The Latest Buzz
Winter 2025
Thank you for signing up to receive the Retire Federal newsletter! This issue focuses on 2025 changes and what you need to know for a smooth transition to retirement. Retire Federal exists to educate you in navigating the maze of your retirement benefits and provide the assistance you need to make decisions that lead to fewer delays and more satisfaction in retirement, knowing you are receiving your earned benefits.
What Retirees Need to Know
Now is the time to review your annuity statements
Your annuity statement is now available at OPM's Retirement Services Online https://www.servicesonline.opm.gov/. Use the Services Online Dashboard and select a menu item to open. Annuity statements are usually available before the payment date (the first business day of a month), and the 1099R is now available for your 2024 tax filing. Your January 2nd annuity payment included the 2024 COLA that took effect on December 1, 2024 (See below). The February 3rd payment will reflect the 2025 premiums for FEHB and FEDVIP coverage if you are enrolled for this year.
Cost-of-Living Adjustment (COLA)
The COLA for retirees was announced in October 2024 and was effective on December 1st, as reflected in your January 2025 annuity payment. If you are a FERS retiree under age 62 or a disability annuitant in the first 12 months of receiving your disability retirement benefit, you did not receive a COLA adjustment. For retirees eligible for immediate COLAs, but you retired in 2024, your first COLA is prorated based on the number of months you retired before December 1st. Special groups such as law enforcement officers, firefighters, and survivor annuitants receive immediate COLAs beginning the first year of benefits.
CSRS benefits increased 2.5%
FERS benefits increased 2.0%.
Social Security benefits increased 2.5%
Military retirement benefits increased 2.5%
If you recently retired on December 31, 2024, remember that your annuity commenced on January 1, 2025. Your first COLA will be paid in your January 2026 annuity payment and will reflect 11/12 of the 2025 increase.
Insurance Reminder:
Is it time to review your Federal Employees Group Life Insurance (FEGLI) coverage and Designation of Beneficiaries? The Fall 2022 Newsletter provides details on what to consider.
Did you know you can reduce your coverage anytime by submitting a request to OPM? See how to contact OPM above. Remember that Optional FEGLI premiums increase every five years on your birthday (50, 55, 60, 65, 70, 75, & 80).
If you are not receiving Social Security benefits at age 65, apply for Medicare Part A, whether you remain employed or have already retired. Your initial enrollment period (IEP) for Medicare begins three months before your 65th birthday and ends three months after your birthday (seven months total).
Recent retirees over 65 and their spouses over 65 who are covered by "current employment" health insurance will have a Special Enrollment Period (SEP) to enroll in Medicare Part B that lasts up to eight months following the retirement date. Enrolling during the SEP will avoid the penalty for late enrollment. There is a General Enrollment Period (GEP) every year from January 1st through March 31st, with coverage commencing the month after enrollment. A 10% permanent late enrollment surcharge (based on the standard Part B premium) is assessed every 12 months from the end of your IEP or from the month after your health insurance coverage based on "current employment" has ended.
Moving or changing Residence?
You'll need to submit a change of address to the following:
OPM's Moving Checklist: https://www.opm.gov/retirement-center/my-annuity-and-benefits/life-events/moving-checklist.pdf
CSRS or FERS retirement, visit: https://www.opm.gov/support/retirement/how-to/change-your-mailing-address/
TSP: https://www.tsp.gov/tsp-basics/update-your-mailing-address/
Social Security and Medicare: https://www-origin.ssa.gov/myaccount/change-of-address.html
FEDVIP and FLTCIP (Dental, Vision, Long-Term Care Insurance): Contact BENEFEDS: https://www.benefeds.gov/contact
Thrift Savings Plan
Annual statements: If you have provided your email address to the TSP, your yearly account statements will be delivered to you electronically only inside My Account starting this year. Quarterly statements and many other TSP notices have already been delivered this way. While some electronic notices will go directly to your preferred email address on file, most will be posted in your secure participant mailbox in My Account.
You’ll receive your statement electronically if:
You have set up your My Account login since June 1, 2022, and have not chosen postal mail as your delivery preference.
You have not set up your My Account login but have an email on file from before June 1, 2022.
You’ll receive your statement by postal mail if:
You have set up your My Account login since June 1, 2022, and have chosen postal mail as your delivery preference.
You have not set up your My Account login or have an email address on file.
If you want to change your delivery preference or update your email address, log in to My Account and review the information under “Manage Communications.” You can find instructions on how to update your mailing address on tsp.gov.
