Lawrence: Welcome to The FED Weekly for 23-29 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 Critical Benefits Window: Federal Benefits Open Season Update
The period from November 23 to November 29 occurs during the critical
Federal Benefits Open Season, which began on November 10, 2025, and
continues through December 8, 2025.
This enrollment period is uniquely important this year, as the recent
government shutdown severely complicated agenciesâ ability to communicate essential
information and resources to employees.
Following the resolution of the appropriations lapse, the Office of
Personnel Management (OPM) issued guidance encouraging agencies to
prioritize communicating Open Season information immediately, placing
special emphasis on notifying employees of plan changes detailed in
Benefits Administration Letter 25-401.
The 2026 Affordability Crisis
For both active employees and federal retirees, the dominant factor impacting
Open Season decision-making is the continuing escalation of healthcare costs.
OPM announced that the average enrollee share for premiums under the Federal
Employees Health Benefits (FEHB) program will rise sharply by 12.3%
for the 2026 plan year.
This increase continues a worrying trend of steep premium hikes, following a 13.5%
jump in 2025, and marks the third consecutive year of
significant rate acceleration.
Participants in the newer Postal Service Health Benefits (PSHB) program are
also facing steep increases, with their average enrollee share rising by 11.3%.
OPM attributes these relentless cost pressures to demographic
realities, noting that the average age of enrollees is highâaround
47 for active employees, rising to 60 when retirees are includedâand
to persistently high prescription drug and overall medical costs.
The reality of this dual-digit percentage increase means that for many federal
workers and retirees, the effective value of their compensation package
is being rapidly diminished by the cost of maintaining health coverage.
Hidden Cost Shifts and Benefit Design Changes
Beyond the immediate rise in premiums, an equally consequential trend is the
shifting of financial risk onto enrollees through modifications to plan designs.
Analyzing the benefit changes for 2026 reveals that for many plans, what an
enrollee pays when services are utilized is set to increase significantly.
This complexity necessitates a careful review of specific plan brochures
beyond just premium comparisons.
A clear example of this cost shifting is the increase in the catastrophic
limitâthe maximum out-of-pocket amount an enrollee must pay for
approved healthcare services annually.
For 2026, twenty-nine out of one hundred thirty-two FEHB
plans are raising this limit.
The magnitude of these increases is striking: GEHA Standard, a popular
nationwide plan, is increasing its out-of-network catastrophic limit by a
staggering 135%, raising the self-only limit from $8,500 to $20,000, and
the self-plus-one/self-and-family coverage limit from $17,000 to $40,000.
Other significant nationwide PPO plans are also increasing utilization costs.
For instance, BCBS Basic members will face higher costs for durable
medical equipment, emergency room services, inpatient and
outpatient hospital services, lab tests, and ambulance services.
GEHA High and Standard members will also see increased costs for physician visits,
emergency room visits, higher deductibles, and higher coinsurance percentages.
While utilization costs are rising, the program is also introducing new mandates.
All FEHB plans are now required to provide coverage for at least one GLP-1 medication
prescribed for weight loss, and more options than ever before are available
for In Vitro Fertilization (IVF) coverage.
However, even these newly mandated benefits may come with
increased member responsibility.
For example, some Kaiser plans are increasing the cost share
for GLP-1 medications prescribed for weight loss to 50%.
These concurrent changesârising premiums, sharply increasing catastrophic limits,
and new cost-sharing arrangements for mandated benefitsâunderscore that
the real cost of FEHB coverage is accelerating at a rate far exceeding
the official average premium increase.
Congressional Legislative Tracking: Healthcare Cost Drivers
The rapid escalation of FEHB costs, which directly affects the federal budget and
the financial security of millions of citizens, has driven active legislative
interest in Congress during this period.
The underlying structure of health care pricing is under
scrutiny, particularly related to Pharmacy Benefit Managers (PBMs).
The Senate Finance Committee announced plans this week to
reintroduce bipartisan PBM reform legislation in the coming weeks.
PBMs are the middlemen in the drug supply chain, and reform legislation
typically seeks to curb opaque practices, such as spread pricing in Medicaid,
and mandate that PBMs pass 100% of manufacturer rebates to plan sponsors.
These reforms are aimed directly at reducing prescription drug costs,
which OPM cited as a primary pressure point driving FEHB premium inflation.
In the broader healthcare arena, legislative proposals introduced
just before the reporting window signal a potential shift toward
consumer-driven healthcare models.
Senator Rick Scott (R-FL) introduced the More Affordable
Care Act on November 20, 2025.
This bill proposes creating "Trump Health Freedom Accounts".
