WEBVTT NOTE This file was generated by Descript 00:00:00.039 --> 00:00:07.159 Lawrence: Welcome to The FED Weekly for 28 December 2025 to 3 January 2026, your 00:00:07.159 --> 00:00:11.659 essential weekly briefing on the policies and proposals shaping your career, 00:00:12.199 --> 00:00:14.890 your benefits, and your retirement. 00:00:15.560 --> 00:00:19.420 Whether you’re a current federal employee navigating changes in the civil service, 00:00:19.840 --> 00:00:24.409 or a retiree keeping a close watch on your hard-earned pension and healthcare, this 00:00:24.409 --> 00:00:29.000 is your source for the latest news from Capitol Hill and the executive branch. 00:00:29.662 --> 00:00:34.262 Each week, we cut through the noise to bring you the critical updates on budget 00:00:34.262 --> 00:00:40.032 negotiations, pay raises, workforce policies, and the legislative battles that 00:00:40.032 --> 00:00:42.271 directly impact the federal community. 00:00:42.641 --> 00:00:45.561 Let's get you up to speed on what happened this past week. 00:00:46.207 --> 00:00:49.348 Issues That Affect Current and Retired Federal Workers 00:00:49.937 --> 00:00:54.168 The final week of 2025 brought a mix of relief and administrative 00:00:54.168 --> 00:00:56.397 complexity regarding holiday time. 00:00:56.837 --> 00:01:00.107 To celebrate Christmas, President Trump issued an Executive Order 00:01:00.248 --> 00:01:04.218 excusing federal employees from duty on Wednesday, 24 December 00:01:04.218 --> 00:01:08.617 2025, and Friday, 26 December 2025. 00:01:09.268 --> 00:01:13.377 This executive action effectively created a five-day break for many, 00:01:13.637 --> 00:01:18.418 excluding those required for national security, defense, or other public needs. 00:01:19.031 --> 00:01:22.672 However, this gift of time came with a specific statutory catch 00:01:22.672 --> 00:01:26.432 that affected both active workers with "use or lose" leave and 00:01:26.432 --> 00:01:28.321 retirees who might be re-employed. 00:01:28.872 --> 00:01:32.752 The Office of Personnel Management, or OPM, clarified that for 00:01:32.752 --> 00:01:36.401 pay and leave purposes, these days were treated as holidays. 00:01:36.901 --> 00:01:40.362 Consequently, if an employee had previously scheduled "use or lose" 00:01:40.362 --> 00:01:45.651 annual leave for 24 December or 26 December, that leave was forfeited. 00:01:46.162 --> 00:01:51.611 Under Title 5 of the United States Code, Section 6304(d), the law does 00:01:51.611 --> 00:01:55.471 not permit the restoration of leave when a holiday prevents its use. 00:01:56.091 --> 00:02:00.411 While employees could donate this excess leave to approved recipients under the 00:02:00.411 --> 00:02:05.232 voluntary leave transfer program, the "use or lose" deadline of 10 January 00:02:05.232 --> 00:02:08.561 2026 remained a hard stop for many. 00:02:09.211 --> 00:02:12.461 As we transition into January, the financial reality of 00:02:12.461 --> 00:02:14.152 healthcare costs is hitting home. 00:02:14.561 --> 00:02:18.132 The 2026 plan year for the Federal Employees Health Benefits 00:02:18.132 --> 00:02:20.831 program, or FEHB, has begun. 00:02:21.352 --> 00:02:24.911 The overall average premium increase for the program is 10.2 00:02:24.911 --> 00:02:25.471 percent. 00:02:25.901 --> 00:02:29.442 However, the impact on your wallet is even more significant. 00:02:29.782 --> 00:02:34.792 The average employee and retiree share of the premium has risen by 12.3 00:02:34.792 --> 00:02:35.352 percent. 00:02:35.422 --> 00:02:36.922 This follows a 13.5 00:02:36.922 --> 00:02:42.512 percent increase in 2025, marking two consecutive years of double-digit hikes. 