The FED Weekly

Lawrence: Welcome to The FED Weekly
for 26 October to 1 November 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 Legislative Impasse and the
Looming Threat to Retroactive Pay

The political standoff that triggered
the shutdown on October 1, 2025,

remains fully entrenched, fueled by
partisan disagreement over health care

policy and overall funding levels.

Congress continued to fail in
resolving the appropriation

lapse during this period.

The Senate, requiring 60 votes to
advance most legislation, voted 13

times on a House-passed resolution
designed to fund the government until

November 21, but fell short of the
necessary threshold, leaving roughly

730,000 federal employees classified
as "excepted" working without pay.

Amidst this paralysis, legislative
proposals emerged to alleviate

the burden on working employees.

The Shutdown Fairness Act (S.

3012) was actively debated.

This bill seeks to provide immediate
appropriations to ensure that federal

agencies can pay their excepted employees
(and certain supporting contractors)

during the ongoing lapse in funding.

The introduction and promotion of S.

3012 highlights a fundamental,
practical difference in employee

compensation during a shutdown.

While the Government Employee Fair
Treatment Act (GEFTA) of 2019 historically

ensures that both furloughed and
excepted employees receive retroactive

pay after a shutdown ends , S.

3012 specifically targets
immediate compensation for those

required to report to work.

The continued necessity of introducing
such immediate pay legislation

underscores the lack of reliable
funding mechanisms for core governmental

functions during extended lapses.

A major controversy that introduced
profound financial uncertainty for

all furloughed workers was revealed
during this reporting period.

An October 2025 draft memo, penned by
the Office of Management and Budget’s

(OMB) general counsel, Mark Paoletta,
and addressed to Director Russell Vought,

questioned the automatic guarantee of
retroactive pay for furloughed employees.

The OMB position argued that the GEFTA
did not automatically ensure post-shutdown

pay for furloughed employees, asserting
instead that Congress must include

explicit, express language appropriating
funds for back pay within any legislation

used to end the government lapse.

Although the administration had not
officially adopted this position

to withhold retroactive pay,
the very existence of this legal

interpretation signals a potential
shift in the executive branch’s

strategy toward the civil service.

Historically, GEFTA has been understood
to guarantee pay , but this new

legal opinion introduces a risk that
the executive branch could use the

withholding of guaranteed compensation
as leverage in budget negotiations,

dismantling a key, established civil
service protection by demanding fresh

appropriations for standard actions.

Judicial Intervention Secures
Essential Food Assistance

The severity of the shutdown escalated
for millions of Americans, including

vulnerable federal employees and
retirees, when funds for the Supplemental

Nutrition Assistance Program (SNAP)
were set to expire on November 1, 2025.

The administration had reversed its prior
stance, claiming it was prohibited from

utilizing a $5 billion contingency fund
specifically allocated by Congress to keep

benefits flowing during funding lapses.

This decision prompted
immediate legal action.

On October 28, 2025, New York
Attorney General Letitia James and

a bipartisan coalition of 26 state
leaders, including the District of

Columbia, filed a lawsuit against
the Department of Agriculture (USDA).

The coalition argued that the refusal
to issue November SNAP payments to more

than 40 million Americans—a population
that includes countless families relying

on this lifeline—was unlawful, as the
USDA was legally required to continue

benefits using existing contingency funds.

The litigation came to a head on
Friday, October 31, 2025, just one day

before the critical payment deadline.

Two federal judges intervened to
block the imminent lapse of benefits.

U.S.

District Judge Indira Talwani
in Massachusetts rejected the

administration's argument that
the contingency funds could

not be used, ruling that the
government is legally required to

tap into the emergency resources.

Simultaneously, U.S.

District Judge John J.

McConnell, Jr.

in Rhode Island granted a temporary
restraining order, specifically

directing the USDA to distribute the
contingency funds to ensure full SNAP

payments by the following Monday, or at
minimum, partial payments by Wednesday.

These rulings affirmed the states’
position that the USDA was legally

obligated to use the existing funds.

This chain of events demonstrated the
judiciary’s function as an emergency

financial safeguard, mitigating the
immediate humanitarian threat that 42

million individuals—including families
connected to the federal workforce—would

have faced on November 1, 2025, due to
executive interpretation of funding law.

Sharp Increase in 2026
Federal Health Care Premiums

The most significant financial news
affecting both current employees and

retirees was the announced increase
in Federal Employees Health Benefits

(FEHB) program premiums for 2026.

While the announcement by the
Office of Personnel Management (OPM)

occurred earlier in October, the
consequences continued to dominate

financial planning during this period.

The average enrollee share for
FEHB will rise sharply by 12.3

percent.

For participants in the newly established
Postal Service Health Benefits

(PSHB) program, the average enrollee
increase is slightly lower at 11.3

percent.

