| AFSA | RETIREE NEWSLETTER |
April,
2006
Volume 20, Number 2 |
American
Foreign Service Association, 2101 E Street NW, Washington, DC, 20037
Web: www.afsa.org E-mail afsa@afsa.org
Phone number (800) 704-AFSA
Join AFSA on May 4 for our annual Day on the Hill. As in past years, active-duty and retiree members and their spouses will visit Capitol Hill for face-to face visits with their members of Congress and their staffs. These visits provide an opportunity to discuss critical Foreign Service and retiree benefit issues.
Other retiree members can participate by making their views known through letters, e-mails, faxes or telephone calls to their senators and representatives in Washington, D.C. or by visiting their home district offices.
Members can find background information and position statements on both foreign affairs and retiree issues, sample letters and guidance about how to make contact with Congress in this newsletter, other AFSA mailings and on our Web site. Go to www.afsa.org and click on “Day On The Hill” on the home page.
Join your colleagues on May 4 in D.C. or in your home state and make this Day on The Hill our most successful ever.
The department’s annual Foreign Affairs Day celebration is scheduled for Friday, May 5. Invitations have been sent to previous attendees and new retirees. If you wish to receive an invitation, e-mail foreignaffairsday@state.gov or contact Chryss Hernandez at (202) 663-2383. During the day regional bureaus will host seminars on current foreign policy issues and Secretary of State Rice will speak at a gala luncheon in the Benjamin Franklin Room.
During Foreign Service Day Secretary Rice will also preside at the AFSA Memorial Plaque Ceremony. This ceremony honors Foreign Service personnel who lost their lives while serving their country abroad. The ceremony is an opportunity to commemorate those who made the ultimate sacrifice while serving under the authority of a Chief of Mission, and to acknowledge the dangers our Foreign Service personnel face every day around the world.
Everyone is also invited to AFSA’s Foreign Affairs Day Reception from 3-5 p.m. at the Foreign Service Club for complimentary hors d’oeuvres and a cash bar.
Phising Alert : Phony IRS and TSP E-Mails
Scammers are taking advantage of the fact that more than half of all tax returns will be filed electronically this year. They are sending phony e-mails to people expecting tax refunds, asking them to supply personal financial information before their refund checks can be issued. Thrift Saving Plan (TSP) participants have also received e-mails asking for private financial information. Both the Internal Revenue Service (IRS) and TSP have issued warnings in which they state that they do not send out unsolicited e-mails or ask people for PIN numbers, passwords or secret access information for credit card, bank or other financial accounts.
Troubles with RNet?
Judging from phone calls and e-mails, it seems many of us are being frustrated in our attempts to log on to the department’s online Retiree Network (www.RNet.state.gov).
Other things to check: 1. The PIN. 2. Use of a suffix (Sr., Jr., II, III, etc.). 3. The Date of Birth field “MMDD” with only month and date—no slash or dash, no year; i.e., for May 3, 1943, you would enter only 0503. 4. A password with at least eight characters using all four types of characters (UPPER CASE, lower case, numbers, special characters at the top of the keyboard except for -, _, and +). Example: ReTireD8% . If this doesn’t help you, contact the Help Desk at hrhelpdesk@state.gov or call (02)663-2000 or toll free 1-866-224-9053, ext. 3200. Norma Reyes, Retiree Recruitment and Communications Coordinator.
Meet Retiree Representative Leonard Baldyga
Leonard Balyga retired as a Career Minister from USIA after serving as Minister Counselor in New Delhi and Rome, PAO in Mexico and Warsaw, among other senior USIA positions. He also served as the Acting Director of the Murrow Center at the Fletcher School of Law and Diplomacy at Tufts. He is now a consultant at the International Research and Exchanges Board (IREX), on the editorial board of Encyclopedia Britannica’s Polish edition and board member of Committees of Partners for Democratic Change, Sabre Foundation and the Public Diplomacy Council.
Day on The Hill: Foreign Affairs Issues
Background
This year sees the beginning of several new initiatives that could affect the Foreign Service for many years to come.
After several years of AFSA effort, Overseas Comparability Pay (Locality Pay) may become a reality for Foreign Service personnel who are FS-01s and below and who are posted abroad.
