Federal benefits face possible cuts in House Republicans’ budget resolution

Although the details of House Republicans’ narrowly approved budget framework are still up in the air, some initial proposals show the possibility of changes to federal benefits, mainly in retirement and health care.

As part of the GOP budget resolution, the House Oversight and Government Reform Committee is looking at cuts of at least $50 billion from its mandatory spending, according to the framework that lawmakers approved in a vote of 216-214 on Thursday. That level of spending cuts would almost certainly dig into federal benefits, the National Active and Retired Federal Employees Association (NARFE) said.

“Given the only major mandatory spending under the committee’s jurisdiction is federal retirement and health benefits, cuts of such a magnitude would necessarily come from cuts to federal retirement and health benefits,” NARFE wrote in a letter to Congress last week.

It will still take weeks — or even months — before House and Senate Republicans work out the exact details of the budget framework and push the bill’s text into a final product. A final version of the budget is expected to come out later this spring or summer, with more voting taking place in the meantime. But with both House and Senate Republicans agreeing to identical versions of the budget resolution, they will be able to pass the legislation in a simple majority vote while circumventing filibuster rules.

A spokesperson for Oversight Committee Republicans declined to comment on where the proposed spending cuts would most likely move forward. But many proposals are already circulating, including several possibilities that could bring changes to federal employees’ retirement benefits, health insurance and more.

Although nothing is final yet, here are a few of the possibilities that Oversight Republicans are considering as part of mandatory spending cuts.

Possibilities for changing FEHB premiums

A handful of proposals on the table as part of the budget resolution would make changes to the Federal Employees Health Benefits (FEHB) program. Notably, one of the proposals for the Oversight Committee would switch the FEHB program from its current shared premium model to a flat-rate “voucher” model.

Under the statute, the government currently pays 72% of the weighted average of all FEHB plan premiums — and FEHB enrollees pay the rest of the share, with their exact premiums being based on the plan they are enrolled in. Because the government’s share is based on the weighted average premiums, the portion the government pays rises along with health costs and annual premium hikes.

But under a possible switch to a “voucher” model for both FEHB and the Postal Service Health Benefits (PSHB) program, the government’s contributions toward health premiums would instead likely be tied to consumer price increases.

Lawmakers estimated that the changes could save between $16 billion and $18 billion over 10 years. But John Hatton, NARFE’s vice president of policy and programs, raised concerns that a flat-rate model would exponentially increase how much FEHB participants would be required to pay into the program, adding up to a “substantial” amount over time.

“The costs for federal employees in the first year may not look massive, but when you get to year 10, all of a sudden you’re paying a lot more,” Hatton said in an interview. “It gets worse over time, and it can spiral into more programs too.”

Over the course of a decade, the government’s share of premiums costs could decrease to below 50%, rather than the current 72% share, according to NARFE’s calculations.

In the last few years, FEHB premiums have been rising substantially. For 2025, enrollees’ premiums rose by an average of 13.5% — the highest year-over-year premium increase in over a decade. In 2024, FEHB premiums also went up by an average of 7.7%, and in 2023, increased by 8.7% on average.

Reducing improper payments in FEHB

Another proposal from lawmakers could change FEHB in an effort toward reducing improper payments and removing ineligible enrollees from the program.

The “Federal Employees Health Benefits Protection Act,” which lawmakers are considering enacting as part of the budget resolution, would require the Office of Personnel Management to audit feds’ family members who are currently enrolled in the FEHB program. OPM would then remove any individuals found to be ineligible for FEHB health benefits.

In 2023, the Government Accountability Office reported that ineligible FEHB enrollees cost OPM nearly $1 billion annually. Last year, as a result of those findings, OPM began addressing the problem by setting more stringent requirements for agencies to validate enrollees and requiring agencies to verify participant eligibility of a 10% random sample of FEHB enrollments.

NARFE said it’s not necessarily opposed to the further changes, but cautioned that the way it’s implemented will be critical.