This substantial increase marks the
continuation of a trend of escalating

costs, following surges of 13.5

percent in 2025, 7.7

percent in 2024, and 8.7

percent in 2023.

OPM attributes the accelerating cost
pressures to multiple factors, primarily

the relatively older average age of
enrollees (47 for active workers; 60

when retirees are included), coupled
with rising costs for prescription

drugs and general medical services.

This premium hike occurs just ahead of
the critical planning window for the

upcoming Open Season, scheduled for
November 10 through December 8, 2025.

For those in plans that are terminating at
the end of 2025, a crucial administrative

detail dictates that they must make an
active election into a new FEHB plan.

Failure to do so will result in default
enrollment into the lowest-cost nationwide

option for 2026, as determined by OPM.

For the combined federal workforce
(active and retired), the 12.3

percent health premium increase
represents a critical erosion

of effective compensation.

When juxtaposed against the announced
2026 pay raise for most active

employees, the cost of coverage is
set to far outstrip any nominal income

increase, forcing households to make
difficult and potentially restrictive

health care choices to manage budgets.

Issues That Affect Retired Federal Workers

Finalized 2026 Cost-of-Living
Adjustments (COLA)

Despite the financial chaos of
the shutdown, the finalized 2026

Cost-of-Living Adjustments (COLA) for
federal annuitants provided a measure

of certainty regarding future income.

The announcement of the COLA,
typically derived from Social Security

Administration data, was delayed this year
due to the ongoing government shutdown.

The announced figures reflected
sustained inflationary pressures,

marking the fifth consecutive year
that the adjustment has been 2.5

percent or higher for Civil Service
Retirement System (CSRS) beneficiaries.

The specific 2026 COLA
figures are as follows:

Civil Service Retirement System
(CSRS) Annuitants: Will receive a 2.8

percent increase.

Federal Employees Retirement System
(FERS) Annuitants: Will receive a 2.0

percent increase.

The continued disparity
in the COLA rate—an 0.8

percentage point difference between the
CSRS and FERS adjustments—underscores

the differential treatment of
retirees under the two systems

when inflation exceeds 2 percent.

In response to this recurring gap,
legislative efforts, specifically

the Equal COLA Act (H.R.

491 and S.

624), remain strongly supported by
advocacy groups like the National

Treasury Employees Union (NTEU), who
seek to eliminate this disparity.

The higher 2.8

percent adjustment for CSRS annuitants,
based on the increase in the Consumer

Price Index for Urban Wage Earners and
Clerical Workers (CPI), confirms that

inflationary pressures are currently
running higher than the general 1.0

percent pay increase planned for the
majority of active federal workers in

2026, reinforcing concerns about declining
real wages for the current workforce.

New Medicare Physician Fee Schedule
and Health Plan Coordination

For federal retirees utilizing Medicare,
the Centers for Medicare & Medicaid

Services (CMS) finalized the Calendar
Year 2026 Medicare Physician Fee

Schedule (PFS) final rule (CMS-1832-F).

This rule introduces key revisions to
payment accuracy and care management.

A significant provision is the
finalization of a modest -2.5

percent efficiency adjustment
applied to select services, such

as surgical procedures, diagnostic
imaging, and orthopedic services.

CMS characterized this adjustment as
a means to modernize payment accuracy

and reduce unnecessary spending
waste, arguing that these services

are becoming more efficient over time
due to technological advancements.

While the agency stated the rule aims to
improve primary care and chronic disease

management, any reduction in the fee
schedule inherently raises questions

regarding potential impacts on beneficiary
access or provider participation,

requiring careful monitoring.

Furthermore, as the Medicare Open
Enrollment Period (OEP) overlaps

with the FEHB Open Season, federal
retirees enrolled in both FEHB and

Original Medicare were reminded of a
critical administrative requirement

should they wish to enroll in a
private Medicare Advantage (MA) plan.

To transition to an MA plan, a retiree
must actively suspend their FEHB

enrollment during the upcoming FEHB
Open Season, which is scheduled from

November 10 through December 8, 2025.

For those retirees eligible for
premium-free Medicare Part A,

the Public Employees' Medical and
Hospital Care Act (PEMHCA) mandates

enrollment in both Parts A and B.

This continued complexity in
coordinating dual benefit streams

highlights the enduring challenge
faced by retirees in navigating

rising health costs and multiple,
overlapping enrollment deadlines.

Retirement System Administration Updates

The Federal Retirement Thrift Investment
Board (FRTIB), which manages the

Thrift Savings Plan (TSP), conducted a
scheduled telephonic board meeting on

Tuesday, October 28, 2025, at 10:00 a.m.

ET.

These meetings are central to the
oversight and long-term security of

the retirement accounts for millions
of federal workers and retirees.

Additionally, the quarterly participant
statements for the TSP, covering

activity from July 1 through September
30, 2025, were made available

online by the end of October.