Life expectancy recalculation notices — TSP life expectancy installments will be recalculated according to required updates to the assumptions used in determining those amounts. In early January, they will send notices with more information, including the recalculated amounts, to participants receiving those installments. Notices will go out based on participants’ delivery preferences on file (by mail or online through the secure participant mailbox in My Account).
Required minimum distribution (RMD) notices — In early January, they will mail RMD calculation notices to separated participants who will be 73 and older in 2025 and to spousal beneficiaries with RMDs due for the 2025 calendar year. If you haven’t done so already, we encourage you to add direct deposit information in My Account to receive your money quickly, safely and easily.
Details are in the TSP Booklet 26, Tax Rules About TSP Payments.
What Employees Need to Know
January Pay Adjustments
The Pay Adjustment for most employees is the first full pay period in 2025 (January 12 for most payroll systems). A comprehensive list of pay tables are located at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/
Review your Leave and Earnings Statements
Remember to review your Leave and Earnings Statement (LES). Generally, these are available online through your electronic payroll portal (i.e., myPay, Employee Express, etc.). You'll want to look at the one for the first full pay period of 2025; it will reflect the pay adjustment and any changes you made to your Federal Employees Health Benefits (FEHB) plan and the Federal Employees Dental and Vision Insurance Program (FEDVIP) plans. Review the deductions for your Federal Employees Group Life Insurance (FEGLI). When your pay rate increases, remember that the amount of your Basic FEGLI and Option B, multiples of your salary, also will increase.
Thrift Savings Plan
While looking at your LES, check to ensure you contribute as much as possible to your TSP account. The annual limits for 2025:
$23,500 regular
$ 7,500 catch-up
$11,250 additional catch-up for participants ages 60,61,62, 63
You can contribute up to the annual limit even if you plan to retire in 2025; you may increase your biweekly withholding to maximize your contributions before you separate. Remember, however, that you will miss out on maximizing the agency matching contributions if you don't contribute at least 5% each pay period.
Medicare
If you are not receiving Social Security benefits at age 65, apply for Medicare Part A, whether you remain employed or have already retired. Your initial enrollment period (IEP) for Medicare begins three months before your 65th birthday and ends three months after your birthday (seven months total).
To continue contributing to a Health Savings Account (HSA) with a High Deductible Health Plan (HDHP), you may wish to delay Medicare A & B enrollment. See your HDHP Plan Brochure for more details.
Recent retirees over 65 and their spouses over 65 who are covered by "current employment" health insurance will have a Special Enrollment Period (SEP) to enroll in Medicare Part B that lasts up to eight months following the retirement date. Enrolling during the SEP will avoid the penalty for late enrollment.
There is a General Enrollment Period (GEP) every year from January 1st through March 31st, with coverage commencing the month after enrollment. A 10% permanent late enrollment surcharge (based on the standard Part B premium) is assessed every 12 months from the end of your IEP or the month after your health insurance coverage based on "current employment" has ended.
Medicare Parts A, B, C, and D Yes or No?
As you approach age 65, you may find your mailbox stuffed with marketing information about Medicare Advantage plans (Part C), Medicare prescription drug plans (Part D), Medicare supplemental coverage, and how to contact experts to help you choose the best coverage to complement your Medicare Parts A and B coverage.
Since most federal retirees will continue coverage under FEHB (or PSHB starting in 2025 for Postal retirees) or TRICARE for Life for military retirees, you won't need Medigap (Medicare supplemental insurance) or Medicare Part C, also known as Medicare Advantage, that are advertised on TV or in the mail that are commercially available.
Most federal annuitants remain covered by FEHB after enrollment in Medicare. If your health insurance premiums are deducted from a CSRS or FERS retirement benefit rather than a current employment paycheck, you will find that Medicare Parts A and B will be the primary payer, and your FEHB will pay second. Your FEHB will pay less for your medical care when Medicare is the primary payer for inpatient (Part A) and outpatient (Part B). Some FEHB plans will provide incentives to enroll in Medicare A & B, such as a Part B partial rebate and a waiver of deductibles, copays, and coinsurance. You may find that a lower-priced plan may be your best option for receiving these benefits. Most FEHB (except BC/BS, Federal Employee Plans) also offer a Medicare Advantage option (Part C) that requires a second enrollment step and provides additional benefits, including free gym membership, meal delivery, and non-emergency transportation to doctor visits following a hospital stay and more, depending on the plan. Medicare Advantage plans are very popular because of these added perks, but be sure you use doctors who accept Medicare and are willing to bill the plan.