Under this model, individuals would receive the value of federal premium tax
credits directly into these accounts, which could then be used for out-of-pocket
health care costs or, critically, to pay health insurance premiums.
The legislation is championed as a way to "fix Obamacare" and instill transparency
by providing patients with upfront pricing for medical goods and services.
While this bill targets the general healthcare market, a governmental emphasis
on consumer-driven, high-deductible models creates a political and regulatory climate
that could eventually pressure the FEHB program, potentially shifting even greater
financial responsibility onto federal employees and retirees, particularly
those requiring complex or chronic care.
Post-Shutdown Recovery and Pay Implementation
Following the enactment of the Continuing Appropriations Act of 2026 on November 12,
2025, the government resumed operations, funded through January 30, 2026.
A major administrative priority during this week was the immediate
implementation of Section 116 of the Act, which provides retroactive pay
to all federal civilian employees affected by the lapse in appropriations
that began on October 1, 2025.
This mandate covers both employees who were furloughed and those
who performed excepted work activities during the shutdown.
OPM directed agencies to prioritize the timely provision of this retroactive pay.
Furthermore, OPM recognized the potential difficulty employees might face in
immediately returning to work following the lengthy lapse and advised agencies
to consider the use of appropriate flexibilities, such as adjusting
work schedules or approving personal leave, consistent with mission needs.
This guidance aimed to ease the transition back to full operational
status for the entire workforce.
Issues That Affect Retired Federal Workers
The 2026 FERS Cost-of-Living Adjustment
For federal retirees, the most significant news this week regarding annuity income
relates to the Cost-of-Living Adjustment (COLA) for the 2026 calendar year.
The 2026 FERS COLA adjustment has been finalized at 2.0%,
effective with annuity payments beginning in January 2026.
The adjustment for FERS retirees is governed by specific legislative
constraints based on the rise in the Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI-W).
The 2026 COLA calculation utilized the average CPI-W from the
third quarter of 2025 relative to the third quarter of 2024.
Critically, FERS retirees are subject to a formula that caps the
increase when inflation is moderate: if the calculated CPI-W quarterly
average increase is between 2.0%
and 3.0%,
the actual FERS benefit increase is capped at 2.0%.
When comparing this modest 2.0%
increase in retirement income to the concurrent 12.3%
average increase in FEHB premiums, a stark fiscal reality emerges.
For many FERS annuitants, who typically rely on their annuity and Social Security
benefits as primary income streams, the benefit increase is mathematically
insufficient to cover the escalating cost of their federal health insurance alone.
This disparity results in a net effective reduction in the purchasing
power of the retireeâs fixed income, forcing difficult budgetary decisions
during the ongoing Open Season.
In related news concerning financial flexibility for retirees, the Social
Security Administration announced updated earnings limits for 2026.
For those workers younger than full retirement age, the earnings
limit will increase to $24,480.
This is relevant for retirees who choose to supplement their annuities
through part-time employment, offering them a higher threshold
before their benefits are reduced.
Thrift Savings Plan Updates and SECURE 2.0
Implementation
The Thrift Savings Plan (TSP) continues to issue guidance concerning the
implementation of the SECURE 2.0
Act, with major changes set to impact those nearing retirement.
Mandatory Roth Catch-Up Contributions
A provision set to take effect on January 1, 2026, dictates that participants
eligible to make catch-up contributions whose prior year Medicare wages (those
earned in 2025) exceed the IRS threshold for TSP-eligible positions must designate
those contributions as Roth (after-tax).
If an affected participant eligible for catch-up contributions holds
elections directed toward their Traditional (pre-tax) TSP balance, those
elections will automatically switch to Roth TSP contributions once the
annual elective deferral limit is met.
This rule change requires urgent planning, particularly for high-earning current
employees intending to retire soon.
The determination of whether this rule applies in 2026 is based on wages
earned during the 2025 calendar year.
Participants who fail to proactively adjust their tax strategy for 2026
may find their savings shifted from the Traditional balance, which defers
taxes until retirement, to the Roth balance, which requires taxes to be
paid on the contribution immediately.
This shift fundamentally alters the tax profile of their near-term savings.
Investment and Withdrawal Clarifications
The TSP also provided clarity on other matters relevant to retirees
and those nearing retirement.
As planned, the L 2025 Fund, having reached its target date, has been
rolled into the L Income Fund, the most conservative allocation
for the Lifecycle fund series.
Furthermore, the TSP reiterated the status of the 10% early
withdrawal penalty exemption for qualified public safety employees.
This exemption remains in effect for tax year 2023 and later, ensuring that if
a public safety employee separates from service with 25 years of service, their
distributions will not be subject to the 10% early withdrawal penalty, even if
they separate before reaching age 50.
