The FED Weekly

Lawrence: Welcome to The FED Weekly
for 5 - 11 October 2025, your essential

weekly briefing on the policies
and proposals shaping your career,

your benefits, and your retirement.

Whether you’re 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 Fiscal Shock of 2026 Health Premiums

The U.S.

Office of Personnel Management (OPM)
released its annual announcement

regarding the Federal Benefits Open
Season on Thursday, October 9, 2025.

This announcement confirms that the
Open Season for the Federal Employees

Health Benefits (FEHB) Program, the new
Postal Service Health Benefits (PSHB)

Program, and the Federal Employees
Dental and Vision Insurance Program

(FEDVIP) will run from Monday, November
10, through Monday, December 8, 2025.

The data accompanying this announcement
delivered a significant fiscal shock

to the entire federal community.

Federal employees and retirees
enrolled in the FEHB Program will

face an average increase of 12.3%

in their share of the premiums for 2026.

This marks the second consecutive
year that beneficiaries have been

hit with a double-digit percentage
increase in health care costs.

To quantify this burden, civilian federal
workers enrolled in “Self Only” plans

are projected to pay an additional $15.43

per biweekly paycheck, while those
with “Self Plus One” plans face an

average additional cost of $34.21

per pay period, and those with
family coverage will pay $38.81

more per paycheck.

For retirees and employees on fixed
or suspended incomes, this unexpected,

steep rise in fixed costs dramatically
complicates financial planning.

The cost hikes extend beyond
the primary FEHB program.

Enrollees in the PSHB Program
will see their premium share

increase by an average of 11.3%

in 2026.

Furthermore, OPM’s announcement
noted premium increases for ancillary

benefits, with dental coverage
through FEDVIP rising by 3.3%

and vision premiums increasing by 0.5%

on average.

This announcement—released the day
before furloughed federal employees

missed their first full paycheck on
Friday, October 10—highlights the intense

financial pressure facing the workforce.

Active employees are not only dealing
with an immediate collapse of their

income stream but are also being
forced to confront rising mandatory

expenses for the coming year.

For annuitants, who rely on
fixed retirement income, a 12.3%

increase in health care costs represents
a serious erosion of their purchasing

power, placing a severe constraint on
their budgets that will likely far exceed

their 2026 cost-of-living adjustment,
a topic we will address in Section 2.

Plan Options and Discontinuations

The Open Season announcement
also confirmed the available

plan landscape for 2026.

The FEHB Program will feature 47
participating carriers offering a total

of 132 plan options, and the PSHB Program
will have 17 carriers with 75 options.

The FEDVIP program will offer 11
dental carriers with 21 options and

five vision carriers with 10 options.

Crucially, OPM confirmed that six FEHB
plans, one PSHB plan, and one FEDVIP

plan will no longer be available in 2026.

Enrollees in these discontinued plans
are strongly advised by OPM to actively

choose new coverage during the Open
Season, as failure to do so could

result in a lapse or default enrollment.

Within specific plans, there are
significant structural changes.

For example, within the Federal Employee
Program (FEP) Blue Focus, the Medicare

Prescription Drug Program will not be
available in 2026, and the catastrophic

out-of-pocket maximum will double for Self
Only plans to $10,000, and for Self Plus

One and Self & Family plans to $20,000.

These structural changes underscore
the critical importance for all federal

employees and retirees to review their
benefits closely during the upcoming

Open Season, even if their plan is
not among those being discontinued.

Thrift Savings Plan Updates
and Charitable Giving

The Thrift Savings Plan (TSP)
provided an update this week

concerning participant statements.

The agency announced on October 3,
2025, that the third-quarter 2025

participant statements, which cover
account activity from July 1 through

September 30, 2025, will be available
online by the end of October.

Separately, the OPM confirmed the
continuation of the 2025 Combined

Federal Campaign (CFC), which allows
federal employees and military

personnel to support charitable causes.

The campaign is running from
October 1, 2025, to December 31,

2025, despite the ongoing shutdown.

OPM noted that it is currently
reviewing the program’s administrative

costs and participation rates,
signaling that potential changes may

be implemented for the 2026 campaign.

Issues That Affect Retired Federal Workers

2026 COLA Announcement Delayed by Shutdown

The Social Security Administration (SSA)
typically announces the COLA for the

following year in mid-October, based on
inflation data from the third quarter.

The official announcement for the 2026
COLA was scheduled for October 15, 2025.

However, the ongoing government shutdown
caused a temporary halt to the data

collection activities of the federal
Bureau of Labor Statistics (BLS).

Because the BLS was unable to finalize
and release the September inflation

report—specifically the Consumer Price
Index for Urban Wage Earners and Clerical

Workers (CPI-W), which is the benchmark
used for the COLA calculation—the official

2026 COLA announcement has been delayed.

While annuity payments themselves are
not directly affected by the lapse in

appropriations, the shutdown directly
impacts the governmental function

required to provide essential economic
information, creating uncertainty for

retirees attempting to budget for 2026.

