August 2023 NARFE Magazine

A NARFE PUBLICATION FOR FEDERAL EMPLOYEES AND RETIREES

August 2023 VOLUME 99 ★ NUMBER 6

P. 26 Using Your Voice on Capitol Hill

P. 34 Saving for College

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For more information, call (866) 787-9775 or visit brookdale.com/NARFE. Applicable to all discounts: Residents under a Life Care Agreement are not eligible for the discounts. These discounts do not apply to any room, board or services which are paid for all or in part by any state or federally funded program. Discounts are available to members and their family members, including spouse, adult children, siblings, parents, grandparents, and corresponding in-law or step adult children, siblings, parents, and grandparents through current spouse. Subject to availability. Further restrictions may apply. *Discount is only applicable to new residents of a Brookdale independent living, assisted living, or memory care community admitting under an executed residency agreement. Discount applies only to the monthly fee/basic service rate, excluding care costs and other fees and is calculated based on the initial monthly fee/basic service rate. **Discount is only applicable to new clients of personal assistance services by a Brookdale agency under an executed service agreement. ***Discount is only applicable to new residents of a Brookdale assisted living or memory care community admitting under an executed respite agreement. Discount applies to the daily rate.

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P. 26 Using Y Voice on Capitol

Contents AUGUST 2023

COVER STORY PAGE 26

FEATURE PAGE 34

USING YOUR VOICE ON CAPITOL HILL Grassroots advocacy strategies to get your point across and make a difference.

SAVING FOR COLLEGE How students, parents and grandparents can meet the rising costs of higher education while minimizing taxes.

Special Feature

Columns

51 NARFE 2022 Financial

4 From the President

Statements

Washington Watch

8 NARFE Submits Comments on 9 Biden Signs Debt Limit and

6 NARFE Online

Fight to Repeal WEP, GPO

11 Senate Committee Advances

Legislation to Fix Retirement Error for CBP Officers

12 OPM Renews FLTCIP Contract with John Hancock, Premium Increases to Come

14 Bill Tracker

P. 34

Saving fo College P. 26 Using Your Voice on Capitol Hill

44 Managing Money Departments

10 Steady Progress Continues in

August 2023 VOLUME 99 ★ NUMBER 6

24 Benefits Brief

PSHB Interim Final Rule Budget Deal Into Law

A NARFE PUBLICATION FOR FEDERAL EMPLOYEES AND RETIREES

20 Questions & Answers

P. 34 Saving for College

ON THE COVER Illustration by TGD

21 Countdown to COLA 46 NARFE News 62 NARFE Perks 64 The Way We Worked

Connect with us!

Visit us online at www.narfe.org Like us on Facebook NARFE National Headquarters Follow us on Twitter @narfehq

Follow us on LinkedIn NARFE

NARFE MAGAZINE www.NARFE.org

1

AUGUST 2023 VOLUME 99 ★ NUMBER 6

REGIONAL VICE PRESIDENTS

EDITORIAL DIRECTOR Jenn Rafael

REGION I Jeff Anliker

CREATIVE SERVICES MANAGER Beth Bedard CONTENT MANAGER Matt Sanderson ADDITIONAL GRAPHIC DESIGN TGD EDITORIAL BOARD William Shackelford, Kathryn E. Hensley, Johann De Castro CONTACT US NARFE Magazine 606 North Washington St. Alexandria, VA 22314-1914 Phone: 703-838-7760 Fax: 703-838-7781 Editorial: communications@narfe.org Advertising Sales: Francine Garner advertising@narfe.org

NARFE FOR THE VISUALLY IMPAIRED ON THE TELEPHONE: This publication can be heard on the telephone by persons who have trouble seeing or reading the print edition. For more information, contact the National Federation of the Blind NFBNEWSLINE® service at 866-504-7300 or go to www.nfbnewsline.org.

ON DIGITAL AUDIO: Issues of NARFE Magazine are also available in audio format through the National Library Service for the Blind and Physically Handicapped (NLS). For availability, call 202-727-2142 or your local NLS service provider.

