The FED Weekly

Lawrence: Welcome to The FED Weekly
for 23-29 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 Critical Benefits Window:
Federal Benefits Open Season Update

The period from November 23 to
November 29 occurs during the critical

Federal Benefits Open Season, which
began on November 10, 2025, and

continues through December 8, 2025.

This enrollment period is uniquely
important this year, as the recent

government shutdown severely complicated
agencies’ ability to communicate essential

information and resources to employees.

Following the resolution of the
appropriations lapse, the Office of

Personnel Management (OPM) issued
guidance encouraging agencies to

prioritize communicating Open Season
information immediately, placing

special emphasis on notifying
employees of plan changes detailed in

Benefits Administration Letter 25-401.

The 2026 Affordability Crisis

For both active employees and federal
retirees, the dominant factor impacting

Open Season decision-making is the
continuing escalation of healthcare costs.

OPM announced that the average enrollee
share for premiums under the Federal

Employees Health Benefits (FEHB)
program will rise sharply by 12.3%

for the 2026 plan year.

This increase continues a worrying trend
of steep premium hikes, following a 13.5%

jump in 2025, and marks the
third consecutive year of

significant rate acceleration.

Participants in the newer Postal Service
Health Benefits (PSHB) program are

also facing steep increases, with their
average enrollee share rising by 11.3%.

OPM attributes these relentless
cost pressures to demographic

realities, noting that the average
age of enrollees is high—around

47 for active employees, rising to
60 when retirees are included—and

to persistently high prescription
drug and overall medical costs.

The reality of this dual-digit percentage
increase means that for many federal

workers and retirees, the effective
value of their compensation package

is being rapidly diminished by the
cost of maintaining health coverage.

Hidden Cost Shifts and
Benefit Design Changes

Beyond the immediate rise in premiums,
an equally consequential trend is the

shifting of financial risk onto enrollees
through modifications to plan designs.

Analyzing the benefit changes for 2026
reveals that for many plans, what an

enrollee pays when services are utilized
is set to increase significantly.

This complexity necessitates a careful
review of specific plan brochures

beyond just premium comparisons.

A clear example of this cost shifting
is the increase in the catastrophic

limit—the maximum out-of-pocket
amount an enrollee must pay for

approved healthcare services annually.

For 2026, twenty-nine out of
one hundred thirty-two FEHB

plans are raising this limit.

The magnitude of these increases is
striking: GEHA Standard, a popular

nationwide plan, is increasing its
out-of-network catastrophic limit by a

staggering 135%, raising the self-only
limit from $8,500 to $20,000, and

the self-plus-one/self-and-family
coverage limit from $17,000 to $40,000.

Other significant nationwide PPO plans
are also increasing utilization costs.

For instance, BCBS Basic members
will face higher costs for durable

medical equipment, emergency
room services, inpatient and

outpatient hospital services, lab
tests, and ambulance services.

GEHA High and Standard members will also
see increased costs for physician visits,

emergency room visits, higher deductibles,
and higher coinsurance percentages.

While utilization costs are rising, the
program is also introducing new mandates.

All FEHB plans are now required to provide
coverage for at least one GLP-1 medication

prescribed for weight loss, and more
options than ever before are available

for In Vitro Fertilization (IVF) coverage.

However, even these newly
mandated benefits may come with

increased member responsibility.

For example, some Kaiser plans
are increasing the cost share

for GLP-1 medications prescribed
for weight loss to 50%.

These concurrent changes—rising premiums,
sharply increasing catastrophic limits,

and new cost-sharing arrangements
for mandated benefits—underscore that

the real cost of FEHB coverage is
accelerating at a rate far exceeding

the official average premium increase.

Congressional Legislative
Tracking: Healthcare Cost Drivers

The rapid escalation of FEHB costs, which
directly affects the federal budget and

the financial security of millions of
citizens, has driven active legislative

interest in Congress during this period.

The underlying structure of
health care pricing is under

scrutiny, particularly related to
Pharmacy Benefit Managers (PBMs).

The Senate Finance Committee
announced plans this week to

reintroduce bipartisan PBM reform
legislation in the coming weeks.

PBMs are the middlemen in the drug
supply chain, and reform legislation

typically seeks to curb opaque practices,
such as spread pricing in Medicaid,

and mandate that PBMs pass 100% of
manufacturer rebates to plan sponsors.

These reforms are aimed directly at
reducing prescription drug costs,

which OPM cited as a primary pressure
point driving FEHB premium inflation.

In the broader healthcare arena,
legislative proposals introduced

just before the reporting window
signal a potential shift toward

consumer-driven healthcare models.

Senator Rick Scott (R-FL)
introduced the More Affordable

Care Act on November 20, 2025.

This bill proposes creating
"Trump Health Freedom Accounts".