00:02:43.095 --> 00:02:48.146 For those enrolled in the Postal Service Health Benefits program, or PSHB, the pain 00:02:48.146 --> 00:02:53.486 is slightly less but still acute, with an average enrollee share increase of 11.3 00:02:53.486 --> 00:02:54.035 percent. 00:02:54.675 --> 00:02:58.795 These increases are driven by higher utilization rates and medical inflation. 00:02:59.355 --> 00:03:04.265 For example, self-only enrollees in certain high-option plans, such as the 00:03:04.265 --> 00:03:08.545 Aetna Open Access High Option in Northern New Jersey, are seeing premiums so 00:03:08.545 --> 00:03:13.906 high that the government’s contribution covers only 27 percent of the total cost. 00:03:14.705 --> 00:03:17.826 This is a stark reminder to check your annuity statements and 00:03:17.826 --> 00:03:19.695 pay stubs carefully this month. 00:03:20.638 --> 00:03:24.048 Turning to Capitol Hill, the legislative machinery is grinding 00:03:24.048 --> 00:03:27.147 back into motion with high stakes for the federal community. 00:03:27.577 --> 00:03:32.438 The government is currently operating under a Continuing Resolution, or CR, that 00:03:32.438 --> 00:03:36.577 was signed into law on 12 November 2025. 00:03:37.057 --> 00:03:41.128 This funding measure expires on 30 January 2026. 00:03:41.743 --> 00:03:44.614 The urgency of this deadline cannot be overstated. 00:03:45.463 --> 00:03:48.703 Congress has only a few weeks to pass the remaining nine annual 00:03:48.703 --> 00:03:52.183 appropriations bills for fiscal year 2026. 00:03:52.853 --> 00:03:58.513 The previous lapse in appropriations, which began on 1 October 2025, resulted 00:03:58.513 --> 00:04:01.224 in a record-breaking 43-day shutdown. 00:04:01.724 --> 00:04:06.263 With the House of Representatives reconvening on 3 January 2026 and the 00:04:06.263 --> 00:04:11.244 Senate on 5 January 2026, the threat of another shutdown looms large. 00:04:11.835 --> 00:04:15.145 There are specific legislative items you need to be aware of. 00:04:16.096 --> 00:04:21.275 Public Law 119-21, known as the reconciliation bill enacted in 00:04:21.275 --> 00:04:26.325 July 2025, continues to drive changes across federal agencies. 00:04:26.926 --> 00:04:30.955 Specifically, this law prohibits the Department of Agriculture from increasing 00:04:30.955 --> 00:04:34.775 the cost of the Thrifty Food Plan based on a reevaluation of the market 00:04:34.775 --> 00:04:39.195 basket of goods, tying adjustments strictly to the Consumer Price Index. 00:04:39.236 --> 00:04:43.466 This legislative constraint is altering the workload and regulatory focus for 00:04:43.466 --> 00:04:48.336 employees at the USDA and has downstream effects on benefits administration. 00:04:49.583 --> 00:04:53.214 Furthermore, the "Department of Government Efficiency," or DOGE, 00:04:53.494 --> 00:04:58.123 established by Executive Order, continues to influence legislative priorities. 00:04:58.703 --> 00:05:02.333 While not a bill itself, its recommendations are fueling the 00:05:02.333 --> 00:05:06.654 appropriations debates, with proposals for deep cuts to foreign aid and 00:05:06.683 --> 00:05:11.384 agency restructuring that will likely feature prominently in the negotiations 00:05:11.384 --> 00:05:13.843 leading up to the 30 January deadline. 00:05:14.487 --> 00:05:17.927 Finally, for this section, we must note the operating status of the 00:05:17.927 --> 00:05:19.987 government as we closed out the week. 00:05:20.478 --> 00:05:24.917 Despite the holiday closures, essential operations continued, and the OPM 00:05:24.917 --> 00:05:26.717 status for the Washington, D.C. 00:05:26.717 --> 00:05:32.507 area returned to "Open" with normal operating procedures by 4 January 2026. 