The Association, since July 1970, has been classified by the IRS as a tax-exempt labor organization [not a union]; however, dues and gifts or contributions to the Association are not deductible as charitable contributions for income tax purposes.

NATIONAL OFFICERS WILLIAM SHACKELFORD President; natpres@narfe.org KATHRYN E. HENSLEY Secretary/Treasurer; natsectreas@narfe.org

INTERIM CHIEF OF STAFF JOHANN DE CASTRO jdecastro@narfe.org

(Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont) Tel: 413-813-8136 Email: jeff.anliker@outlook.com

REGION II Larry Walton (Delaware, District of Columbia, Maryland, New Jersey and Pennsylvania) Tel: 443-831-1791 Email: rvp2@narfe.org

REGION III Lynn Harper (Alabama, Florida, Georgia, Mississippi, South Carolina and Puerto Rico) Tel: 478-951-3260 Email: lynn_harper@msn.com

REGION IV Robert L. Helfrich (Illinois, Indiana, Michigan, Ohio and Wisconsin) Tel: 317-501-1700 Email: rlhelfrich@yahoo.com

REGION V Cindy Reneé Blythe

TO JOIN NARFE, RENEW YOUR MEMBERSHIP OR FIND A LOCAL CHAPTER: CALL (TOLL-FREE) 800-456-8410 OR GO TO www.narfe.org TO CHANGE YOUR ADDRESS, PHONE NUMBER OR EMAIL LISTING:

CALL (TOLL-FREE) 800-456-8410 EMAIL memberrecords@narfe.org OR GO TO www.narfe.org, log in and click on “My Account”

TO REACH A FEDERAL BENEFITS SPECIALIST:

(Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) Tel: 785-256-1450 Email: mrsdocbusyb@yahoo.com

REGION VI Marshall L. Richards (Arkansas, Louisiana, Oklahoma, Republic of Panama and Texas) Tel: 903-660-2784 Email: pappysdad@cobridge.tv

REGION VII Sharon Reese (Arizona, Colorado, New Mexico, Utah and Wyoming) Tel: 575-649-6035 Email: rvp7@narfe.org

REGION VIII Robert H. Ruskamp (California, Hawaii, Nevada and Republic of Philippines) Tel: 703-628-3234 Email: ruskampr@gmail.com

EMAIL fedbenefits@narfe.org

REGION IX Steven Roy

NARFE HEADQUARTERS

(Alaska, Idaho, Montana, Oregon and Washington) Tel: 425-344-3926 Email: stevenroy1@yahoo.com

606 N. Washington St. Alexandria, VA 22314 703-838-7760 Hours of operation: Monday-Friday, 8 a.m.-5 p.m. ET

REGION X Robert Allen (Kentucky, North Carolina, Tennessee, Virginia and West Virginia) Tel: 757-404-3880 Email: rvp10@narfe.org

NARFE Magazine (ISSN 1948-4453) is published monthly except in February and July by the National Active and Retired Federal Employees Association (NARFE), 606 N. Washington St., Alexandria, VA 22314. Periodicals postage paid at Alexandria, VA, and additional mailing offices. Members: Annual dues includes subscription. Nonmember subscription rate $48. Postmaster: Send address change to: NARFE Attn: Member Records, 606 N. Washington St., Alexandria, VA 22314. To ensure prompt delivery, members should also forward changes of address without delay. Because of the volume involved, NARFE cannot acknowledge nor be responsible for unsolicited pictures and manuscripts, although every reasonable precaution is taken. All submissions become the property of NARFE. Copyright © 2023, NARFE. Advertisements in the magazine are not endorsements of products and/or services by NARFE, unless officially stated in the ad. We shall accept advertising on the same basis as other reputable publications: that is, we shall not knowingly permit a dishonest advertisement to appear in NARFE Magazine, but at the same time we will not undertake to guarantee the reliability of our advertisers.

