August 2008 Newsletter - American Foreign Service Association
August 2008 Newsletter - American Foreign Service Association August 2008 Newsletter - American Foreign Service Association
Page 2 AFSA Newsletter For Your Information COLA Jumps to 6.2 Percent in July Foreign Service retirees, whose annuities and Social Security benefits are increased each year by the cost of living adjustment will be pleased to know that the COLA increased by 0.5 percent to 6.2 percent in July. The COLA is based on changes in the consumer price index from the third quarter of one calendar year to the next. Retirees have accumulated 6.2 percent toward the 2009 COLA, with two months remaining in the counting period. Cost of living adjustments sustain the value of federal annuities, survivor annuities and Social Security payments by adjusting these payments to keep pace with inflation. August price indices will be released on Thursday, Sept. 16. There is a possibility that the COLA will rise considerably more before the end of the counting period, and that this may tempt Congress to reduce or delay the start of the 2009 adjustment for federal annuities. While Congress passed the first law requiring automatic COLA increases for federal retirement benefits in 1962, it has adjusted the formula for calculating it or the date on which the COLA takes effect more than a dozen times since then. Although Congress could by law do the same with respect to the Social Security COLA, this is not likely to happen. Please note that the full COLA applies to annuities in the old retirement system, FSRDS. In contrast, the new system, FSPS, uses a somewhat more complicated formula to provide a smaller benefit. If the change in the COLA is between 2 percent and 3 percent, the FSPS COLA becomes 2 percent. If the COLA increase is more than 3 percent, the FSPS COLA becomes 1 percent less than the increase. SLF Planning for Change Seminar The Senior Living Foundation of the American Foreign Service is pleased to announce that it will host its “Planning for Change” seminar on Sept. 18, 2008, from 1 to 5 p.m. with a reception immediately following. The event will be held at the Beacon Hotel located at 1615 Rhode Island Avenue NW in Washington, D.C. This year’s invited speakers are experts in the fields of prescription medication concerns for seniors, Medicare and Social Security, as well as wills and trusts. The series of informative discussions will explore many areas in which understanding and advanced planning make all the difference. If you would like to attend the “Planning for Change” seminar or get more information, please contact the Foundation at (202) 887-8170 or at info@slfoundation.org. Space is limited, so RSVP today! WETA Invitation AARP and WETA 26 are inviting AFSA Retirees to a live taping of public television’s longest-running news and public affairs program, Washington Week and National Journal with Gwen Ifill. The event will take place on Friday, Sept. 5, 2008 at 5:45 p.m. at the George Washington University Lisner Auditorium. The taping includes a Washington Week extra : an additional half-hour special, featuring a question and answer session with the audience. A reception will follow. Guests must be seated by 5:30 p.m. Taping begins at 5:45 p.m. This free event is open to the public, but reservations are required. For tickets, please call (703) 998-2691, or e-mail lcircle@weta.com.
Page 3 AFSA Newsletter Some Legislative Issues To Watch Medicare Payments to Physicians On July 15, the House and Senate voted to override a presidential veto of H.R. 6331. The override reversed a July 1 payment cut of 10.6 percent for physicians who treat Medicare beneficiaries. Lawmakers responded to widespread concern that the cut would discourage doctor participation in Medicare. The override also took funds from private insurers who run Medicare Advantage plans to reimburse doctors who have Medicare patients. The House voted 383-41 and the Senate voted 70-26 in favor of overriding the veto. Medicare D Costs for Participants In a recent report, the House Committee on Oversight and Government Reform reported that taxpayers are paying up to 30 percent more for prescription drugs under Medicare's privatized Part D program for seniors and the disabled than under the government's Medicaid program for the poor. Under Medicaid, drug companies are required to sell prescription drugs to the government at discounted prices. Private Medicare Part D plans are not subject to the same discount requirement. Since Part D went into effect two years ago, drug manufacturers have earned $3.7 billion more than they would have through prices under the Medicaid program, committee investigators found. Chairman Henry A. Waxman (D-Calif.) said he would introduce legislation to guarantee that federal taxpayers are not charged higher prices under Medicare Part D than under Medicaid. In response, Rep. Thomas M. Davis (R-VA.), ranking Republican on the oversight committee, said that the cost of Medicare D had been 40 percent lower than original estimates and that more economically disadvantaged seniors have access to prescription drugs than ever before. TSP The Federal Retirement Thrift Investment Board is considering a proposal to allow the spouses of deceased federal employees to continue managing their TSP funds instead of withdrawing them within 60 days. According to a FRTIB official, this would bring the system into line with many private sector plans, but would require full implementation of new technical upgrades. The proposal would require congressional authorization. Recent tobacco legislation adopted by the House contains some unrelated provisions that affect the Thrift Savings Plan. The bill provides for automatically enrolling new employees and beginning immediate employer matching contributions; adding a Roth account option; and giving authority to the FRTIB to permit participants to invest in mutual funds outside the funds currently offered by the plan. Critics have questioned whether this latter provision would change the investment philosophy of the TSP. Companion legislation would have to be adopted by the Senate and signed by the President for these provisions to go into effect. Unused Sick Leave In the bill mentioned above, the House also voted to allow federal employees in the new federal retirement systems — and by implication the Foreign Service Pension System — to receive retirement credit for their unused sick leave. At present, employees in the old retirement systems can apply their unused sick leave toward retirement, but employees in the new systems cannot. The bill would allow employees who retire in the next three years to get credit towards retirement for 75 percent of their unused sick leave. Employees retiring after this time would get credit for all of their unused sick leave. Since years of service is one part of the formula used to calculate annuities, getting credit for unused sick leave could increase annuities.