00:05:33.157 --> 00:05:37.788 As we move into the heart of winter, OPM has reminded all employees and retirees 00:05:37.987 --> 00:05:42.667 that "unscheduled telework" and other flexibilities remain vital tools during 00:05:42.667 --> 00:05:47.538 severe weather, a policy that interacts complexly with the new return-to-office 00:05:47.538 --> 00:05:49.648 mandates we will discuss later. 00:05:50.213 --> 00:05:52.783 Issues That Affect Retired Federal Workers 00:05:53.359 --> 00:05:57.549 For our retiree listeners, the most significant news of the week concerns your 00:05:57.549 --> 00:06:03.029 annuity payments and the Cost-of-Living Adjustment, or COLA, for 2026. 00:06:03.741 --> 00:06:07.592 The 2026 COLA has been finalized and is effective for 00:06:07.592 --> 00:06:10.581 payments dated 2 January 2026. 00:06:11.061 --> 00:06:13.812 For retirees under the Civil Service Retirement System, or 00:06:13.812 --> 00:06:18.831 CSRS, and for Social Security beneficiaries, the adjustment is 2.8 00:06:18.831 --> 00:06:19.422 percent. 00:06:20.121 --> 00:06:24.142 This reflects the increase in the Consumer Price Index for Urban Wage 00:06:24.142 --> 00:06:28.111 Earners and Clerical Workers, or CPI-W, from the third quarter of 00:06:28.111 --> 00:06:31.402 2024 to the third quarter of 2025. 00:06:32.211 --> 00:06:35.882 However, for those retired under the Federal Employees Retirement 00:06:35.882 --> 00:06:38.791 System, or FERS, the adjustment is 2.0 00:06:38.791 --> 00:06:39.291 percent. 00:06:39.751 --> 00:06:43.791 This discrepancy arises from the statutory formula governing FERS COLAs. 00:06:44.442 --> 00:06:47.171 When the CPI-W increase falls between 2.0 00:06:47.171 --> 00:06:48.352 percent and 3.0 00:06:48.352 --> 00:06:51.522 percent, FERS retirees receive a flat 2.0 00:06:51.522 --> 00:06:51.952 percent. 00:06:52.432 --> 00:06:56.872 This "diet COLA" means that FERS retirees are effectively losing 0.8 00:06:56.872 --> 00:07:00.381 percent in purchasing power relative to inflation this year. 00:07:01.031 --> 00:07:04.031 We must also address a technical issue that arose this week. 00:07:04.202 --> 00:07:08.241 NARFE has reported that some federal annuitants received annuity 00:07:08.241 --> 00:07:13.502 statements dated 1 December 2025 that contained errors regarding 00:07:13.502 --> 00:07:16.582 the January 2026 COLA amounts. 00:07:17.041 --> 00:07:20.811 If your statement shows a COLA that does not align with the 2.8 00:07:20.811 --> 00:07:22.342 percent or 2.0 00:07:22.342 --> 00:07:25.881 percent figures we just discussed, do not be alarmed. 00:07:26.451 --> 00:07:29.651 This appears to be a reporting error on the statement itself, 00:07:29.682 --> 00:07:33.361 and the actual electronic payments processed by the Treasury should 00:07:33.361 --> 00:07:34.931 reflect the correct amounts. 00:07:35.651 --> 00:07:39.802 If you do notice a discrepancy in your actual bank deposit, NARFE 00:07:39.802 --> 00:07:44.462 advises contacting OPM immediately, though be prepared for wait times 00:07:44.462 --> 00:07:46.131 given current staffing levels. 00:07:46.809 --> 00:07:51.330 On the legislative front, there is activity regarding Social Security that 00:07:51.330 --> 00:07:56.279 is relevant to many federal retirees, particularly those with "mixed" service. 00:07:56.950 --> 00:08:03.089 Between 28 December 2025 and 3 January 2026, the House of 00:08:03.089 --> 00:08:06.630 Representatives advanced several bills aimed at improving the Social 00:08:06.630 --> 00:08:08.630 Security Administration's services. 00:08:08.700 --> 00:08:13.800 These bills focus on enhancing protections for identity theft victims and improving 00:08:13.800 --> 00:08:18.759 processes for replacing lost or stolen Social Security cards for children. 