2

NARFE MAGAZINE AUGUST 2023

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Aetna Medicare is a PPO plan with a Medicare contract. Enrollment in our plans depends on contract renewal. See Evidence of Coverage for a complete description of plan bene�ts, exclusions, limitations and conditions of coverage. Plan features and availability may vary by service area.

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Health insurance plans are o�ered and/or underwritten by Aetna Life Insurance Company (Aetna).

This is a brief description of the features of this Aetna health insurance plan. Before making a decision, please read the plan’s applicable federal brochure(s). All bene�ts are subject to the de�nitions, limitations and exclusions set forth in the federal brochure. Plan features and availability may vary by location and are subject to change. Aetna does not provide care or guarantee access to health services. For more information about Aetna plans, refer to AetnaFeds.com/RetireePlans ©2023 Aetna Inc. Y0001_GRP_4009_3488_2021_M 19.12.345.1 A (9/21)

From the President

NARFE’S MISSION STATEMENT To support legislation and regulations beneficial to federal civilian employees and annuitants and potential annuitants under any federal civilian retirement system and to oppose those detrimental to their interests.

To promote the general welfare of federal civilian employees and annuitants and potential annuitants, to advise and assist them with respect to their rights under retirement, health and other employee and retiree benefits laws and regulations, and to represent their interests before appropriate authorities.

To cooperate with other organizations and associations in furtherance of these general objectives.

August Is for NARFE Advocacy

T

o many, the month of August is the most important time on the NARFE calendar. Originally designated as

“NARFE Lobby Month” and during election years “Meet Your Candidates Month,” this is the time we can expect to see our members of Congress without traveling to their Capitol Hill offices in Washington.

Many representatives and senators use the August congressional recess to return to their local “grassroots” offices. As such, NARFE designates August as Grassroots Advocacy Month. Many lawmakers will conduct town-hall-style meetings all over their districts or states. These events provide the best chance for constituents to let their elected representatives know what is important to them, and they provide you with the opportunity to make certain that elected officials know about and understand NARFE’s concerns. The most important thing is to tell them how the issues affect you specifically.

Many of you have already had virtual contact with your members of Congress or their staff by participating in LEGcon23, our legislative training conference. At LEGcon, you received training over two days that can also be beneficial to prepare you for face-to-face meetings with lawmakers during the August recess.

NARFE chapters are always looking for a good program for the chapter meeting. Although some of our chapters take the summer off, hosting a “Meet Your Representative” event could prove extremely valuable. Members of Congress are always looking for opportunities to greet constituents, so be sure to invite them to meetings in August. A chapter could invite all the NARFE members in the congressional district, or several nearby chapters, and also open it up to the public. And don’t forget to notify local media about the upcoming meeting. Not only 4

NARFE MAGAZINE AUGUST 2023

would members get to hear the views of those who represent them, but NARFE could also garner some positive publicity for putting on the program.

There’s never been a more critical time to speak out. I urge you during NARFE’s Grassroots Advocacy Month to continue to use the vast resources on NARFE’s advocacy webpage, and be sure to articulate how issues affect you personally.

Regardless of the meeting method, the same general principles apply—have a concise, effective message; keep it simple; tell your story; and have a clear “ask.”

Don’t forget to keep your conversation local, with state- and district-specific information. After the meeting, send a thank you note and include any necessary follow-up information.

We are building on the progress from the last Congress to rally even more congressional support for repeal or reform of WEP and GPO. As of June 22, there were 284 House cosponsors of the repeal bill, H.R. 82. We’re going to keep the pressure on Congress to act. We’re incrementally gaining support for the Equal COLA Act, H.R. 866, to provide FERS retirees with a full COLA when inflation is high. And NARFE continues to push for improvements to OPM customer service, relief from federal long-term care premium increases, ensuring FEHB plans benefit from prescription drug cost savings. Please visit our website’s advocacy section to learn more.