Under this model, individuals would
receive the value of federal premium tax

credits directly into these accounts,
which could then be used for out-of-pocket

health care costs or, critically,
to pay health insurance premiums.

The legislation is championed as a way to
"fix Obamacare" and instill transparency

by providing patients with upfront
pricing for medical goods and services.

While this bill targets the general
healthcare market, a governmental emphasis

on consumer-driven, high-deductible models
creates a political and regulatory climate

that could eventually pressure the FEHB
program, potentially shifting even greater

financial responsibility onto federal
employees and retirees, particularly

those requiring complex or chronic care.

Post-Shutdown Recovery
and Pay Implementation

Following the enactment of the Continuing
Appropriations Act of 2026 on November 12,

2025, the government resumed operations,
funded through January 30, 2026.

A major administrative priority
during this week was the immediate

implementation of Section 116 of the
Act, which provides retroactive pay

to all federal civilian employees
affected by the lapse in appropriations

that began on October 1, 2025.

This mandate covers both employees
who were furloughed and those

who performed excepted work
activities during the shutdown.

OPM directed agencies to prioritize the
timely provision of this retroactive pay.

Furthermore, OPM recognized the potential
difficulty employees might face in

immediately returning to work following
the lengthy lapse and advised agencies

to consider the use of appropriate
flexibilities, such as adjusting

work schedules or approving personal
leave, consistent with mission needs.

This guidance aimed to ease the
transition back to full operational

status for the entire workforce.

Issues That Affect Retired Federal Workers

The 2026 FERS Cost-of-Living Adjustment

For federal retirees, the most significant
news this week regarding annuity income

relates to the Cost-of-Living Adjustment
(COLA) for the 2026 calendar year.

The 2026 FERS COLA adjustment
has been finalized at 2.0%,

effective with annuity payments
beginning in January 2026.

The adjustment for FERS retirees
is governed by specific legislative

constraints based on the rise in the
Consumer Price Index for Urban Wage

Earners and Clerical Workers (CPI-W).

The 2026 COLA calculation utilized
the average CPI-W from the

third quarter of 2025 relative
to the third quarter of 2024.

Critically, FERS retirees are
subject to a formula that caps the

increase when inflation is moderate:
if the calculated CPI-W quarterly

average increase is between 2.0%

and 3.0%,

the actual FERS benefit
increase is capped at 2.0%.

When comparing this modest 2.0%

increase in retirement income
to the concurrent 12.3%

average increase in FEHB premiums,
a stark fiscal reality emerges.

For many FERS annuitants, who typically
rely on their annuity and Social Security

benefits as primary income streams,
the benefit increase is mathematically

insufficient to cover the escalating cost
of their federal health insurance alone.

This disparity results in a net
effective reduction in the purchasing

power of the retiree’s fixed income,
forcing difficult budgetary decisions

during the ongoing Open Season.

In related news concerning financial
flexibility for retirees, the Social

Security Administration announced
updated earnings limits for 2026.

For those workers younger than
full retirement age, the earnings

limit will increase to $24,480.

This is relevant for retirees who
choose to supplement their annuities

through part-time employment,
offering them a higher threshold

before their benefits are reduced.

Thrift Savings Plan Updates and SECURE 2.0

Implementation

The Thrift Savings Plan (TSP) continues
to issue guidance concerning the

implementation of the SECURE 2.0

Act, with major changes set to
impact those nearing retirement.

Mandatory Roth Catch-Up Contributions

A provision set to take effect on January
1, 2026, dictates that participants

eligible to make catch-up contributions
whose prior year Medicare wages (those

earned in 2025) exceed the IRS threshold
for TSP-eligible positions must designate

those contributions as Roth (after-tax).

If an affected participant eligible
for catch-up contributions holds

elections directed toward their
Traditional (pre-tax) TSP balance, those

elections will automatically switch
to Roth TSP contributions once the

annual elective deferral limit is met.

This rule change requires urgent planning,
particularly for high-earning current

employees intending to retire soon.

The determination of whether this
rule applies in 2026 is based on wages

earned during the 2025 calendar year.

Participants who fail to proactively
adjust their tax strategy for 2026

may find their savings shifted from
the Traditional balance, which defers

taxes until retirement, to the Roth
balance, which requires taxes to be

paid on the contribution immediately.

This shift fundamentally alters the
tax profile of their near-term savings.

Investment and Withdrawal Clarifications

The TSP also provided clarity on
other matters relevant to retirees

and those nearing retirement.

As planned, the L 2025 Fund, having
reached its target date, has been

rolled into the L Income Fund,
the most conservative allocation

for the Lifecycle fund series.

Furthermore, the TSP reiterated
the status of the 10% early

withdrawal penalty exemption for
qualified public safety employees.

This exemption remains in effect for tax
year 2023 and later, ensuring that if

a public safety employee separates from
service with 25 years of service, their

distributions will not be subject to the
10% early withdrawal penalty, even if

they separate before reaching age 50.