00:08:20.020 --> 00:08:23.289 While these are not the sweeping repeals of the Windfall Elimination 00:08:23.289 --> 00:08:26.840 Provision or the Government Pension Offset that many are hoping for, 00:08:27.360 --> 00:08:32.160 they represent a bipartisan effort to fix the administrative plumbing 00:08:32.160 --> 00:08:33.789 of the Social Security system. 00:08:34.527 --> 00:08:38.168 Additionally, for those managing their healthcare costs, it is important to 00:08:38.168 --> 00:08:40.328 note the changes to Medicare Part D. 00:08:40.678 --> 00:08:44.517 With the new plan year, the cap on out-of-pocket prescription 00:08:44.517 --> 00:08:46.687 drug costs is in full effect. 00:08:47.238 --> 00:08:51.278 For retirees who have paired their FEHB coverage with Medicare Part 00:08:51.278 --> 00:08:55.787 D, this provides a significant safeguard against high drug prices. 00:08:56.447 --> 00:09:00.168 NARFE has highlighted that recent improvements have made Medicare Part 00:09:00.168 --> 00:09:04.678 D a more viable option for federal annuitants, potentially offering savings 00:09:04.678 --> 00:09:07.057 over standard FEHB drug coverage alone. 00:09:07.643 --> 00:09:10.774 We also want to highlight a reminder regarding the "Windfall 00:09:10.774 --> 00:09:12.053 Elimination Provision." 00:09:12.473 --> 00:09:18.704 A law passed late in 2024 repealed this provision for many, and 2026 marks 00:09:18.704 --> 00:09:20.824 a full year of its implementation. 00:09:21.454 --> 00:09:25.503 This means that for eligible retirees, your Social Security benefits 00:09:25.503 --> 00:09:29.573 based on private sector work are no longer reduced simply because 00:09:29.573 --> 00:09:31.323 you receive a federal pension. 00:09:31.454 --> 00:09:35.204 This is a massive victory that continues to pay dividends in 00:09:35.204 --> 00:09:36.964 your monthly checks this year. 00:09:37.574 --> 00:09:42.014 Finally, for those who retired in the calendar year 2025, remember 00:09:42.014 --> 00:09:44.953 that your COLA for 2026 is prorated. 00:09:45.344 --> 00:09:47.653 You will not receive the full 2.8 00:09:47.653 --> 00:09:49.174 percent or 2.0 00:09:49.174 --> 00:09:49.703 percent. 00:09:50.394 --> 00:09:54.753 Instead, you will receive one-twelfth of the applicable increase for each 00:09:54.753 --> 00:09:59.604 month you were on the retirement rolls before 1 December 2025. 00:10:00.044 --> 00:10:04.213 If you retired late in the year, your increase will be minimal, but you will 00:10:04.213 --> 00:10:07.264 be eligible for the full COLA in 2027. 00:10:07.875 --> 00:10:10.445 Issues That Affect Current Federal Workers 00:10:11.039 --> 00:10:14.099 If you are currently on the payroll, you are navigating one 00:10:14.099 --> 00:10:17.280 of the most turbulent periods in the history of the civil service. 00:10:17.900 --> 00:10:24.350 The news from 28 December 2025 to 3 January 2026 has brought clarity 00:10:24.350 --> 00:10:29.469 on pay, but considerable anxiety regarding telework and job security. 00:10:30.067 --> 00:10:31.618 First, the paycheck. 00:10:31.998 --> 00:10:34.437 The 2026 pay raise is official. 00:10:34.837 --> 00:10:38.937 On 18 December 2025, President Trump signed the Executive Order 00:10:38.937 --> 00:10:40.738 finalizing the pay schedules. 00:10:41.198 --> 00:10:45.838 For the vast majority of the General Schedule workforce, the raise is a 1.0 00:10:45.838 --> 00:10:48.437 percent across-the-board increase to base pay. 00:10:48.888 --> 00:10:53.777 Crucially, locality pay percentages have been frozen at 2025 levels. 