I encourage you to continue contacting your representatives through NARFE’s Legislative Action Center. As leaders, I also hope you will engage in regular grasstops advocacy throughout the year by responding to calls to action in NARFE Voices. As they listen to the issues affecting constituents, it’s important that they hear your voice, and NARFE’s voice. Silence is not golden but consent!

Thank you,

WILLIAM SHACKELFORD NARFE NATIONAL PRESIDENT natpres@narfe.org

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SAVE MONEY WITH NARFE PERKS WHETHER you are planning your next vacation or move, buying a gift or planning for retirement, members can save money on everyday purchases with special discounts from our Affinity Partners. Visit www.narfe.org/perks or see p. 62.

Stay Informed About News That Matters to You

W

ant to stay on top of key federal news and benefits information?

Subscribe to NARFE Daily News Clips.

This newsletter features breaking news and informative articles from various outlets curated just for NARFE members, as well as NARFE media

statements, op-eds and more.

NARFE Daily News Clips is delivered to inboxes weekday mornings. To join the mailing list, visit www.narfe.org/clips.

TSP UPDATE ONLINE

Get the most recent monthly and annual Thrift Savings Plan returns (G, F, C, S, I and L Funds) online at www.narfe.org/tsp-funds.

TRACKING RETIREMENT CLAIMS

MISS A WEBINAR?

Catch up on past NARFE Federal Benefits Institute presentations in NARFE’s webinar archive, where you’ll find videos, slides and transcripts of question-and-answer sessions for webinars dating back to January 2019. View them at www.narfe.org/webinar-archive.

CONNECT ON FEDHUB If you haven’t checked out NARFE’s new online community yet, what are you waiting for? NARFE designed FEDHub to support your federal journey, leveraging the knowledge and value of our entire community—all that’s missing is you.

Join the conversation at fedhub.narfe.org/quick-start-guide.

6

NARFE MAGAZINE AUGUST 2023

Find out how many retirement claims OPM Retirement Services receives and processes each month, with average processing times and total inventory, at www.narfe.org/opm-processing.

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Washington Watch

NARFE Submits Comments on PSHB Interim Final Rule

I

n April, the Office of Personnel Management (OPM) published its interim final rule establishing the Postal Service Health Benefits (PSHB) program. The rule outlined

how PSHB will be created and provided important dates for OPM, insurance carriers and all other stakeholders assisting in the creation of PSHB before it is set to begin in January 2025. The rule largely follows the specifics set in the Postal Service Reform Act of 2022, with some discretion left to OPM to administer the program.

NARFE submitted a comment letter to OPM in response to the interim final rule highlighting areas in need of clarification, providing questions gathered from NARFE members and detailing actions that OPM can take to provide a more seamless transition to PSHB for postal workers and annuitants. The letter encouraged OPM to limit insurance plan changes to prevent disruptions to enrollee coverage and requested hardship exceptions to maintain coverage for postal employees and annuitants covered by some smaller plans, such as health maintenance organization (HMO) plans, that may decline to offer PSHB plans. The letter 8

NARFE MAGAZINE AUGUST 2023

also requested further details on the six-month special enrollment period for Medicare Part B and requested OPM to encourage carriers to provide reimbursement accounts to cover Medicare-related costs (as

some FEHB plans already do).

The letter is posted on NARFE’s website and NARFE will share responses from OPM once they become available.

Based on the rule, the PSHB, like FEHB, will be operated by the Office of Personnel Management, and, to the greatest extent practicable, the program will offer a PSHB plan from each FEHB carrier that has a plan with 1,500 or more Postal Service employees or annuitants enrolled in 2023. OPM may exempt certain HMO plans from this requirement, and the PSHB will be permitted to include plans offered by other carriers as deemed appropriate by OPM.

AUGUST MONTH ACTION ALERT: SOCIAL SECURITY FAIRNESS ACT OF 2023 Visit NARFE’s Legislative Action Center at www.narfe.org to send a message to your lawmakers urging them to cosponsor the Social Security Fairness Act of 2023, H.R. 82/S. 597. This bill would repeal the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) policies that unfairly reduce Social Security benefits for federal, state and local civil servant retirees who earned a pension from their civil service career separate from benefits earned from employment covered by Social Security.

