Title: Health Care Issues
1National Active and Retired Federal Employees
Association (NARFE) Legislative Priorities in
the 110th Congress (2007-2008)
By Dan Adcock Assistant Legislative Director
2Legislative Priorities
- Protecting Federal Retirement
- Premium Conversion
- Government Retiree Social Security Offsets
3Job Number One
- Protecting Earned
- Existing Benefits
4Budget Situations Impact on Federal Retirement
- No Legislated Retirement Cuts Since 1993
- If the Past is Prologue
- 50 Billion Cut in 1980s Early 90s
- 2.3 Billion in FY 2005 Budget Resolution
- 38.3 Billion in FY 2005 Budget Resolution
- Calls for an Entitlement Commission
- RSCs Operation Offset
- Base Retiree FEHBP Premiums of Length of Service
- Highest 5 Years of Salary
Rep. Mike Pence (R-IN)
5Presidents FY 2008 Budget
- Health Savings Accounts (HSAs) in Federal
Employees Health Benefit Program (FEHBP). - Base Retiree FEHBP Premiums on Length of Service.
6Congressional Budget Resolutions
- No plans to cut Federal Retirement in House or
Senate Budget Resolutions.
7Setting the Bar High
- The Fight for
- Premium
- Conversion
8How Premium Conversion Works
- Paying for Health Insurance With Pre-Tax Salary
(Premium Conversion) - Annual Salary 32,000
- Enrollee Premium Share
3,491 - Reported Income 28,509
- Combined Federal/State Tax Rate 19
- Income Taxes Paid 5,416
- Paying for Health Insurance With After-Tax Salary
(w/o Premium Conversion) - Annual Salary 32,000
- Enrollee Premium Share
3,491 - Reported Income 32,000
- Combined Federal/State Tax Rate 19
- Income Taxes Paid 6,080
Total Savings with Premium Conversion in this
example 664
9Premium Conversion
- Rep. Tom Davis (R-VA)
- H.R. 1110
- 168 Cosponsors, including
- Majority Leader Hoyer (D-MD)
- Oversight Govt Reform Committee Chairman
Waxman (D-CA) - 23 Members of Ways and Means (13 Ds 10 Rs)
As of May 16, 2007
10Premium Conversion
- Senators John Warner (R-VA) Jim Webb
- S. 773
- 29 Cosponsors
- 6 Finance Committee members (Rockefeller, Lott,
Snowe, Cantwell, Crapo Bunning, .
As of May 16, 2007
11So Whats New About...
- Premium Conversion in the 110th Congress
(2007-2008)?
12Whats New? Committee Chairman
- House Ways and Means Committee
Charles Rangel (D-NY) Chairman
Jim McCrery (R-LA) Ranking Member
Charles Grassley (R-IA), Ranking Member
Max Baucus (D-MT), Chairman
13Whats New?Budget Rule
- Pay As You Go (a.k.a. Paygo)
- Tax Relief Must be Offset by
- Revenue Increases, or
- Program Cuts
14Whats Old?
- Premium Conversion Costs 12 billion
- 248 billion Federal Budget Deficit 06
- Unknown costs of Wars Homeland Security.
- The Impending Fiscal Tsunami
These guys will need a lot of Social Security
benefits, health care long-term care
15What Else is Leftover?Politics of Premium
Conversion
- Many lawmakers would like to support PC.
- But, they have to consider how non-feds feel.
- No Retirees Anywhere Receive PC tax benefit.
- Under H.R. 1110 S. 773, Retired Members of
Congress get Premium Conversion too. - Legislators concern about giving themselves a tax
break other retirees wont get.
16How NARFE Should Respond
- NARFE Sen. Warner Cutting PCs 12 billion
cost - Cap benefit with no effect on relief for 7-8
years. - Annuitants get benefit through an Flexible
Spending Account. - Open PC to all retirees
- No retirees private or public have PC
- Cost goes up, but PC for all removes one obstacle.
OMB Director Portman Senator Cardin (D-MD)
17Premium ConversionOur Best Arguments
- The cost is not out of line with how the tax code
is being used on health care. - Federal civilian and military retirees should be
reward for their sacrifices to our country. - Improvements in health care are incremental
- H.R. 1110/S. 773 are a foot in the door for other
retirees.
18Government Pension Offset (GPO)andWindfall
Elimination Provision (WEP)
19NARFEs Priority Bills to Repeal GPO WEP
- S. 206, Sen. Dianne Feinstein (D-CA)
- Cosponsors 29
-
- H.R. 82, Rep. Howard Berman (D-CA)
- Cosponsors 297
As of May 16, 2007
20Chances for GPO/WEP Bills
- Total repeal costs over 60 billion.
- SSA opposition.
- Reform bills have better shot.
- Odds improve if GPO/WEP bills are added to Social
Security overhaul legislation.
21GOVERNMENT PENSION OFFSET
- Question Why has Republican Democratic SSA
opposed GPO/WEP repeal? - Answer GPO Repeal would be unfair to
private-sector retirees subject to the dual
entitlement rule.
22GPO How Are They Affected?
- Edna
- Monthly Government Annuity 900
Social Security Widows
Benefit Before GPO 500 Two-thirds of annuity of
900 600 SS Widows Benefit After GPO 0
23Dual Entitlement RuleGPO vs. Non-GPO
- GPO Edna
- Monthly Government Annuity 900
- Widows Benefit Before GPO 500
- Two-thirds of annuity of 900 600
- SS Widows Benefit After GPO 0
- Total Retirement Income 900
- Non-GPO Selma
- Social Security Benefit Before Spouses Death
900 - Social Security Widows Benefit 900
- Total Widows benefit payable 900
- Employer Sponsored Pension ?
- Total Retirement Income 900
24What Percentage of A Government Annuity Social
Security?
More Accurate Social Security 1/3 of Annuity
GPO Current Law Social Security 2/3 of Annuity
100 of Pie Charts Equals Total Government
Retiree Annuity
25GPO Reduction2/3 vs. 1/3
- GPO 1/3 Reduction
- Monthly Government Annuity 900
- Widows Benefit Before GPO 500
- One-thirds of annuity of 900 300
- SS Widows Benefit After GPO 200
- Total Retirement Income 1,100
- GPO 2/3 Reduction
- Monthly Government Annuity 900
- Widows Benefit Before GPO 500
- Two-thirds of annuity of 900 600
- SS Widows Benefit After GPO 0
- Total Retirement Income 900
26Mikulski-Voinovich GPO Reform Bill
- S. 1254
- Lessens the burden of the Government Pension
Offset (GPO) on retired public servants,
including federal retirees. - Targets retirees with lower annuities.
27Bipartisan SSA Opposition to WEP Repeal
- Social Security Formula
- Designed to artificially provide low wage earners
a larger benefit. - Government Workers
- Some barely qualify for SS, but they were not
necessarily low wage workers. - Formula treats them like low wage earner.
- SSA Says WEP repeal would provide unfair
advantage to govt retirees. - We say WEP drafted to achieve savings, not
fairness.
28WINDFALL ELIMINATION PROVISIONREFORM BILL
- H.R. 726
- Exempts retirees whose combined Social Security
earned benefits and public pension are less than
2,000 a month. - Gradually phase in WEP for those receiving
combined benefits between 2,000 and 3,000 per
month. - Above 3,000 a month, the full WEP would still
apply.
Rep. B. Frank (D-MA)
29Join NARFE!
- Call 1-800-627-3394 or 703/838-7760
- Visit www.narfe.org
30110th Congress Legislative Priorities
QUESTIONS AND ANSWERS