POINTS TO PONDER
Issue 01-05
from your Federation President
NARFE Members of California:
PREMIUM CONVERSION: As I visit Chapters I find that many members are still not aware
or understand the "Premium Conversion" Bills, H.R. 2125 and S. 1022
These bills, if passed, will allow retired federal employees to pay their monthly Federal Employee
Health Benefit Program (FEHBP) premiums with tax free dollars. (Current working federal
employees and Congressional Representatives already have this benefit.)
What does this really mean? Let's take for example that your monthly premium for family plan
is $350.00. Of that $350 you pay about 28% or $98.00 and our government pays the remaining 72%,
or $252.00. Therefore, for the year, you pay $1,176.00 (12 months x $98).
Let's assume your annual annuity is $25,000. Without considering any other deductions, you
would pay taxes, let's say, 28% of $25,000 which equals $7,000.
However, if the Premium Conversion Bills were passed, you would pay your FEHBP premiums
with pre-tax dollars, which means subtracting the $1,176 (you pay annually for FEHBP) from your
$25,000 annuity, which equals $23,824.
Thus, instead of paying taxes on $25,000, you would only pay taxes on $23,824. Again, using
the same tax rate, 28% of $23,824 equals $6,670 or an annual savings of $329
(i.e., $7,000 - $6,671 = $329)
KEEP IN MIND this is only an example; you need to compute your own tax and health plan
structure.
Now that you are an expert on premium conversion, it is important that you again contact your
Congressional Representative and our two Senators by phone, letter, e-mail, personal visit or post
cards. Request them respectively to support/co-sponsor House of Representative Bill H.R. 2125
and Senate Bill S. 1022.
In the August issue of "Retirement Life" you received three post cards addressing Premium
Conversion; one for your Congressional Representative and two for the two Senators, Boxer and
Feinstein. You were asked to fill in your name and address on one side, address the other side
with the appropriate Congressional Representative's name, and place a 21 cent stamp on the card
and mail them. Most of you did send these cards, but many of you did not.
Our National Legislative Staff feels these bills could pass next year, if we flood Congress with
our phone calls, letters, e-mails or post cards.
Post cards, like the ones in the August issue of "Retirement Life", are now available again.
Have ONE person in your Chapter contact National Headquarters Legislative Staff and ask for
whatever number of post cards you need for your Chapter members to fill out and send to Congress.
Phone Number 703.838.7760 ask for Jill Crissman, or Chris Farrell, or Dan Adcock. If you prefer,
e-mail your request to: legislation@narfe.org.
Till Next Time ....
Your California Federation President, Lea Zajac
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