“Our only concern is the potential that efforts to prevent those who are ineligible for benefits inadvertently take away benefits from individuals who are eligible family members, perhaps by placing overly burdensome requirements for proof of eligibility,” NARFE wrote in its letter to Congress.

Proposed changes to FERS contributions

The budget resolution could additionally include changes to retirement benefits for many federal employees and annuitants through the Federal Employees Retirement System (FERS).

In one proposal from House Republicans, lawmakers are considering increasing federal employees’ FERS contribution rates to a 4.4% across-the-board contribution toward the civil service retirement and disability fund.

Currently, FERS employees contribute 0.8% if they were hired in 2012 or earlier, 3.1% if they were hired in 2013, and 4.4% if they were hired during or after 2014.

The changes, if implemented, would put all federal employees at a contribution rate of 4.4%. The proposal would not alter the value of federal employees’ annuity payments, but it would result in feds paying more from their paychecks into OPM’s retirement fund.

“That’s really nothing more than across-the-board pay cut for federal employees,” Hatton said.

House lawmakers estimated the changes to FERS contributions could save $44 billion over 10 years. But many details of the possible implementation in the proposal are still unclear. It may be weeks or months before more specifics emerge about the effective date, or who exactly would be impacted.

Making more feds at-will employees

On top of the FERS contribution changes, a separate proposal from Republicans that may work its way into the budget resolution would convert new federal employees to be at-will if they don’t accept a higher FERS contribution rate.

Under the proposal, future federal employees would maintain a FERS annuity contribution rate at or below 4.4% if they opt for an at-will classification. But those who choose to maintain their merit system protections would see a higher contribution rate.

“It’s a trade-off between employees getting greater pay or losing some job security,” Hatton said. “The merit-based civil service protections are not designed to protect employees, they’re designed to ensure a non-partisan civil service that favors expertise.”

The lawmakers’ proposal aligns with the Trump administration’s efforts to reclassify broad swaths of career civil servants to remove their job protections, make them at-will employees, and make it easier for agencies to fire them. The White House has said the move would increase accountability, but critics have argued that removing those job protections would politicize the career civil service.

Changing high-3 to high-5 for retiring feds

Republicans have also been eyeing possible changes to the current “high-3” calculation for determining the value of federal employees’ retirement annuities.

Currently, the retirement formula calculates federal employees’ annuities by taking the average of their highest three consecutive years of earnings. But the proposal, if implemented, would move federal employees instead to a “high-5” calculation for the FERS retiree benefit — in other words, calculating feds’ annuities based on the average of their highest five consecutive years of earnings in the civil service.

Lawmakers estimated the switch to “high-5” instead of “high-3” would save the government $4 billion over the course of a decade. But NARFE argued that the change would be unfair especially to those who are at or near retirement age.

“It would break promises to retirees by reducing the value of their vested benefits,” NARFE wrote. “The annuities are not gifts; they were earned. Diminishing their value in any way fails to honor the commitments made to these public servants.”

Removing FERS supplemental payments

Another proposal from House Republicans seeks to eliminate FERS supplemental retirement payments, which the lawmakers said would save somewhere between $5 billion and $13 billion over the next 10 years.

By law, federal employees who retire before age 62 earn a supplemental FERS payment to bridge the gap until they become eligible for Social Security. But House Republicans are considering entirely removing that benefit for federal retirees.

If the supplemental FERS payment is removed, Hatton said it would hit first responders, such as federal firefighters or law enforcement officers, the hardest. Since they are required to retire by age 57, they would spend a longer time earning lower annuity payments between when they retire, and when their Social Security benefits eventually kick in.

All combined, Hatton said he believed the proposals stemming from the Oversight Committee would have compounding negative impacts on the entire federal workforce, as well as federal retirees. Still, he recommended that federal employees should not make retirement or benefits decisions based only on what Congress might do.

“The federal workforce is already under assault from reductions in force and a loss of merit system protections,” Hatton said. “Adding these changes on top of all of that would just further hurt them.”

If you would like to contact this reporter about recent changes in the federal government, please email drew.friedman@federalnewsnetwork.com or reach out on Signal at drewfriedman.11

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