal
agencies can pay their excepted employees (and certain supporting contractors)
during the ongoing lapse in funding.
The introduction and promotion of S.
3012 highlights a fundamental, practical difference in employee
compensation during a shutdown.
While the Government Employee Fair Treatment Act (GEFTA) of 2019 historically
ensures that both furloughed and excepted employees receive retroactive
pay after a shutdown ends , S.
3012 specifically targets immediate compensation for those
required to report to work.
The continued necessity of introducing such immediate pay legislation
underscores the lack of reliable funding mechanisms for core governmental
functions during extended lapses.
A major controversy that introduced profound financial uncertainty for
all furloughed workers was revealed during this reporting period.
An October 2025 draft memo, penned by the Office of Management and Budgetâs
(OMB) general counsel, Mark Paoletta, and addressed to Director Russell Vought,
questioned the automatic guarantee of retroactive pay for furloughed employees.
The OMB position argued that the GEFTA did not automatically ensure post-shutdown
pay for furloughed employees, asserting instead that Congress must include
explicit, express language appropriating funds for back pay within any legislation
used to end the government lapse.
Although the administration had not officially adopted this position
to withhold retroactive pay, the very existence of this legal
interpretation signals a potential shift in the executive branchâs
strategy toward the civil service.
Historically, GEFTA has been understood to guarantee pay , but this new
legal opinion introduces a risk that the executive branch could use the
withholding of guaranteed compensation as leverage in budget negotiations,
dismantling a key, established civil service protection by demanding fresh
appropriations for standard actions.
Judicial Intervention Secures Essential Food Assistance
The severity of the shutdown escalated for millions of Americans, including
vulnerable federal employees and retirees, when funds for the Supplemental
Nutrition Assistance Program (SNAP) were set to expire on November 1, 2025.
The administration had reversed its prior stance, claiming it was prohibited from
utilizing a $5 billion contingency fund specifically allocated by Congress to keep
benefits flowing during funding lapses.
This decision prompted immediate legal action.
On October 28, 2025, New York Attorney General Letitia James and
a bipartisan coalition of 26 state leaders, including the District of
Columbia, filed a lawsuit against the Department of Agriculture (USDA).
The coalition argued that the refusal to issue November SNAP payments to more
than 40 million Americansâa population that includes countless families relying
on this lifelineâwas unlawful, as the USDA was legally required to continue
benefits using existing contingency funds.
The litigation came to a head on Friday, October 31, 2025, just one day
before the critical payment deadline.
Two federal judges intervened to block the imminent lapse of benefits.
U.S.
District Judge Indira Talwani in Massachusetts rejected the
administration's argument that the contingency funds could
not be used, ruling that the government is legally required to
tap into the emergency resources.
Simultaneously, U.S.
District Judge John J.
McConnell, Jr.
in Rhode Island granted a temporary restraining order, specifically
directing the USDA to distribute the contingency funds to ensure full SNAP
payments by the following Monday, or at minimum, partial payments by Wednesday.
These rulings affirmed the statesâ position that the USDA was legally
obligated to use the existing funds.
This chain of events demonstrated the judiciaryâs function as an emergency
financial safeguard, mitigating the immediate humanitarian threat that 42
million individualsâincluding families connected to the federal workforceâwould
have faced on November 1, 2025, due to executive interpretation of funding law.
Sharp Increase in 2026 Federal Health Care Premiums
The most significant financial news affecting both current employees and
retirees was the announced increase in Federal Employees Health Benefits
(FEHB) program premiums for 2026.
While the announcement by the Office of Personnel Management (OPM)
occurred earlier in October, the consequences continued to dominate
financial planning during this period.
The average enrollee share for FEHB will rise sharply by 12.3
percent.
For participants in the newly established Postal Service Health Benefits
(PSHB) program, the average enrollee increase is slightly lower at 11.3
percent.
This substantial increase marks the continuation of a trend of escalating
costs, following surges of 13.5
percent in 2025, 7.7
percent in 2024, and 8.7
percent in 2023.
OPM attributes the accelerating cost pressures to multiple factors, primarily
the relatively older average age of enrollees (47 for active workers; 60
when retirees are included), coupled with rising costs for prescription
drugs and general medical services.
This premium hike occurs just ahead of the critical planning window for the
upcoming Open Season, scheduled for November 10 through December 8, 2025.
For those in plans that are terminating at the end of 2025, a crucial administrative
detail dictates that they must make an active election into a new FEHB plan.