Issues That Affect Current Federal Workers
The 2026 Pay Structure: Targeted Increases and General Freeze
The pay structure for General Schedule (GS) employees in 2026, stemming from
the President's Alternative Pay Plan issued on August 28, 2025, contrasts
sharply with the statutory formula.
The Alternative Pay Plan announces a decision to provide a 1.0%
base increase for 2026, while otherwise freezing locality rates at 2025 levels.
This aggregate increase falls substantially below the raise
required under standard pay law.
Based on the 3.8%
increase in the Employment Cost Index (ECI) observed in September
2024, the statutory base increase for 2026 would have been 3.3%.
By providing a 1.0%
base increase and freezing locality pay, the administration is
effectively implementing a pay raise that falls significantly short of
the increase required to maintain parity with the private sector.
Strategic Pay Prioritization for Law Enforcement
In a move that signals a significant shift toward segmented compensation, the
President directed OPM to use special salary rate authority (under 5 U.S.C.
5305) to provide an additional approximate 2.8%
pay increase for certain front-line Law Enforcement Officials (LEOs).
The goal of this targeted use of special salary rates is to align
the LEO pay increase with the 3.8%
military pay increase planned for 2026.
Special salary rates are typically established by OPM to counter existing
or anticipated recruitment and retention challenges due to factors
such as higher non-federal pay rates or undesirable working conditions.
OPM specifically cited that certain front-line LEOs are "critical
to implementing the President's strategy to secure the border,"
justifying this targeted increase.
This approach demonstrates a deliberate strategy of prioritizing compensation
rewards for specific, mission-critical groups, resulting in a fractured pay
landscape where the vast majority of the General Schedule workforce
receives a low, non-competitive increase, while select groups receive
an increase aimed at competitive parity.
This fragmentation risks exacerbating retention challenges in agencies and
job categories deemed non-priority.
Workforce Restructuring and Headcount Accountability
The executive branch is now moving to institutionalize long-term workforce
reductions through administrative guidance issued by OPM and the Office
of Management and Budget (OMB).
Following President Trump's Executive Order 14356, the guidance was
released to ensure accountability and discipline in federal hiring.
OPM Director Scott Kupor noted that the purpose of the new executive order is
to build on the administrationâs success in meeting and exceeding the goal of
four reductions for every one new hire.
Official figures indicate that the government hired approximately 68,000
people this year, while approximately 317,000 employees left the government.
The new guidance requires all executive agency heads to
submit Annual Staffing Plans and quarterly updates to OPM and OMB.
The stated goals are to ensure that headcount resources focus on the most
critical objectives, deliver maximum value to the taxpayer, and eliminate wasteful
expenses in areas that are inefficient or contradict administration priorities.
Politicization of Hiring Decisions
A key element of this restructuring is the mandate for agencies to
establish Strategic Hiring Committees.
This measure ensures that new career appointments are consistent
with the national interest and administration priorities.
By placing "Democratically accountable agency leadership" at the table for
hiring decisions, the administration is shifting control over staffing
away from traditional human resources practices and toward political alignment,
ensuring that the previously achieved workforce reductions will endure.
This policy is being implemented while OPM publicly emphasizes
the scale of the governmentâs external contractor infrastructure.
OPM estimates there are at least two times the number of contractors
employed as full-time employees (FTEs), costing the government
approximately $750 billion annually.
The focus on aggressive reduction of the civilian employee count, while
acknowledging the massive cost and reliance on contractors for specialized
or temporary labor, suggests a policy direction aimed at shrinking the permanent
civil service core while maintaining flexibility through external support.
Legislative Battle over Collective Bargaining Rights
A critical legislative maneuver just preceding this reporting week
sets the stage for a potential shift in federal labor relations.
A bipartisan coalition of House lawmakers successfully completed
a discharge petition on November 18, 2025, securing the necessary
signatures to force a floor vote on the Protect Americaâs Workforce Act (H.R.
2550).
H.R.
2550, introduced by Representatives Jared Golden (D-Maine) and
Brian Fitzpatrick (R-Pa.),
aims to nullify a pair of executive orders issued by President Trump that cited
national security to strip collective bargaining rights from an estimated
two-thirds of the federal workforce.
These executive orders impacted numerous agencies, including NASA
and federal weather agencies.
Although the orders have been tied up in litigation, with previous broad
court relief subsequently stayed, this successful discharge petition
represents a high-stakes legislative challenge to the administrationâs
core workforce management strategy.
The outcome of the forced House vote, expected to occur within or immediately
following this reporting period, will determine the near-term legal status of
collective bargaining rights for wide segments of the current federal workforce.
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.