COLA Projection and FERS Disparity

Despite the delay in the official
announcement, the latest available

data, specifically the August 2025
CPI-W figure, provides a strong

indication of the impending COLA rate.

The running tally toward
the 2026 COLA reached 2.78

percent, calculated by comparing
the average third-quarter CPI-W

to the same period in 2024.

While this 2.78

percent figure is a positive indication,
it must be viewed in the context

of the retirement system rules.

If the finalized rate remains near
this projection, the full 2.78

percent would be applied to
annuities under the CSRS.

However, FERS retirees are subject
to different rules: if the rise

in the CPI-W is between 2.0%

and 3.0%,

the FERS COLA is capped at 2.0%.

This FERS-CSRS disparity is highly
relevant when viewed alongside the 12.3%

FEHB premium increase
announced on October 9.

A FERS annuitant
receiving a mandatory 2.0%

COLA would see the overwhelming
majority of that adjustment, and

potentially more, swallowed by the 12.3%

rise in their health care premium share,
resulting in a net decrease in their

effective disposable income for 2026.

This comparison illustrates how
rising mandatory benefit costs can

compound existing structural inequities
within the federal retirement system.

Legislative Update:
Retirement Service Credit

A piece of legislation aimed at
addressing historical gaps in retirement

credit remains pending in Congress.

H.R.

1522, known as the Federal Retirement
Fairness Act, addresses a long-standing

issue for many FERS employees.

The bill seeks to amend
Title 5 of the U.S.

Code to allow civilian service
performed in a temporary position

after December 31, 1988, to be counted
as creditable service under the

Federal Employees Retirement System.

For employees who held these temporary
appointments early in their careers—often

before converting to permanent
status—this legislation is critical,

as it would potentially allow them
to "buy back" this time and increase

their total service credit, thereby
boosting their final annuity calculation.

The bill was introduced
on February 24, 2025.

While no substantial action was
reported during the week of October

5 through 11, the bill remains
active, with Representative Ms.

Randall assuming first
sponsorship in July 2025.

Issues That Affect Current Federal Workers

Shutdown Escalation: Missed
Pay and Mass Layoff Notices

By Friday, October 10, 2025, federal
workers began missing their full,

scheduled paychecks since the lapse
in appropriations began on October 1.

This financial milestone created severe
strain across the workforce, which was

simultaneously compounded by the threat
of mass firings from the administration.

On Friday, October 10, employees began
receiving formal notices informing

them they would be laid off in 60 days.

CBS News confirmed that more than
4,000 workers across at least seven

federal agencies—including the
Department of Homeland Security, the

Department of Education, the Treasury,
and the Department of Health and

Human Services—could receive these
Reduction in Force (RIF) notices.

This RIF process, managed by the
White House Office of Management and

Budget (OMB) and OPM, signaled a clear
intention to use the funding crisis

to enact permanent structural cuts.

OMB directed agencies to consider
issuing RIF notices to employees in

programs that satisfied three conditions:
discretionary funding lapsed on October

1, 2025; other funding (such as H.R.

1) was unavailable; and, most tellingly,
the program was not consistent

with the President's priorities.

The inclusion of the "President's
priorities" criterion elevates the

RIFs beyond typical budgetary necessity
and transforms the shutdown into an

attempt at permanent, ideologically
driven workforce realignment.

This context confirms the fears expressed
by furloughed workers, who noted that

while they had experienced furloughs
before, this was the first time they

were checking their email daily for
threats of being "fired en masse".

The issuance of mass RIF notices
directly contradicts OPM’s stated goal,

announced by Director Scott Kupor on
October 7, to aggressively recruit

highly skilled technical talent.

The stability and longevity previously
offered as a key recruiting narrative for

government service is now demonstrably
compromised by the ongoing mass

layoff threats, which fundamentally
complicates the agency’s ability to

attract cutting-edge technology workers.

Legislative Response:
Emergency Relief for TSP

In response to the dire financial
situation created by the missed

paychecks, Congressional Democrats
introduced legislation designed to

protect federal workers' retirement
savings from the short-term crisis.

Representative Don Beyer introduced
the House version of the Emergency

Relief for Federal Workers Act of
2025, with a companion bill introduced

in the Senate by Senator Tim Kaine.

The legislation attempts to
alleviate immediate financial

pressure by turning the Thrift
Savings Plan (TSP) into a protected

emergency fund during the shutdown.

The core provisions of the Act are
highly specific to shutdown relief:

Penalty-Free Withdrawals: The bill
enables furloughed participants to

withdraw up to $30,000 from their TSP
accounts without incurring the customary

10% early withdrawal penalty, provided
the shutdown lasts at least two weeks.

While federal income taxes would still
apply, waiving the penalty shields

employees from the most punitive charge.

Restoration of Funds: The legislation
includes a critical provision allowing

workers to put the funds they withdrew
back into their TSP account later.