Failure to do so will result in default enrollment into the lowest-cost nationwide
option for 2026, as determined by OPM.
For the combined federal workforce (active and retired), the 12.3
percent health premium increase represents a critical erosion
of effective compensation.
When juxtaposed against the announced 2026 pay raise for most active
employees, the cost of coverage is set to far outstrip any nominal income
increase, forcing households to make difficult and potentially restrictive
health care choices to manage budgets.
Issues That Affect Retired Federal Workers
Finalized 2026 Cost-of-Living Adjustments (COLA)
Despite the financial chaos of the shutdown, the finalized 2026
Cost-of-Living Adjustments (COLA) for federal annuitants provided a measure
of certainty regarding future income.
The announcement of the COLA, typically derived from Social Security
Administration data, was delayed this year due to the ongoing government shutdown.
The announced figures reflected sustained inflationary pressures,
marking the fifth consecutive year that the adjustment has been 2.5
percent or higher for Civil Service Retirement System (CSRS) beneficiaries.
The specific 2026 COLA figures are as follows:
Civil Service Retirement System (CSRS) Annuitants: Will receive a 2.8
percent increase.
Federal Employees Retirement System (FERS) Annuitants: Will receive a 2.0
percent increase.
The continued disparity in the COLA rateâan 0.8
percentage point difference between the CSRS and FERS adjustmentsâunderscores
the differential treatment of retirees under the two systems
when inflation exceeds 2 percent.
In response to this recurring gap, legislative efforts, specifically
the Equal COLA Act (H.R.
491 and S.
624), remain strongly supported by advocacy groups like the National
Treasury Employees Union (NTEU), who seek to eliminate this disparity.
The higher 2.8
percent adjustment for CSRS annuitants, based on the increase in the Consumer
Price Index for Urban Wage Earners and Clerical Workers (CPI), confirms that
inflationary pressures are currently running higher than the general 1.0
percent pay increase planned for the majority of active federal workers in
2026, reinforcing concerns about declining real wages for the current workforce.
New Medicare Physician Fee Schedule and Health Plan Coordination
For federal retirees utilizing Medicare, the Centers for Medicare & Medicaid
Services (CMS) finalized the Calendar Year 2026 Medicare Physician Fee
Schedule (PFS) final rule (CMS-1832-F).
This rule introduces key revisions to payment accuracy and care management.
A significant provision is the finalization of a modest -2.5
percent efficiency adjustment applied to select services, such
as surgical procedures, diagnostic imaging, and orthopedic services.
CMS characterized this adjustment as a means to modernize payment accuracy
and reduce unnecessary spending waste, arguing that these services
are becoming more efficient over time due to technological advancements.
While the agency stated the rule aims to improve primary care and chronic disease
management, any reduction in the fee schedule inherently raises questions
regarding potential impacts on beneficiary access or provider participation,
requiring careful monitoring.
Furthermore, as the Medicare Open Enrollment Period (OEP) overlaps
with the FEHB Open Season, federal retirees enrolled in both FEHB and
Original Medicare were reminded of a critical administrative requirement
should they wish to enroll in a private Medicare Advantage (MA) plan.
To transition to an MA plan, a retiree must actively suspend their FEHB
enrollment during the upcoming FEHB Open Season, which is scheduled from
November 10 through December 8, 2025.
For those retirees eligible for premium-free Medicare Part A,
the Public Employees' Medical and Hospital Care Act (PEMHCA) mandates
enrollment in both Parts A and B.
This continued complexity in coordinating dual benefit streams
highlights the enduring challenge faced by retirees in navigating
rising health costs and multiple, overlapping enrollment deadlines.
Retirement System Administration Updates
The Federal Retirement Thrift Investment Board (FRTIB), which manages the
Thrift Savings Plan (TSP), conducted a scheduled telephonic board meeting on
Tuesday, October 28, 2025, at 10:00 a.m.
ET.
These meetings are central to the oversight and long-term security of
the retirement accounts for millions of federal workers and retirees.
Additionally, the quarterly participant statements for the TSP, covering
activity from July 1 through September 30, 2025, were made available
online by the end of October.
On the administrative front, OPM announced new efforts on October 30,
2025, aimed at streamlining services for former employees through "Faster,
Paperless Options for Federal Retirees".
