2011 Financial Questions (And Some Answers) for Federal Employees

By on August 2, 2010 in Current Events with 4 Comments

It is the time of year when readers are wondering about answers to several questions:

  • How much will my raise be next year?
  • How much of a COLA will federal retirees receive in January?
  • Will my health insurance benefits go up? 

Some of the answers are starting to come into focus.

Federal Pay in 2011

As far as a federal employee raise in 2011, the most likely answer at this point is an average increase of 1.4%. That is the amount that was proposed by the administration early in the year. (See Negotiations Starting on 2011 Pay Raise: How About 1.4%?) Also, an appropriations bill that includes a 1.4 percent average raise for federal employees cleared a Senate committee late last week. A House subcommittee has approved a 1.4% increase for military personnel although the House has passed an appropriations bill for the Department of Defense which includes a 1.9% increase for military personnel.

In other words, an average raise of 1.4% is not necessarily the final figure as anything could happen by the time a final figure is passed by Congress and approved by the President. Moreover, this is an election year and nothing focuses the attention of Congressional representatives more than retaining their seat for another two years.

The news media have been trumpeting the average pay for federal employees as being considerably higher than it is for private sector workers. An article in USA Today stated in the opening paragraph: “The number of federal workers earning six-figure salaries has exploded during the recession.” The article also stated: “The growth in six-figure salaries has pushed the average federal
worker’s pay to $71,206, compared with $40,331 in the private sector.” 

There have also been attempts to freeze federal pay in 2011. This has not been popular in Congress but it does give one a sense that there is not going to be a groundswell of support for a large pay increase in the pay of federal employees in 2011.

To give readers an idea of how widely this article has been read, a Google search using the terms “USA Today, federal pay” yields 15,900,000 results.

There is little doubt that the article has had an impact on federal pay for next year.

Federal employees have been receiving pretty good annual pay raises in
recent years. For example, the average federal employee received a pay raise of 3.9% in 2009. Federal employees received an average pay increase of 3.5% in 2008, 2.7% in 2007 and 3.1% in 2006 and 4.1% back in 2004.

Last year, federal employees received a basic pay increase of 1.5% with
an 0.5% locality pay increase to be distributed so that some localities
had a bigger increase than others.(See Your New Salary: How Much Will You Make in 2010?)

Keep in mind that your pay may be more than the average of 1.4% if that figure becomes a reality in 2011. Locality pay can make a considerable difference in your actual pay. You can use our pay calculator to see how much your pay actually changed in 2010 based on an average of 1.5%. For example, some federal employees in Atlanta received an actual increase of 2.13%; those in the Washington, DC metro area received about 2.42%.

Your COLA in 2011

In 2010, for the first time, there was no cost of living increase for federal retirees. (See What Happened to My COLA for 2010?)  What about in 2011?

It isn’t official yet but you will not be getting a COLA in 2011 either.

The federal inflation figures that are used to determine the amount of a cost of living increase currently show a decrease in prices instead of inflation pushing prices higher. While the time period for computing next year’s COLA does not end until September, the chances of this figures skyrocketing in the next few weeks is close to zero.

Keep in mind that the prices for goods and services the retirees use may still have gone up. But, while the prices you are paying may have gone up, these are not necessarily the items used to calculate your COLA. Under the regular consumer price index, transportation is 18% of the index; education is 6% and medical care is only 6%. Retirees are more likely to be going to a doctor or a hospital than getting a college education so the price index does not necessarily reflect your real expenses. (See No COLA for 2011? A Technical Change Could Mean a Raise Next Year)

Health Insurance Premiums

OPM’s annual call letter on the 2011 health insurance rates went out in April and asked insurance companies to submit their rates for 2011 by May 31, 2010. We do not know yet the health insurance premium rates for 2011. The call letter explains some of the changes you may expect in your health insurance plans next year.

Health care has been the predominant political issue in 2010. No doubt, some readers may be expecting little or no increase in their health insurance rates for 2011 as a result of the recent legislation enacted on health care.

But here is one clue about what will happen to health premium rates in 2011. “Preliminary results from Milliman’s 2010 Group Health Insurance Survey indicate premium rate increases continue to exceed the government’s official rate of inflation and are higher than premium increases in recent years. The estimated January 2011 renewal increases are about 9.0% for health maintenance organizations (HMOs) and 11.0% for preferred provider organizations (PPOs).”

Obviously, the rates for federal employees under the federal program could be lower. This article from the Society of Human Resource Management outlines some of the changes that will impact 2011 rates. While this article covers American society as a whole, the companies that provide insurance are still impacted by many of these changes and these will impact our 2011 rates.

This year’s open season for health benefits will run from runs from Monday, November 8, 2010 through Monday, December 13, 2010. When the new rates become available, we will make readers aware of the changes.

Summary

As with many Americans, federal employees and retirees are likely to feel a financial squeeze in 2011. Salary levels are likely to remain stable and retirees are likely to get little in the way of more income in their retirement checks in 2011. At the same time, check the health insurance premium rates and changes to your health insurance plans for 2011 as rates and coverage are likely to change and you may want to consider switching to a plan that may be a better fit for your individual needs and budget.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters onĀ federal human resources.

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