Welcome to the November issue of the Retire Federal newsletter that covers the latest issues of interest for retiring and retired federal employees to include updates and changes for 2022 . Retire Federal exists to help prepare federal employees for retirement, provide assistance when applying for benefits, and guidance to those who need direction when navigating the maze of all the parts of your retirement benefits that fit together for financial independence.
Need to Know
Open Season ends December 13 Midnight ET. Take advantage of this opportunity to evaluate your health, dental and/or vision plans. This is one of the most valuable employee benefits of your federal career as it may continue to provide valuable coverage for you and your eligible family members throughout your career and continue into retirement. 8.2 million enrollees have a total of 275 plan choices for the 2022 plan year. Depending on your location, you will have at least two dozen plan choices to choose from. For example, an enrollee living in Washington DC has 38 plan choices, versus an enrollee living in Sioux Falls, SD with 25 plan choices. (Excludes FFS plans with availability limited to certain groups).
The 2022 biweekly maximum government contribution for most employees and annuitants (72% of the weighted average) is $244.86 for Self Only, $524.63 for Self Plus One, and $574.13 for Self and Family. The monthly maximum government contribution (72% of the weighted average) is $530.53 for Self Only, $1,136.70 for Self Plus One and $1,243.95 for Self and Family.
The average enrollee share for Federal employees and annuitants (excluding postal active employees) will increase an average of 3.8% in 2022.
18 Fee-for-Service (FFS) plans available
14 nation-wide FFS plan choices open to all
4 FFS plans with availability limited to certain groups (Compass Rose, Foreign Service Benefit Plan, Rural Carriers Benefit Plan, and Panama Canal Area Benefit Plan)
192 HMO plan choices (excluding HDHPs and CDHPs; in 2021, there were 212)
37 High Deductible Health Plan choices (HDHP), 2 of which are nation-wide (In 2021, there were 18)
28 Consumer Driven Health Plan choices (CDHP) (the same as 2021)
Important to know the 5-year rule: Most employees need to have at least self only or be covered as the plus one or a family member in a Federal Employee Health Benefits (FEHB) plan for a full 5 years immediately prior to retirement to be eligible to continue coverage in retirement. The premiums are the same for employees as retirees. It is not necessary to maintain the same health plan for the 5 year period. Retirees also participate in the annual open season.
Employees can use Flexible Spending Accounts for substantial tax savings on expenses that would normally be paid with after-tax dollars. Check out qualified expenses, to see that there are more reasons to set aside tax-free dollars than you may have imagined. This wonderful benefit does not transition into retirement, however, so take advantage of it while you are still working.
Limits and Carryover of FSA: For the 2022 plan year, Health Care Flexible Spending Accounts (HCFSA) and Limited Expense Flexible Spending Accounts (LEXFSA) have a minimum enrollment amount of $100 and a maximum amount of $2,850. The carry over amount increased to $570, however, any available funds remaining from the end of 2021, will also carry over to 2022, if the participant re-enrolls for the 2022 plan year. Assuming a combined tax rate of 30%, including FICA, state and federal income taxes and the maximum contribution of $2,850 to your HCFSA and LEXFSA (used by those who are eligible for a health savings account / HSA and enrolled in a high deductible health plan / HDHP), can save you $855 next year! The Dependent Care Flexible Spending Account (DCFSA) limit remains the same at $5,000 for 2022. The 2021 grace period is extended through December 31, 2022 for all DCFSA participants.
COLAs for CSRS and FERS retirees will be effective December 1 and reflected in the January annuity payment. CSRS retirees will receive 5.9% and most FERS retirees 4.9%. Your first COLA will be prorated based on the number of months you were retired after December 2020. Most FERS retirees will see their first COLA after they turn age 62, however special groups such as law enforcement officers and firefighters receive immediate COLAs, regardless of their age at retirement. Disability and survivor annuitants also receive annual FERS COLAs, regardless of age. The FERS supplement is not adjusted for COLA.
The 5.9 % cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 millionSocial Security beneficiaries in January of 2022.
The annual Earning Test applied to most retirees who receive the FERS Annuity Supplement and individuals receiving a Social Security benefit who are under their Full Retirement Age (65 - 67, depending on your year of birth) increases to $19,560 for 2022. In the spring of 2022 the Office of Personnel Management will mail the 2021 earnings surveys to retirees who are receiving the FERS Supplement. If the survey earnings are in excess of the 2021 earnings limit of $18,960, the supplement will be reduced or terminated beginning with the July 2022 FERS annuity payment. For special groups such as law enforcement officers and firefighters, the earnings limit doesn't apply until after you reach the FERS Minimum Retirement Age (55 - 57, depending on your year of birth).
The Medicare Part B standard premium rate will increase to $170.10 / month / person for 2022 (an increase of $21.60 / month over 2021).
Beneficiaries who file individual tax returns with modified adjusted gross income less than or equal to $91,000 will pay the standard rate.
Beneficiaries who file joint tax returns with modified adjusted gross income less than or equal to $182,000 will each pay the standard rate.
Review 2022 Medicare Income-Related Monthly Adjustment Amounts (IRMAA)
If Social Security determines that you should pay an IRMAA, they will mail you a notice called an initial determination. This notice should include information on how to request a new initial determination. You can request that Social Security revisit its decision if you have experienced a life-changing event that caused an income decrease, or if you think the income information Social Security used to determine your IRMAA was incorrect or outdated.
Contact the Social Security Administration at 1-800-772-1213 if your income has gone down. They may have you complete form SSA-44 Medicare IRMAA Life Changing Event.
General Schedule Feds may see 2.7% average pay increase for 2022. Specifically, the president is recommending a 2.2% across-the-board pay raise, with an additional 0.5% locality pay adjustment, totaling a 2.7% average increase. Final decisions on employee pay increases usually are made the end of December. For most employees, the increase would be effective January 2, 2022.
Note for end of the year retirees: The January pay increase will be reflected in the lump sum annual leave payments for those retiring on December 31, 2021. Due to payroll processing, be aware that the lump sum leave payment may be initially paid at the 2021 rate with a supplemental payment that follows a pay period or two later.
TSP maximum employee contributions increase to $20,500 for 2022. The catch-up contributions for those turning age 50 in 2022 or older remain the same at $6,500. Many employees can set up their contributions December 6 - 16, 2021 for the 2022 tax year. You must contribute at least 5% per pay period to receive the full agency match. To contribute the maximum for 2022, you will need to contribute $789 per pay period in order to spread the $20,500 evenly over 26 biweekly pay periods. In order to contribute $27,000 ($20,500 + $6,500) for 2022, your biweekly contribution over 26 pay periods will total $1,039.
Learning Opportunities
Plan your Federal Retirement Podcasts with Tammy Flanagan and Micah Shilanski, CFP partner provide fun and informative retirement planning guidance
Retirement Planning Tammy's weekly column appearing on www.govexec.com covers what you need to know for a successful transition to retirement. Get the latest stories and updates sent to your inbox every Friday.
TSP offers free webinars for federal employees and uniform members.
Tammy's team provides one-on-one consultation on all your important retirement decisions as well as navigating FEHB and Medicare. Contact the team here.
NARFE Federal Benefits Institute's upcoming webinars (must be a NARFE member to register). Join NARFE today!
Tammy Flanagan and Mark Keen, CFP® to learn what happens when Leaving Federal Services Before Retirement: What you Need to Know on Thursday, December 2 at 2 p.m. ET
Mark Keen, CFP® to discover Estate Planning Strategies for Feds on Thursday, December 16 at 2 p.m. ET