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Page 2 AFSA <strong>Newsletter</strong><br />
For Your Information<br />
COLA Jumps to 6.2 Percent in July<br />
<strong>Foreign</strong> <strong>Service</strong> retirees, whose annuities and<br />
Social Security benefits are increased each year<br />
by the cost of living adjustment will be pleased<br />
to know that the COLA increased by 0.5 percent<br />
to 6.2 percent in July.<br />
The COLA is based on changes in the consumer<br />
price index from the third quarter of one calendar<br />
year to the next. Retirees have accumulated<br />
6.2 percent toward the 2009 COLA, with two<br />
months remaining in the counting period. Cost<br />
of living adjustments sustain the value of federal<br />
annuities, survivor annuities and Social Security<br />
payments by adjusting these payments to<br />
keep pace with inflation. <strong>August</strong> price indices<br />
will be released on Thursday, Sept. 16.<br />
There is a possibility that the COLA will rise<br />
considerably more before the end of the counting<br />
period, and that this may tempt Congress<br />
to reduce or delay the start of the 2009 adjustment<br />
for federal annuities. While Congress<br />
passed the first law requiring automatic COLA<br />
increases for federal retirement benefits in<br />
1962, it has adjusted the formula for calculating<br />
it or the date on which the COLA takes effect<br />
more than a dozen times since then. Although<br />
Congress could by law do the same<br />
with respect to the Social Security COLA, this is<br />
not likely to happen.<br />
Please note that the full COLA applies to annuities in the old<br />
retirement system, FSRDS. In contrast, the new system,<br />
FSPS, uses a somewhat more complicated formula to provide<br />
a smaller benefit. If the change in the COLA is between<br />
2 percent and 3 percent, the FSPS COLA becomes 2 percent.<br />
If the COLA increase is more than 3 percent, the FSPS COLA<br />
becomes 1 percent less than the increase.<br />
SLF Planning for Change Seminar<br />
The Senior Living Foundation of the <strong>American</strong> <strong>Foreign</strong><br />
<strong>Service</strong> is pleased to announce that it will host<br />
its “Planning for Change” seminar on Sept. 18, <strong>2008</strong>,<br />
from 1 to 5 p.m. with a reception immediately following.<br />
The event will be held at the Beacon Hotel located at<br />
1615 Rhode Island Avenue NW in Washington,<br />
D.C. This year’s invited speakers are experts in the<br />
fields of prescription medication concerns for seniors,<br />
Medicare and Social Security, as well as wills<br />
and trusts. The series of informative discussions<br />
will explore many areas in which understanding and<br />
advanced planning make all the difference.<br />
If you would like to attend the “Planning for Change”<br />
seminar or get more information, please contact the<br />
Foundation at (202) 887-8170 or at<br />
info@slfoundation.org. Space is limited, so RSVP<br />
today!<br />
WETA Invitation<br />
AARP and WETA 26 are inviting AFSA Retirees to a<br />
live taping of public television’s longest-running<br />
news and public affairs program, Washington Week<br />
and National Journal with Gwen Ifill. The event will<br />
take place on Friday, Sept. 5, <strong>2008</strong> at 5:45 p.m. at<br />
the George Washington University Lisner Auditorium.<br />
The taping includes a Washington Week extra :<br />
an additional half-hour special, featuring a question<br />
and answer session with the audience. A reception<br />
will follow.<br />
Guests must be seated by 5:30 p.m. Taping begins<br />
at 5:45 p.m. This free event is open to the public,<br />
but reservations are required.<br />
For tickets, please call (703) 998-2691, or e-mail<br />
lcircle@weta.com.
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