MYTH VS. REALITY MYTH: Postal annuitants who drop Medicare Part B, or are not enrolled, will not receive health benefits via the new, parallel set of plans offered via the new Postal Service Health Benefit (PSHB) program in 2025.

REALITY: Per the Postal Service Reform Act of 2022, all postal annuitants, regardless of Medicare Part B enrollment, will receive federal retiree health benefits under the umbrella of the PSHB starting in January 2025. PSHB plans will generally provide equivalent benefits and cost sharing, per law, to the same Federal Employee Health Benefits (FEHB) program plans offered by the same carrier, but will offer different premiums based on the new postal risk pool (and cost savings accrued via partial Medicare integration).

Postal employees age 64 and older as of 1/1/25 and postal annuitants will not be required to enroll in Medicare Part B if they are not already covered.

PSHB plans must include self only, self plus one, and self and family plan options. In the initial contract year, 2025, PSHB carriers must offer plans that have coverage with equivalent benefits and cost-sharing to the FEHB plans offered by that carrier, except as needed to integrate with Medicare Part D prescription drug coverage.

Additionally, OPM will create a centralized enrollment system allowing PSHB enrollees to make coverage decisions through an online portal. Persons unable to access the online portal will be able to make enrollment decisions over the phone, by fax or by mail. The interim rule

also outlines important dates for the implementation of the program, such as the launch of a health benefits education program beginning October 2023, the beginning of the sixmonth Medicare Part B special enrollment period in April 2024, the publishing of PSHB plan rate and benefits for 2025 in September of 2024 and the first open season, running November 11 through December 9, 2024.

Importantly, anyone who is a postal annuitant as of January 1, 2025, or a postal employee age 64 as of January 1, 2025, and not already enrolled in Medicare Part B will not be required to enroll in Part B as a condition of

receiving health benefits through the PSHB program. Family members of such postal workers and annuitants are also exempt from the Part B enrollment requirement. Medicare-eligible postal annuitants and family members who are not already enrolled in Medicare Part B will have a six-month special enrollment period, beginning April 1, 2024, to enroll in Part B penalty free.

NARFE will continue to monitor the creation of PSHB and advocate for postal workers and annuitants as more information becomes available.

—BY ROSS APTER, DIRECTOR, LEGISLATIVE AND POLITICAL AFFAIRS

Biden Signs Debt Limit and Budget Deal Into Law

P

resident Biden and Speaker Kevin McCarthy reached an agreement in late May to raise the federal government’s debt limit and set caps on annual government funding levels for the next two fiscal years. It was signed into law June 3.

The debt limit suspension runs through January 1, 2025, past the next congressional and presidential elections.

The law also allows for a 3.3% increase in defense spending (up from $858.4 billion to $886.3 billion, matching the amount in President Biden’s budget) for fiscal year 2024. It caps

nondefense spending that is authorized via annual funding bills at $703.7 billion, a 5.4% cut compared to the current fiscal year (2023). However, according to both sides, there’s an unwritten agreement to repurpose unspent COVID-19 relief funds, adjust amounts dedicated to the Internal Revenue Service, and rescind unused budget authority within other mandatory spending programs to permit the total level for nondefense discretionary spending to remain roughly even to the current fiscal year. For fiscal year 2025, annual defense and

nondefense spending would increase about 1% from the fiscal year 2024 level.

The law also provides a mechanism to lessen the likelihood of a government shutdown, allowing for a continuing resolution with 1% across-the-board cuts if lawmakers fail to pass, by the end of the calendar year, the annual funding bills consistent with the budget caps in the bill. This provides an incentive for defense hawks to support passage of nondefense appropriations, or otherwise SEE BUDGET ON P. 10 NARFE MAGAZINE www.NARFE.org

9

Washington Watch

NARFE GRASSROOTS ADVOCACY LEARN MORE about how you can take action to protect your earned pay and benefits by reviewing NARFE Grassroots materials at www.narfe.org/advocacy.