Issues That Affect Current Federal Workers

The 2026 Pay Structure: Targeted
Increases and General Freeze

The pay structure for General Schedule
(GS) employees in 2026, stemming from

the President's Alternative Pay Plan
issued on August 28, 2025, contrasts

sharply with the statutory formula.

The Alternative Pay Plan announces
a decision to provide a 1.0%

base increase for 2026, while otherwise
freezing locality rates at 2025 levels.

This aggregate increase falls
substantially below the raise

required under standard pay law.

Based on the 3.8%

increase in the Employment Cost
Index (ECI) observed in September

2024, the statutory base increase
for 2026 would have been 3.3%.

By providing a 1.0%

base increase and freezing
locality pay, the administration is

effectively implementing a pay raise
that falls significantly short of

the increase required to maintain
parity with the private sector.

Strategic Pay Prioritization
for Law Enforcement

In a move that signals a significant
shift toward segmented compensation, the

President directed OPM to use special
salary rate authority (under 5 U.S.C.

5305) to provide an
additional approximate 2.8%

pay increase for certain front-line
Law Enforcement Officials (LEOs).

The goal of this targeted use of
special salary rates is to align

the LEO pay increase with the 3.8%

military pay increase planned for 2026.

Special salary rates are typically
established by OPM to counter existing

or anticipated recruitment and
retention challenges due to factors

such as higher non-federal pay rates
or undesirable working conditions.

OPM specifically cited that certain
front-line LEOs are "critical

to implementing the President's
strategy to secure the border,"

justifying this targeted increase.

This approach demonstrates a deliberate
strategy of prioritizing compensation

rewards for specific, mission-critical
groups, resulting in a fractured pay

landscape where the vast majority
of the General Schedule workforce

receives a low, non-competitive
increase, while select groups receive

an increase aimed at competitive parity.

This fragmentation risks exacerbating
retention challenges in agencies and

job categories deemed non-priority.

Workforce Restructuring and
Headcount Accountability

The executive branch is now moving to
institutionalize long-term workforce

reductions through administrative
guidance issued by OPM and the Office

of Management and Budget (OMB).

Following President Trump's Executive
Order 14356, the guidance was

released to ensure accountability
and discipline in federal hiring.

OPM Director Scott Kupor noted that the
purpose of the new executive order is

to build on the administration’s success
in meeting and exceeding the goal of

four reductions for every one new hire.

Official figures indicate that the
government hired approximately 68,000

people this year, while approximately
317,000 employees left the government.

The new guidance requires
all executive agency heads to

submit Annual Staffing Plans and
quarterly updates to OPM and OMB.

The stated goals are to ensure that
headcount resources focus on the most

critical objectives, deliver maximum value
to the taxpayer, and eliminate wasteful

expenses in areas that are inefficient
or contradict administration priorities.

Politicization of Hiring Decisions

A key element of this restructuring
is the mandate for agencies to

establish Strategic Hiring Committees.

This measure ensures that new
career appointments are consistent

with the national interest
and administration priorities.

By placing "Democratically accountable
agency leadership" at the table for

hiring decisions, the administration
is shifting control over staffing

away from traditional human resources
practices and toward political alignment,

ensuring that the previously achieved
workforce reductions will endure.

This policy is being implemented
while OPM publicly emphasizes

the scale of the government’s
external contractor infrastructure.

OPM estimates there are at least
two times the number of contractors

employed as full-time employees
(FTEs), costing the government

approximately $750 billion annually.

The focus on aggressive reduction of
the civilian employee count, while

acknowledging the massive cost and
reliance on contractors for specialized

or temporary labor, suggests a policy
direction aimed at shrinking the permanent

civil service core while maintaining
flexibility through external support.

Legislative Battle over
Collective Bargaining Rights

A critical legislative maneuver
just preceding this reporting week

sets the stage for a potential
shift in federal labor relations.

A bipartisan coalition of House
lawmakers successfully completed

a discharge petition on November
18, 2025, securing the necessary

signatures to force a floor vote on the
Protect America’s Workforce Act (H.R.

2550).

H.R.

2550, introduced by Representatives
Jared Golden (D-Maine) and

Brian Fitzpatrick (R-Pa.),

aims to nullify a pair of executive orders
issued by President Trump that cited

national security to strip collective
bargaining rights from an estimated

two-thirds of the federal workforce.

These executive orders impacted
numerous agencies, including NASA

and federal weather agencies.

Although the orders have been tied
up in litigation, with previous broad

court relief subsequently stayed,
this successful discharge petition

represents a high-stakes legislative
challenge to the administration’s

core workforce management strategy.

The outcome of the forced House vote,
expected to occur within or immediately

following this reporting period, will
determine the near-term legal status of

collective bargaining rights for wide
segments of the current federal workforce.

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.