Currently, the Senior Foreign Service and the intelligence community serving abroad get Washington, D.C.- level salaries. The administration has finally agreed that Overseas Comparability Pay is warranted for all Foreign Service members and included funding for this in the FY07 budget request. In exchange, our personnel system will become more of a pay-for-performance system. The Foreign Service, with its rank in person (and not in-position), the annual promotion reviews, the up-or-out system, the Time-in-Class (TIC), Time- in-Service (TIS) is essentially such a system, but other changes will be made. The new system will not have step increases, and a specific rank’s salary will be tied to a pay range, with increases to be determined by performance.
The nature of the personnel system will not be the only 2006 change for the Foreign Service. On January 18, at Georgetown University, Secretary Rice discussed in some detail her plans for U.S. diplomacy in the coming years and the role the Foreign Service will play. Secretary Rice explained the “Transformational Diplomacy” initiative:
The President said, "[America’s policy is] to seek and support the growth of democratic movements and institutions in every nation and culture with the ultimate goal of ending tyranny in our world." To achieve this bold mission, America needs equally bold diplomacy, a diplomacy that not only reports about the world as it is, but seeks to change the world itself. I and others have called this mission "transformational diplomacy."
The Transformational Diplomacy policy recognizes and unifies the essential goals of the United States and the Foreign Service for the last few years. Implementation of the Secretary’s initiative requires:
- A major repositioning of U.S. diplomatic personnel by moving hundreds of positions
largely from Europe and Washington to critical emerging areas in Africa, South Asia,
East Asia, the Middle East and elsewhere;
- Greater utilization of American Presence Posts, which will be manned by a single
diplomat working outside of the embassy in key regional population centers;
- Greater use of the Internet to create “Virtual Presence Posts”;
- Enhanced training so that diplomats will be expert in at least two regions and fluent in
two languages, with a greater emphasis on the “hard” languages.
AFSA fully supports these initiatives and asks Day On The Hill participants to help express support of the Secretary’s initiative. In particular, AFSA notes that the extention of Overseas Comparability Pay will finally end penalization of those willing to serve abroad.
2007 Funding Request
The past several years have been tough in terms of the budget. Yet even in these tough budget times the administration has requested increases in international affairs funding for the last five years in real terms. For FY07, the administration has requested $35.1 billion.
These funds are needed more than ever as the fight against international terrorism shifts from a purely military effort to a diplomatic one, as well as for the implementation of the Secretary’s transformational goals. Additionally, the Foreign Service must continue our more traditional efforts including the securing of traditional ties with other nations, improving our international trade position, helping the hungry and the sick of the world, stopping the spread of weapons of mass destruction, securing our borders, fighting both international crime and diseases such as a possible “bird flu” pandemic, and more.
The demands on diplomacy are growing, and it is important that Congress provide the funds requested. The world is becoming more competitive, challenging and dangerous for the United States. Diplomacy is the tool through which we speak and engage the world to protect our national interests. We can no longer - if we ever could - do diplomacy on the cheap; too much is at stake.
Overseas Comparability Pay
The lack of a full system of Overseas Comparability pay has been a critical issue for AFSA because of its unfair and adverse effect on Foreign Service personnel. Unlike members of the intelligence community and the Senior Foreign Service, Foreign Service personnel who are FS-01s and below and who are posted abroad do not receive Washington, D.C.-level pay. The pay disparity has led to a de facto eroding of the intent of the hardship and danger differentials. We believe that Foreign Service members should not be penalized for serving abroad. Last year, the lack of locality pay meant members serving abroad took a 16% pay cut, which adversely affected both salary and retirement contributions. (A person who joined the Service in 1995 and who will serve a full 27-year career, retiring at the FS-1 level will experience about a $440,000 loss in pay and retirement benefits). Today, the disparity between service in Washington and service abroad is 17.5%.
Reemployed Annuitants
Re-employed annuitants or WAEs (part-time, temporary or intermittent appointees) are subject to a cap on earnings. The sum of a WAE's salary and annuity during a calendar year cannot exceed the annuitant's salary at the time of retirement or the full-time salary of the position in which he or she was re-employed, whichever is higher. In practical effect, this means that an annuitant can work only for three to six months as a WAE. The Secretary of State can waive the cap on a case-by-case basis if such authority is necessary due to an “emergency involving direct threat to life or property or other unusual circumstances.”
Expansion of the Secretary’s waiver authority would give the department an important tool in meeting the immediate needs of the Transformational Diplomacy/Global Repositioning initiatives.
