Taking home less take home

Many federal workers and a majority of retirees will see their spendable income drop next year. Not your gross, but the all important net. That’s what’s left after Uncle Sam, your State, and maybe city and county government have removed what they need.

The take-home concept is simple: It’s what you get to take home. The money you use to pay bills, buy food and put diesel in your VW.

So, here’s the outlook both for white collar workers who will likely get a pay raise in 2016 and for retirees who are probably not going to get any sort of cost of living adjustment next year.

Workers: White collar feds who are expecting a small (1 percent to 1.3 percent) pay hike could see most if not all of the raise eaten up by higher health insurance premiums. Rates in the giant Federal Employees Health Benefits Program (FEHBP) going up an average of 6.4 percent, overall. But the average increase for individuals will be 7.4 percent. Uncle Sam will continue to pay about 70 percent of the total premium, but costs to workers are going up in many plans.

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Retirees: Retirees could get a double whammy next year. First, there is the strong likelihood that there will not be a cost-of-living adjustment in 2016. Living costs have been generally flat, because of the big drop in gasoline prices, and the government is likely to announce later this month that there has not been enough inflation to trigger a retiree increase.

Added to that problem, premiums for Medicare Part B are going up next year by more than 50 percent. That could hit lots of retired feds. For a full explanation, click here.

What can you do? Whether active or retired, you can take steps to avoid a drop in your take home pay or take-home annuity amount next year. Shop. Shop, for real, during the health insurance open season that starts Nov. 9 and runs through Dec. 14.

Health premiums in most plans are going up. Some a little, some a lot. Employees in the popular APWU high option self and family plan will pay an additional $69.37 per pay period starting in January. Retirees in the same plan will see their premiums go up $150.30 per month. People who switch to the new self-plus one option will pay $155.07 every two weeks compared to $215.60 for the self-plus family option.

The changes in the APWU plan is one of the few instances where there is a big difference between self-plus one and self-plus family coverage premiums.

Bottom line to avoid a hit in your take home pay/pension next year you will have to make some choices (in some cases hard choices) during the health insurance hunting season.

So what are the odds you will do the right thing and bag the best health plan during the upcoming season? Check out tomorrow’s column and prepare to be ashamed!

Nearly Useless Factoid:

By Michael O’Connell

Patricia Roberts Harris, the first black women become a U.S. ambassador,  took her post as ambassador to Luxembourg on Oct. 6, 1965.

Source: This Day Trivia