On the administrative front, OPM
announced new efforts on October 30,

2025, aimed at streamlining services
for former employees through "Faster,

Paperless Options for Federal Retirees".

The continuity of these essential
administrative functions, such as TSP

management and OPM digitization efforts,
provides a notable contrast to the severe

operational and financial disruption
experienced by the active, non-excepted

federal workforce during the shutdown.

Issues That Affect Current Federal Workers

Judicial Preliminary Injunction Protects
Against Mass Reductions in Force

The most critical development for the
active federal workforce during this

period was the successful judicial
defense against attempts to use the

government shutdown as an opportunity
to reduce the federal workforce.

The shutdown has been marked by
direction from the Office of Management

and Budget (OMB) for agencies to
consider issuing Reduction in Force

(RIF) notices to employees in programs
with lapsed discretionary funding

that were deemed inconsistent with
the administration's priorities.

Reports indicated that over 4,000
federal workers were targeted

for RIFs during the shutdown.

OMB deemed that agencies were authorized
to direct employees to perform the

work necessary to administer RIF
processes as an "excepted activity"

during the lapse in appropriations.

However, on Monday, October 28, 2025,
a federal court intervened decisively.

U.S.

District Judge Susan Illston of the U.S.

District Court for the Northern
District of California granted a

request from a coalition of labor
unions for a preliminary injunction.

This court order explicitly prohibits the
administration from issuing new RIFs or

implementing RIFs that had already been
filed while the government remains shut

down and the related litigation proceeds.

The lawsuit leading to this landmark
injunction was filed by a large coalition

of unions, including the American
Federation of Government Employees

(AFGE), the National Treasury Employees
Union (NTEU), the National Federation

of Federal Employees (NFFE), and others.

The preliminary injunction
served as a vital protective

measure for the active workforce.

It directly challenged the executive
branch's use of a funding lapse to

execute mass terminations, thereby
preserving the stability and

integrity of the career civil service.

Advocacy groups characterized the
ruling as a significant setback to

efforts targeting career public servants
under the guise of the shutdown,

temporarily stabilizing the employment
status of thousands of federal

workers facing immediate job loss.

The Finalized 2026 Pay
Structure and Locality Freeze

While the active workforce struggled
through the ongoing pay lapse,

the details of their compensation
for 2026 were confirmed following

the Alternative Pay Plan issued by
the President on August 28, 2025.

This finalized structure reveals a
stark divergence in planned compensation

across the federal workforce:

The majority of federal employees under
the General Schedule (GS) and related pay

systems are slated to receive a modest 1.0

percent base increase.

Simultaneously, OPM was directed to freeze
2026 locality rates at their 2025 levels.

In contrast, the plan mandates
the use of special pay authorities

to provide an additional 2.8

percent increase for certain law
enforcement officials (LEOs),

resulting in an overall raise of 3.8

percent, which is designed to match
the expected military pay increase.

OPM will use Special Salary Rates (SSRs)
to achieve this targeted increase.

SSRs are intended to address significant
recruitment or retention problems, and

their application here is specifically
linked to supporting law enforcement

personnel crucial to the President’s
strategy regarding border security.

This pay structure, with a 1.0

percent general base raise and
frozen locality pay, represents a

notable departure from the customary
alignment of federal employee

raises with military increases.

When this low general increase
is weighed against the high 12.3

percent FEHB premium hike (discussed
in Section 1) and the higher

inflation rate indicated by the 2.8

percent CSRS COLA (discussed in Section
2), the majority of the active federal

workforce faces a significant decline
in real net compensation for 2026.

The highly targeted nature of the 3.8

percent raise for LEOs risks exacerbating
morale and retention issues across non-law

enforcement sectors of the government.

Continuing Pressure on Workplace Posture

The focus on restricting telework and
enforcing a return to the office remained

a dominant policy theme, even amidst the
operational disruption of the shutdown.

The existing Presidential Memorandum
on "Return to In-Person Work"

continues to guide agency policies,
requiring a substantial increase

in meaningful in-person work.

Although Congress did not act on
the matter during this specific

week, the previously House-passed
SHOW Up Act of 2023 (H.R.

139) continues to signal
legislative intent.

This bill would mandate executive
agencies to revert to their pre-December

31, 2019, telework policies and
require OPM certification that

any expanded telework positively
affects agency mission and costs.

Administration officials and department
leaders, including those preparing

to staff the Department of Government
Efficiency, have explicitly articulated

goals of implementing five-day, in-office
requirements to meet the stated objective

of trimming the federal workforce.

The structural connection between
mandated return-to-office policies

and explicit workforce reduction goals
suggests that telework restrictions

are being utilized strategically, not
only for real property optimization

but also as an implicit mechanism to
encourage attrition among employees who

depend on flexible work arrangements.

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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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.