Steady Progress Continues in Fight to Repeal WEP, GPO

T

he Social Security Fairness Act of 2023, H.R. 82/S. 597, which would fully repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), is closing in on a supermajority of support in the House of Representatives.

As of press time, H.R. 82, introduced by Reps. Garret Graves, R-LA, and Abigail Spanberger, D-VA, in the House had reached 284 cosponsors, marking a significant milestone in the 118th Congress for NARFE’s fight to pass the bill into law. H.R. 82 is now only 6 cosponsors shy of the 290 cosponsors needed to trigger the House Consensus Calendar rule process that would require either committee advancement

BUDGET FROM P.9

face a substantial decrease in defense spending from the agreed-upon caps.

Finally, the law includes additional policy provisions: adjustments to work requirement rules (and exemptions) for the Supplemental Nutrition Assistance Program, some reforms to streamline environmental permitting

10

NARFE MAGAZINE AUGUST 2023

or a floor vote. At the same time last session, the House bill had just 167 cosponsors. As of June 22, H.R. 82 had the third most cosponsors of any bill in Congress.

The Senate companion, S. 597, introduced by Sens.

Sherrod Brown, D-OH, and Susan Collins, R-ME, had 44 cosponsors as of June 22, reflecting steady progress in both chambers.

NARFE needs the continued support of its members to advance this legislation. Are you affected by the WEP and GPO, and want to join our efforts? We still need to accumulate more cosponsors to push the bill to a vote. Visit NARFE’s Legislative Action Center at www.narfe.org/ advocacy and click “Legislative

Action Center” to send your lawmaker a letter asking them to cosponsor this bill to finally repeal the WEP and GPO. Just type in your address and our system will choose the pertinent letter for you to send to your lawmaker in the House and Senate.

The WEP and GPO both penalize individuals who have dedicated their careers to public service and their spouses by taking away the Social Security benefits they have earned.

The WEP affects more than 2 million beneficiaries, while the GPO affects more than 723,000 people, 48% of whom are widows/widowers and 52 percent of whom are spouses.

for energy projects, and a statutory prohibition on extending the suspension of student loan repayments beyond this summer (when the administration had planned to end its pause).

The good news for NARFE is that the debt limit and budget deal stayed clear of federal retirement and health benefits.

And with the threat of default off the table, federal retirement

annuities and Social Security benefits will continue to be delivered.

The House passed the bill, H.R. 3746, the Fiscal Responsibility Act of 2023, by a vote of 314-117 on May 31, followed by Senate passage via a 63-36 vote on June 1, with significant bipartisan support in both chambers.

—BY ROSS APTER, DIRECTOR, LEGISLATIVE AND POLITICAL AFFAIRS

—JOHN HATTON, STAFF VICE PRESIDENT, POLICY AND PROGRAMS

Senate Committee Advances Legislation to Fix Retirement Error for CBP Officers

I

n May, the Senate Committee on Homeland Security and Governmental Affairs (HSGAC) favorably reported the U.S. Customs and Border Protection Officer Retirement Technical Corrections Act, S. 311. The bill would make good on promised enhanced retirement benefits for more than 1,000 Customs and Border Protection (CBP) officers who saw their benefits reversed after a technical error was discovered. The bill received approval by all senators present.

In 2007, a law was passed making CBP officers eligible for enhanced law enforcement officer retirement as a tradeoff for mandatory retirement at age 57, increased retirement

contributions, and a 20-year service requirement. A

system for any officer hired before and serving on July 6, 2008. These officers could retire before 20 years of service under the new retirement system, receive a proportional enhanced retirement benefit for their post-July 2008 work, and were not bound by the mandatory retirement age. However, CBP erroneously told officers who were hired before July 6, 2008, but with later start dates, that they would also be eligible for the proportional enhanced benefit without needing to work for 20 years.