Foreign Service retirees have the language skills, cultural and professional experience and security clearances that permit them to move quickly and seamlessly into critical short-term positions. (And, because they have annuities and health benefits, they are less expensive than contractors.)
Language in pending Senate bill S. 600, which was inserted at the request of the administration, would expand waiver authority to include situations for which it is exceptionally “difficult to recruit or retain qualified employees.” Given their abilities, experience and availability, they are a resource we cannot afford to ignore.
Day On The Hill: Retiree Issues
Background
Retirees are fortunate to have dodged the bullet this Congressional session. There are no major pieces of legislation that reduce federal retiree benefits. On the other hand, AFSA-supported bills that would permit federal civilian and military retirees to pay health premiums on a pretax basis (Premium Conversion) and eliminate the Social Security offsets (the Windfall Elimination Provision and Government Pension Offset) have not made it out of critical committees. And, there are administration and other proposals not yet in the form of legislation that could affect the Federal Employee Health Benefits Program.
Windfall Elimination Provision (WEP)
Current law provides that if you work for an employer who does not withhold Social Security taxes, the pension you receive based on that employment will reduce your Social Security benefits from any other employment. The Windfall Elimination Provision applies to Foreign Service Retirement System (FSRDS) annuitants who were not eligible for a government annuity until after 1985. The WEP reduction can reduce a retiree's earned Social Security benefit by as much as 60 percent. There are approximately 755,000 current beneficiaries affected by the WEP, a number that grows by 60,000 a year.
Government Pension Offset (GPO)Elimination Provision
A related law, the Government Pension Offset, prevents FSRDS annuitants (who were first eligible to retire in December 1982 and later) from collecting both a government annuity that was not covered by Social Security and Social Security benefits that are based on the work record of their spouses. The effect of the GPO is that two thirds of a government annuity will offset any Social Security benefits payable to the retired government worker as a spouse. There are approximately 635,000 current beneficiaries affected by the WEP, a number that grows by 15,000 a year. The GPO most drastically affects low-income widows.
H. R. 147 and S. 619, introduced by Rep. Buck McKeon and Senator Dianne Feinstein, would repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO).
Premium Conversion
H. R. 994 and S. 484 would amend Section 125 of the Internal Revenue Code to allow federal civilian and military retirees to pay health insurance premiums on a pretax basis and allow deductions for TRICARE supplementary premiums.
Section 125 of the Internal Revenue Code allows federal employees to pay health insurance premiums with pre-tax earnings. This allows reductions on federal and social security taxes and, in some instances, state and local taxes. Federal employees who pay health premiums with pre-tax dollars save an estimated $435 a year. Section 125, however, does not extend this pre-tax or "premium conversion" benefit to civilian or military annuitants.
This inequity has serious implications. During the past eight years much of each COLA received by federal and military annuitants has been eroded by double-digit increases in health insurance premiums. Nonetheless, faced with increasing health costs on fixed incomes, annuitants must pay health insurance premiums with after-tax earnings. Current employees are also affected. Federal workers lose the premium conversion benefit on the date of retirement, at a time when the tax savings would be of great benefit.
Background: HSAs and the FEHBP
In his 2007 budget, President Bush proposed to include a Blue Cross/Blue Shield Health Savings Account (HSA) plan in the Federal Employees Health Benefits Program (FEHBP). Blue Cross, the largest FEHBP plan, would be able to offer a high-deductible health plan coupled with a tax-advantaged HSA that federal employees could use to pay for health care. (At present, FEHBP carriers offer 39 small HSA plans). The president also proposed to significantly increase the tax incentives for HSAs.
Our concern is that the inclusion of a Blue Cross HSA plan in the FEHBP would adversely affect the risk-sharing nature of FEHBP. Under employer-based or comprehensive health coverage, such as the FEHBP, people of varying health conditions are combined into a single insurance pool. This means that less healthy people can obtain insurance at an affordable price, rather than having to seek insurance in the open market where it could be too expensive or unavailable to them.
While tax benefits could make HSAs an attractive investment mechanism for some individuals, our concern is with the effect on the FEHB Program as a whole. What is not known is the extent to which the Blue Cross HSA plan would affect the FEHBP risk pool. The critical question is whether a move by Blue Cross into the HSA market would accelerate adverse selection and leave comprehensive plans with less healthy enrollees who require more health services. And if so, would this occur to the extent that comprehensive plans become more expensive and more restrictive in their services?