This provision is vital, as standard
TSP hardship withdrawals do not

permit repayment, thereby ensuring
that short-term financial necessity

does not permanently compromise
long-term retirement security.

Loan Protection: The bill ensures
that TSP loans remain available to

affected employees, overriding the
existing rule that often restricts

loan access if a shutdown is
expected to last longer than 30 days.

Furthermore, it mandates that TSP
loan payments, typically deducted

from payroll, must be automatically
suspended during the shutdown.

Once appropriations are restored,
the missed payments would be deducted

directly from the employee’s back pay.

This also protects employees by
prohibiting missed loan payments

from becoming taxable distributions
subject to the 10% penalty.

Despite the importance of
these protections, the bill was

introduced exclusively by Democrats.

Given the current political landscape,
congressional analysts assess that the

bill is highly unlikely to receive a
vote from the Republican-controlled

Congress, leaving employees reliant
on the eventual, though legally

guaranteed, promise of back pay.

Structural Legislative Proposals
Defining the Future Workforce

Beyond the immediate shutdown
crisis, several pieces of legislation

were active this week, signaling a
fundamental, long-term shift in the

structure of federal pay, performance
management, and working conditions.

The 2026 Pay Raise Conflict

The debate over the 2026 pay raise
intensified this week in light of the

massive premium increases announced.

On August 28, 2025, the President issued
an Alternative Pay Plan for January 2026,

which overrides the Federal Employees Pay
Comparability Act (FEPCA) formula that had

called for a much higher overall increase.

The President's plan dictates a 1.0%

base increase and freezes locality pay
rates at 2025 levels for the vast majority

of General Schedule (GS) employees.

The administration made one notable
exception: OPM was directed to use

its Special Salary Rate authority
to provide an additional 2.8%

pay increase to certain law
enforcement personnel, ensuring they

receive a total increase of 3.8%.

This 3.8%

increase aligns with the planned
military pay increase for 2026, but

the decision to restrict this parity
break tradition and restrict the

majority of the workforce to a 1.0%

raise is a major point of contention.

The American Federation of Government
Employees (AFGE) argues that the current

federal salary average is 27% below
comparable private sector jobs and has

endorsed legislation that would provide
all federal employees with a 4.3%

pay adjustment in 2026.

By providing only a 1.0%

raise while civilian
employees face a 12.3%

hike in health care premiums,
the administration's pay plan

effectively guarantees a significant
net decrease in spending power,

directly undermining workforce
recruitment and retention efforts.

Performance, Pay, and Cuts Legislation

Two key House bills introduced
this year seek to restructure

the workforce permanently:

H.R.

201: Federal Employee Performance and
Accountability Act of 2025: This bill

proposes establishing a pilot program
that fundamentally ties compensation to

performance ratings, moving away from the
traditional GS steps and locality system.

Under this program, employees who
significantly exceed established

performance metrics would receive
a pay increase of up to 10%.

Conversely, those who rate
below expectations would face a

mandatory 10% reduction in pay.

A key structural change is that
employees participating in this pilot

would become explicitly ineligible
for the annual or locality-based pay

increases authorized under current
law, transforming the GS structure

into a high-risk, high-reward model.

H.R.

200 (Untitled): Pay Freeze and
Reduction Mandate: This bill

mandates a hard, structural
reduction in the federal workforce.

It prohibits increasing the
basic pay of any federal employee

for one year after enactment.

Furthermore, it prohibits each federal
agency from increasing its number of

employees beyond the level employed on
the date of enactment, except for specific

positions related to law enforcement,
public safety, or national security.

This bill, if enacted, would codify a
permanent workforce reduction requirement

through attrition and mandatory cuts,
reinforcing the political intent behind

the RIFs seen during the shutdown.

Telework Scrutiny

Another structural component of
modern federal employment is facing

intense scrutiny in Congress.

S.

82, the Telework Reform Act of 2025,
introduced by Senator Lankford,

proposes amendments to Title 5
aimed at heavily restricting and

monitoring telework eligibility.

The bill mandates several new
requirements for agencies:

Telework agreements must be
limited to a period of one year

and reviewed at least annually.

Policies must be established to
address the extent to which telework

may be restricted based on performance
deficiencies or disciplinary action.

Agencies must establish systems to
confirm that employees are working

solely at approved worksites and
provide mandatory annual training

that includes accurate reporting
of remote work and telework usage.

The bill further stipulates that these
new requirements could override existing

collective bargaining agreements,
although current agreements would

remain enforceable until they expire
or become subject to renegotiation.

This legislation signals a sustained
effort to roll back the flexibility

that many federal employees rely on,
despite telework being a critical factor

in workforce retention and morale.

And that’s a wrap on this week’s
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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podcasts, so you never miss an update.

Thanks for tuning in.

We’ll be back next week to
track the latest developments

and what they mean for you.

Until then, stay engaged and be well.