In 2020, CBP discovered this error and required the more than 1,000 CBP officers

THE BILL WOULD MAKE GOOD ON PROMISED ENHANCED RETIREMENT BENEFITS FOR MORE THAN 1,000 CUSTOMS AND BORDER PROTECTION (CBP) OFFICERS WHO SAW THEIR BENEFITS REVERSED AFTER A TECHNICAL ERROR WAS DISCOVERED. transitional system was put in place for the new retirement

CONTRIBUTE TO

SEE ERROR ON P.12

NARFE Member #: ____________________________________ Name:______________________________________________ Address: ___________________________________________

Contribute monthly through your annuity or by credit card. Get started at narfe.org/pac-sustainer.

OR

Monthly contributors of $10 or more receive a sustainer lapel pin

Make a one-time contribution:

City: _____________________________________________ State: _________________

ZIP:__________________

Occupation: _________________________________________ Employer: ___________________________________________

q Charge my credit card q MasterCard

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q AMEX

q $25 – Basic lapel pin

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q $50 – Bronze lapel pin

Exp. Date: _____ /_________

q $100 – Silver lapel pin q $250 – Gold lapel pin q $500 – Platinum lapel pin q Other: _________ Contribution totals are cumulative for the 2023-2024 election cycle

n No pin for me. I’d like 100 percent of my contribution to go to NARFE-PAC.

Mail coupon and/or check payable to NARFE-PAC to: NARFE-PAC Budget & Finance | 606 North Washington St. | Alexandria, VA 22314

mm

yyyy

Name on Card: ______________________________________ Signature: __________________________________________ Date: _____________________

To comply with federal law, we must use our best efforts to obtain, maintain and submit the name, mailing address, occupation and name of employer of individuals whose contributions exceed $200 each calendar year. NARFE-PAC is for the benefit of political candidates and activities on a national level. NARFE members have the right to refuse to contribute without reprisal, and NARFE will neither favor nor disadvantage anyone based on the amount of a contribution or failure to make a voluntary contribution. The suggested amounts are only suggestions and not enforceable. Only members of NARFE may contribute to the PAC. Contributions from non-members will be returned. NARFE-PAC contributions are not deductible for federal income tax purposes.

NARFE MAGAZINE www.NARFE.org

11

Washington Watch LEGISLATIVE RESOURCES NARFE NewsLine – A weekly newsletter that goes out to NARFE members on Tuesdays and includes weekly recaps of legislative news, compiled by NARFE’s advocacy and communications teams.

LEGISLATIVE ACTION CENTER – A one-stop site to send a letter to Congress, and more, at www.narfe.org.

OPM Renews FLTCIP Contract with John Hancock, Premium Increases to Come

E

ffective May 1, 2023, the Office of Personnel Management (OPM) extended its contract with John Hancock to provide insurance coverage to all Federal Long Term Care Insurance Program (FLTCIP) enrollees. Although OPM solicited multiple bids, John Hancock remained the sole bidder. The program administrator, Long Term Care Partners LLC, has mailed notice of this action to enrollees.

Per the extended contract, most enrollees should expect to face a premium increase effective January 1, 2024. In September 2023, each enrollee will be offered personalized options that will include accepting the premium rate increase to maintain current coverage or to decrease coverage to reduce the impact of any

increase. OPM indicated that premium increases would be phased in over three years

ERROR FROM P.11

Hawley, R-MO, reintroduced the U.S. Customs and Border Protection Officer Retirement Technical Corrections Act, to make good on what the officers were promised. The bill would require CBP to identify the officers affected by the error and grant them the enhanced benefits they were promised. The legislation would also retroactively change the annuities of those

that straddled the July 6 date to reach the 20-year work requirement, even though these employees had been paying the higher retirement contributions for more than a decade and making retirement decisions based on what they were told when hired.

As a result, Sens. Gary Peters, D-MI, and Josh 12

NARFE MAGAZINE AUGUST 2023

OPM INDICATED THAT PREMIUM INCREASES WOULD BE PHASED IN OVER THREE YEARS FOR SOME COVERAGE OPTIONS.

for some coverage options.