00:10:54.357 --> 00:10:58.857 This means the "locality adjustment" on your pay stub will not change, resulting 00:10:58.857 --> 00:11:01.827 in a net average increase of just 1.0 00:11:01.827 --> 00:11:02.417 percent. 00:11:03.048 --> 00:11:08.068 This is significantly lower than the increases seen in 2024 and 2025 and 00:11:08.068 --> 00:11:12.978 effectively represents a decline in real wages when adjusted for inflation. 00:11:13.719 --> 00:11:16.509 However, there is a major exception for law enforcement. 00:11:16.939 --> 00:11:23.289 On 31 December 2025, OPM Director Scott Kupor issued a memorandum approving 00:11:23.289 --> 00:11:28.190 special salary rates for certain federal civilian law enforcement personnel. 00:11:28.669 --> 00:11:32.450 This directive, stemming from the President's Executive Order, provides an 00:11:32.450 --> 00:11:35.130 additional increase of approximately 2.8 00:11:35.130 --> 00:11:40.290 percent for eligible officers, bringing their total raise to roughly 3.8 00:11:40.370 --> 00:11:40.940 percent. 00:11:41.089 --> 00:11:45.030 This applies to specific job series in agencies like Customs and Border 00:11:45.030 --> 00:11:48.990 Protection and is intended to align civilian law enforcement pay with 00:11:48.990 --> 00:11:51.560 the 2026 military pay increase. 00:11:52.470 --> 00:11:56.549 OPM has posted these new special rate tables, L001 00:11:56.549 --> 00:11:58.839 through L133, on their website. 00:11:59.483 --> 00:12:03.104 The most explosive news of the week, however, concerns telework. 00:12:03.773 --> 00:12:09.444 On Wednesday, 31 December 2025, OPM issued a new "Guide to Telework and 00:12:09.444 --> 00:12:11.353 Remote Work in the Federal Government". 00:12:12.004 --> 00:12:16.474 This guidance serves as the implementation blueprint for the President's memorandum 00:12:16.474 --> 00:12:18.724 titled "Return to In-Person Work". 00:12:19.327 --> 00:12:23.557 The guidance is blunt: agencies are instructed to "take all necessary steps 00:12:23.557 --> 00:12:27.668 to terminate remote work arrangements" and require employees to return to their 00:12:27.668 --> 00:12:29.998 duty stations on a full-time basis. 00:12:30.628 --> 00:12:34.348 The guidance specifies that telework cannot be used to "avoid 00:12:34.348 --> 00:12:38.058 working full-time, in-person from an agency worksite on a 00:12:38.058 --> 00:12:39.857 regular and recurring basis". 00:12:40.648 --> 00:12:44.558 While there are limited exceptions for military spouses, reasonable 00:12:44.558 --> 00:12:48.738 accommodations, and compelling agency needs, the era of widespread 00:12:48.738 --> 00:12:50.628 remote work appears to be ending. 00:12:51.291 --> 00:12:53.682 Union reaction has been swift and fierce. 00:12:54.281 --> 00:12:58.592 AFGE National President Everett Kelley issued a statement condemning 00:12:58.592 --> 00:13:02.531 the directive, arguing that it "turns back the clock to before 00:13:02.531 --> 00:13:06.831 2010" and ignores the operational efficiencies gained through telework. 00:13:07.801 --> 00:13:11.891 AFGE has also flagged that legislation introduced by Representative James 00:13:11.891 --> 00:13:16.551 Comer, such as the "Stopping Home Office Work’s Unproductive Problems Act," 00:13:16.551 --> 00:13:20.762 creates a legislative pincer movement alongside the executive crackdown. 00:13:21.452 --> 00:13:25.992 The NTEU has vowed to fight these changes by enforcing existing collective 00:13:25.992 --> 00:13:29.452 bargaining agreements, arguing that contracts signed before the 00:13:29.452 --> 00:13:32.121 executive action should remain valid. 00:13:32.914 --> 00:13:35.554 The workforce itself is also shrinking. 