HSAs have been in use in FEHBP for only one year. A recent Government Accountability Office (GAO) analysis of this early experience with consumer-driven FEHBP health plans found that HSA enrollees, a small but growing number, were male, younger, healthier and better educated than other FEHBP enrollees and more likely to enroll in plans as individuals. GAO also found that enrollment in HSAs would have to reach sufficient levels for a sustained period of time before definitive conclusions about the costs and use of services could be drawn.
More information and analysis is needed before making a major change in a health care system that delivers excellent services and is seen as the gold standard for health plans.
Federal workers enrolled in the Federal Employees Health Benefits Program (FEHBP) could have electronic health care records if a new bill called the Federal Family Health Information Technology Act of 2006 is passed. The bill would require FEHBP insurance carriers to create electronic records for their participants. Carriers would also create a Web-based service that participants could use to add supplementary information about their health. NARFE has expressed some concern about funding the electronic system from the unused portion of the current 1% administrative fee.
We would like to allay concerns about a recent Mike Causey article in which he noted that the Republican Study Committee (a conservative group in the House) had made a number of fairly drastic cost-cutting proposals last fall. Two of them dealt with federal employees and retirees. One would involve using a high-five formula for calculating new annuities. The other would involve tenure-testing FEHBP premiums or reducing the government's share of health premiums by two percentage points for each year of service less than 30 years. Neither seems to be a realistic prospect for legislation at present. In fact, the Republican majority seems to be distancing itself from the Committee's proposals and budget cuts in general.
Although federal benefits were not cut this session, we recognize that there may be efforts to reduce FEHBP benefits in the future. Congress at some point may seek to have employees pay a higher share of health premiums. They now pay 28%. Also, because of a recent court-affirmed EEOC ruling, there may be little impediment to treating retirees under and over the age of 65 differently with regard to health coverage and premiums. The case will go to the Supreme Court, where it appears likely to be affirmed.
AFSA will continue to monitor retirement benefits and keep you informed.
Retiree Directory Corrections and Additions
Colorado
Carolyn J. Jenkins, (H) 719-540-6388, carolynj@frii.com
Florida
Frances Kinney, 7740 Indian Oaks Dr., #G120, Vero Beach FL 32966, (H) 772-563-2992
Hawaii
David B. Monk, 7476 Keka’a St., Honolulu HI 96825, (H) 808-396-5959
Idaho
Samuel H. Butterfield, butterfield@lentilland.com
Kentucky
CWilliam Struck, 1802 Ballard Mill Lane, Louisville KY 40207-1724, H: 502-894-8249, wwstruck@yahoo.com
Massachusetts
Samuel B. Bartlett, sbbartlett@adelphia.net
Michigan
Robert T. (Ted) Curran, 940 Crystal Downs, Frankfort MI 49635, (C) 301-320-2664, currantc@msn.com
New York
Howard Stoffer, (W) 212-457-1108
North Carolina
Barbara J. DeJournette, 203 Countryview Ln., Eden NC 27288, (H) 336-623-8795, bdejournette@bellsouth.net
Oregon
Arthur S. Lezin, alezin@bendbroadband.com
Texas
Charles E. Hagemann, chagemann@satx.rr.com
Virginia
Daniel H. Erickson, III, dherick2@aol.com
Philip Harrick, pharrick@comcast.net
Robert Hechtman, hechtman1@verizon.net (Corrected correction.)
Margaret A. Murphy, mamurphy2002@aol.com
Douglas K. Watson, douglaswatsonis@hotmail.com
Edward H. Wilkinson, (H) 703-356-9233, (O) 703-633-1357, ehw0605@verizon.net
During the month of February, our retiree coordinators provided assistance to 35 retiree members.
AFSA Retiree Staff
Bonnie
Brown, Retiree Counseling and Legislative Coordinator, Monday through
Wednesday at (202) 944-5509 or 1 (800) 704-2372, ext.509, or at brown@afsa.org.
Norma Reyes, Retiree Recruitment and Communications Coordinator, Monday,
Wednesday and Thursday at (202) 944-5514 or 1 (800) 704-2372, ext. 514,
or at reyes@afsa.org.