There is an interesting article about non-federal Medicare Advantage plans offered by private sector employers that may help you understand more about this type of coverage: https://www.kff.org/medicare/issue-brief/medicare-advantage-has-become-more-popular-among-the-shrinking-share-of-employers-that-offer-retiree-health-benefits/
Learn more about Medicare. A—Hospital Insurance covers inpatient care when you are admitted to a hospital, hospice, or skilled nursing facility. You may also receive limited home health care benefits following a hospital stay while recovering from an accident, illness, or surgery. B - Outpatient Medical Insurance helps cover:
C—Medicare Advantage (MA) is another way to receive Medicare benefits through a private insurance company. You must be enrolled in Parts A & B to enroll in Part C. Most MA plans include Medicare drug coverage (Part D). Unlike original Medicare (Parts A & B), MA plans may not be accepted as readily. Be sure that your providers will accept this coverage when enrolling in an MA plan. When enrolled in an MA option offered by your FEHB or PSHB plan, you may opt-out anytime if you no longer want this benefit. D - Prescription Drug coverage that helps cover the cost of prescription drugs (including many recommended shots or vaccines).
NOTE: If you remain enrolled in FEHB, PSHB, or TRICARE For Life (TFL), you will not need to enroll in Medicare Supplemental Insurance (Medigap). Medigap insurance helps pay your share of costs in Original Medicare (Parts A & B). Private companies sell policies for Medicare beneficiaries who did not choose Medicare Part C. In most states, the policies are standardized and named by letters, like Plan G or Plan K. The benefits in each lettered plan are the same, no matter which insurance company sells it. Your FEHB, PSHB, or TFL will be your "Medigap" coverage. Although some Medigap premiums may cost less than FEHB or PSHB plans, you will need to enroll in a separate Medicare Part D Prescription Drug Plan for an additional cost while prescription drug benefits are included under FEHB and PSHB. In addition, you may need to pass medical underwriting to change Medigap plans and you will pay some expenses out of pocket, such as the Medicare Part B deductible (waived under TFL and many FEHB and PSHB plans).
There is no premium for Part A coverage if you or your spouse qualify by paying the Medicare tax of 1.45%. Part B does have a monthly premium based on your income. For 2025, the standard premium is $185 per person. Suppose your Modified Adjusted Gross Income in 2023 was more than $106,000 (single taxpayer) or $212,000 (for those filing a joint tax return) then, a surcharge called the Income Related Monthly Adjustment Amount or IRMAA is added to this premium. IRMAA is also applied to Part D coverage. The Medicare & You 2025 handbook provides additional information about Medicare.
All FEHB plan websites address how Medicare coordinates coverage with the plan options—section 9 of every FEHB plan brochure details coordinating with Medicare or other health insurance. You will find your plan website and brochures here.
Bottomline: Hopefully, you are enjoying good health, but consider there may be decades of life after turning 65. According to the National Council on Aging (NCOA), older adults are disproportionately affected by chronic conditions, such as diabetes, arthritis, and heart disease. Nearly 95% have at least one chronic condition, and almost 80% have two or more. Later in life, having Medicare + FEHB or TFL or PSHB can provide savings and peace of mind. |
Upcoming Opportunities with TSP
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Recent Questions
Question: My spouse passed away. When I retired, I elected a survivor benefit and now receive a reduced annuity. How can I stop that reduction to increase my annuity?
Answer: I am sorry for your loss. OPM can restore your annuity payment to the unreduced amount after they receive proof of your spouse's death. Inform OPM of your spouse's passing and that you want to increase your benefit. You may also need to change your health benefits to a self-only enrollment and cancel FEGLI Option C coverage if there is no longer an eligible family member. OPM's address: Office of Personnel Management, Retirement Operations Center, P. O. Box 45 Boyers, PA 16017-0045. Include a copy of the death certificate.
If FEGLI Option C-Family covers your spouse, submit the Statement of Claim form to the address in the instructions on the first page to receive the insurance benefits payable to you.
Contact Benefeds if your spouse was covered under the Federal Employees Dental and Vision Insurance Program (FEDVIP) plan. You may also want to update your designation of beneficiaries: Federal Employees Group Life Insurance (FEGLI), CSRS or FERS |
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