The continuity of these essential administrative functions, such as TSP
management and OPM digitization efforts, provides a notable contrast to the severe
operational and financial disruption experienced by the active, non-excepted
federal workforce during the shutdown.
Issues That Affect Current Federal Workers
Judicial Preliminary Injunction Protects Against Mass Reductions in Force
The most critical development for the active federal workforce during this
period was the successful judicial defense against attempts to use the
government shutdown as an opportunity to reduce the federal workforce.
The shutdown has been marked by direction from the Office of Management
and Budget (OMB) for agencies to consider issuing Reduction in Force
(RIF) notices to employees in programs with lapsed discretionary funding
that were deemed inconsistent with the administration's priorities.
Reports indicated that over 4,000 federal workers were targeted
for RIFs during the shutdown.
OMB deemed that agencies were authorized to direct employees to perform the
work necessary to administer RIF processes as an "excepted activity"
during the lapse in appropriations.
However, on Monday, October 28, 2025, a federal court intervened decisively.
U.S.
District Judge Susan Illston of the U.S.
District Court for the Northern District of California granted a
request from a coalition of labor unions for a preliminary injunction.
This court order explicitly prohibits the administration from issuing new RIFs or
implementing RIFs that had already been filed while the government remains shut
down and the related litigation proceeds.
The lawsuit leading to this landmark injunction was filed by a large coalition
of unions, including the American Federation of Government Employees
(AFGE), the National Treasury Employees Union (NTEU), the National Federation
of Federal Employees (NFFE), and others.
The preliminary injunction served as a vital protective
measure for the active workforce.
It directly challenged the executive branch's use of a funding lapse to
execute mass terminations, thereby preserving the stability and
integrity of the career civil service.
Advocacy groups characterized the ruling as a significant setback to
efforts targeting career public servants under the guise of the shutdown,
temporarily stabilizing the employment status of thousands of federal
workers facing immediate job loss.
The Finalized 2026 Pay Structure and Locality Freeze
While the active workforce struggled through the ongoing pay lapse,
the details of their compensation for 2026 were confirmed following
the Alternative Pay Plan issued by the President on August 28, 2025.
This finalized structure reveals a stark divergence in planned compensation
across the federal workforce:
The majority of federal employees under the General Schedule (GS) and related pay
systems are slated to receive a modest 1.0
percent base increase.
Simultaneously, OPM was directed to freeze 2026 locality rates at their 2025 levels.
In contrast, the plan mandates the use of special pay authorities
to provide an additional 2.8
percent increase for certain law enforcement officials (LEOs),
resulting in an overall raise of 3.8
percent, which is designed to match the expected military pay increase.
OPM will use Special Salary Rates (SSRs) to achieve this targeted increase.
SSRs are intended to address significant recruitment or retention problems, and
their application here is specifically linked to supporting law enforcement
personnel crucial to the Presidentâs strategy regarding border security.
This pay structure, with a 1.0
percent general base raise and frozen locality pay, represents a
notable departure from the customary alignment of federal employee
raises with military increases.
When this low general increase is weighed against the high 12.3
percent FEHB premium hike (discussed in Section 1) and the higher
inflation rate indicated by the 2.8
percent CSRS COLA (discussed in Section 2), the majority of the active federal
workforce faces a significant decline in real net compensation for 2026.
The highly targeted nature of the 3.8
percent raise for LEOs risks exacerbating morale and retention issues across non-law
enforcement sectors of the government.
Continuing Pressure on Workplace Posture
The focus on restricting telework and enforcing a return to the office remained
a dominant policy theme, even amidst the operational disruption of the shutdown.
The existing Presidential Memorandum on "Return to In-Person Work"
continues to guide agency policies, requiring a substantial increase
in meaningful in-person work.
Although Congress did not act on the matter during this specific
week, the previously House-passed SHOW Up Act of 2023 (H.R.
139) continues to signal legislative intent.
This bill would mandate executive agencies to revert to their pre-December
31, 2019, telework policies and require OPM certification that
any expanded telework positively affects agency mission and costs.
Administration officials and department leaders, including those preparing
to staff the Department of Government Efficiency, have explicitly articulated
goals of implementing five-day, in-office requirements to meet the stated objective
of trimming the federal workforce.
The structural connection between mandated return-to-office policies
and explicit workforce reduction goals suggests that telework restrictions
are being utilized strategically, not only for real property optimization
but also as an implicit mechanism to encourage attrition among employees who
depend on flexible work arrangements.
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.