Questions Loom Regarding 2021 Federal Pay
The coronavirus pandemic has had an impact in many areas of life that were, perhaps, not initially anticipated. In a recent article for Federal News Network, author Nicole Ogrysko explores one such area of impact: take-home pay for federal workers in 2021.
There are many factors that contribute to how federal pay is calculated. Ogrysko examines three particular factors that are more unpredictable than usual due to the pandemic:
- Health Insurance Premiums – The annual premium rates for the Federal Employees Health Benefits Program (FEHBP) for the upcoming year are calculated based on FEHB usage from the preceding year. That means that 2021 premium increases will be based upon 2020 FEHB usage. Due to the pandemic, many federal employees postponed elective surgeries and other procedures, resulting in lower FEHB usage for 2020 than expected. Overall, this has resulted in lower premium increases for 2021 than initially anticipated.
- Deferred Social Security Taxes – President Trump announced mandatory federal employee and military member participation in his payroll tax deferral policy. The policy temporarily waives payment of Social Security taxes for the last four months of 2020. However, unless Congress acts to permanently waive the taxes, they will need to be paid back in the first four months of 2021. This means that while federal employees are currently taking home 6.2% more on their paychecks than usual, they will be required to pay double Social Security taxes—totaling 12.4%—from each paycheck for the first four months of 2021.
- 2021 Pay Raise Unknowns – While federal workers are due for a 1% pay increase in 2021, unless Congress proposes and passes the pay raise, it will not happen.
All of these items together create a lot of uncertainty for federal workers regarding what their actual take-home pay will look like in 2021. For further details, click here to read the article in full at Federal News Network.