00:13:35.973 --> 00:13:40.043 The "Department of Government Efficiency," led by Elon Musk, is driving a 00:13:40.043 --> 00:13:42.443 campaign of mass buyouts and layoffs. 00:13:42.784 --> 00:13:46.063 We are seeing the fallout of the "Deferred Resignation Program," 00:13:46.324 --> 00:13:51.394 with reports indicating that over 150,000 employees have taken buyouts. 00:13:51.833 --> 00:13:56.624 The Department of Education has been particularly hard hit, with a 50 percent 00:13:56.624 --> 00:13:58.863 workforce reduction plan in motion. 00:13:59.333 --> 00:14:04.523 In response, the American Federation of Teachers filed a lawsuit on 29 December 00:14:04.523 --> 00:14:09.113 2025, challenging the Department of Education's termination of grants 00:14:09.113 --> 00:14:13.444 for community schools, alleging the cuts were made "on a whim" and 00:14:13.444 --> 00:14:15.773 violated administrative procedures. 00:14:16.494 --> 00:14:20.674 At the Department of Veterans Affairs, a massive reorganization of 00:14:20.674 --> 00:14:23.603 the Veterans Health Administration was announced this week. 00:14:23.864 --> 00:14:28.523 While the VA claims this is not a reduction in force, senators have raised 00:14:28.523 --> 00:14:34.224 alarms about the elimination of up to 35,000 vacant healthcare positions, 00:14:34.523 --> 00:14:37.023 fearing it will degrade care for veterans. 00:14:37.643 --> 00:14:40.474 Finally, we must discuss your retirement savings. 00:14:40.883 --> 00:14:46.254 The Thrift Savings Plan, or TSP, contribution limits have changed for 2026. 00:14:46.724 --> 00:14:50.863 The elective deferral limit has increased to 24,500 dollars. 00:14:51.214 --> 00:14:54.604 The standard catch-up contribution limit for those turning 50 or 00:14:54.633 --> 00:14:57.303 older is now 8,000 dollars. 00:14:57.784 --> 00:15:01.653 Additionally, a new "super catch-up" tier created by the SECURE 2.0 00:15:01.653 --> 00:15:08.874 Act allows participants aged 60, 61, 62, or 63 to contribute up to 11,250 00:15:08.874 --> 00:15:10.944 dollars in catch-up contributions. 00:15:11.542 --> 00:15:15.251 But there is a critical new rule: the mandatory Roth catch-up. 00:15:15.821 --> 00:15:23.052 Starting 1 January 2026, if your FICA wages in 2025 were greater than 150,000 00:15:23.052 --> 00:15:27.711 dollars, you must make your catch-up contributions as Roth contributions. 00:15:28.221 --> 00:15:32.061 You are no longer permitted to make pre-tax catch-up contributions if 00:15:32.061 --> 00:15:33.871 you exceed this income threshold. 00:15:34.381 --> 00:15:39.481 This is a major change that will increase your taxable income for 2026. 00:15:39.541 --> 00:15:43.631 Payroll providers are currently implementing this check, but you 00:15:43.631 --> 00:15:47.822 should review your Leave and Earnings Statement carefully to ensure your 00:15:47.822 --> 00:15:50.122 contributions are not rejected. 00:15:50.826 --> 00:15:54.065 And that’s a wrap on this week’s Federal Workforce Roundup. 00:15:54.446 --> 00:15:58.605 The landscape for federal employees and retirees is constantly shifting, 00:15:58.946 --> 00:16:03.586 with major decisions being made about everything from pay and job security 00:16:03.855 --> 00:16:07.886 to retirement benefits and the very structure of the civil service. 00:16:08.316 --> 00:16:10.456 Staying informed is your best tool. 00:16:10.786 --> 00:16:15.216 Be sure to subscribe wherever you get your podcasts, so you never miss an update. 00:16:15.833 --> 00:16:16.983 Thanks for tuning in. 00:16:17.024 --> 00:16:19.963 We’ll be back next week to track the latest developments 00:16:19.963 --> 00:16:21.233 and what they mean for you. 00:16:21.443 --> 00:16:24.734 Until then, stay engaged and be well.