As we hit the mid-point of the first week of Senior Correspondent Mike Causey’s time away from the keyboard, we continue with “The Most Popular Federal Reports of the Year”. This (shortened) column was originally published on March 4th. The Nearly Useless Factoids will be freshened daily as time allows. sk
George Bernard Shaw once said “Youth is such a wonderful thing. It’s a shame to waste it on the young,” or words to that effect.
Much the same thing could be said about active duty federal workers who don’t appreciate some of the things they got until they lose them.
When the typical federal or postal worker retires, several things change:
Their income drops.
They lost a valuable tax break that helps many of them afford better health insurance at a time, and an age, when they need it most.
The vast majority of working feds get a major tax break. They are allowed to pay their health premiums with pre-tax dollars. It reduces their federal tax bite by anywhere from $300 to $800 a year. Not a fortune, but a big help, especially in these economic times. The perk, called Premium Conversion, is automatic in the sense that people get it unless they decline it. As a result many working feds don’t know they have the tax-break until they become retired feds and lose it.
Premium Conversion (PC) is available to working feds. President Clinton extended it to them via Executive Order years ago. But it will take an act of Congress before PC can be extended to federal-military retirees. The tax code must be changed.
Congress has been working on extending PC to federal (and now military) retirees for years, but it hasn’t gone anyplace regardless of which political party controlled the key committees – House Ways and Means and Senate Finance – that must approve it.
But things could be about to change.
Groups pushing PC for retirees think they have a good shot this year. Congress and the White House are controlled by the same political party. And some new political heavyweights have agreed to help move the legislation through Congress. Sen. Jim Webb (D-Va.) has introduced a bill (S. 491) to extend PC to active and retired military personnel as well as to retired civil servants. Reps. Chris Van Hollen (D-Md.), Frank Wolf (R-Va.) and Gerry Connolly (D-Va.) have introduced a companion bill (H.R. 1203) in the House.