No additional information on the premium increases or personalized options is available currently. Notably, OPM did not disclose the range of the premium increases nor the average premium increase, which it has done in the past.

For historical reference, premium increases in 2016 averaged 83 percent and were as high as 126 percent, while premium increases in 2009 were as high as 25 percent. It’s possible that the range and average for premium increases presented to enrollees in 2023 will exceed those amounts.

NARFE previously requested that OPM provide a partial refund option in addition to the other options it will provide to maintain premium levels (and reduce coverage), but OPM has declined to do so. NARFE is now pursuing legislative options to provide premium relief, as options for administrative relief have passed. We will continue to update members on this issue as developments arise.

—JOHN HATTON, STAFF VICE PRESIDENT, POLICY AND PROGRAMS

eligible who retired prior to enactment. It would also grant the Department of Homeland Security the authority to waive maximum entry age requirements for eligible officers.

The U.S. Customs and Border Protection Officer Retirement Technical Corrections Act now awaits further action by the full Senate.

—BY SETH ICKES, POLITICAL ASSOCIATE

Only $25 National Active and Retired Federal Employees Association

CONGRESSIONAL DIRECTORY

NARFE’s CONGRESSIONAL DIRECTORY

FOR THE 118 th CONGRESS (2023-2024)

118th Congress 2023-2024

Features: • Members of Congress by state delegation, with color photos, biographical data and congressional district maps.

• Members’ contact information, including addresses, phone and fax numbers, website addresses, social media contacts, district offices and key staffers.

• Complete listings of committees, subcommittees and leadership.

• Contact information for the White House, Cabinet, Supreme Court and federal agencies.

Be a stronger advocate with NARFE’s Congressional Directory at your fingertips Order online at www.narfe.org/directory 10/29/08 11:21:34 AM

Order your copy of the new CONGRESSIONAL DIRECTORY today!

Name __________________________________________________________ Address ________________________________________________________ City_____________________________________ State _____ ZIP _________ Member ID# (as it appears on NARFE Magazine label) _____________________

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Quantity ______________ $25 each (includes shipping and handling) VA sales tax ___________ VA residents add 6% tax ($1.50) per book Total cost _____________ Mail to: NARFE Congressional Directory 606 N. Washington Street Alexandria, VA 22314-1914

Please allow 3-4 weeks for delivery. Call NARFE’s Advocacy Department at 800-456-8410, option 3, to order by phone.

NARFE BILL TRACKER

THE NARFE BILL TRACKER IS YOUR MONTHLY GUIDE TO LEGISLATION NARFE IS FOLLOWING. CHECK BACK EACH ISSUE FOR UPDATES. ISSUE

BILL NUMBER / NAME / SPONSOR H.R.159/S.59: Chance to Compete Act of 2023 / Rep. Virginia Foxx, R-NC / Sen. Kyrsten Sinema, I-AZ Cosponsors: H.R. 159: 3 (D) 2 (R) S. 59: 1 (D) 2 (R) 0 (I) H.R. 1002/S. 399: Saving the Civil Service Act / Rep. Gerry Connolly, D-VA / Sen. Tim Kaine, D-VA Cosponsors: H.R. 1002: 11 (D) 2 (R) S. 399: 14 (D) 0 (R) 1 (I)

FEDERAL PERSONNEL POLICY

H.R. 1487: The Strengthening the Office of Personnel Management Reform Act / Rep. Gerry Connolly, D-VA Cosponsors: H.R. 1487: 1 (D) 0 (R)

H.R. 3115/S. 1496: Public Service Reform Act / Rep. Chip Roy, R-TX / Sen. Rick Scott, R-FL Cosponsors: H.R. 3115: 0 (D) 14 (R) S. 1496: 0 (D) 1 (R) 0 (I)

WHAT BILL WOULD DO Implements merit-based reforms to the civil service hiring system that replace degree-based hiring with skills- and competencybased hiring.

Passed the House under suspension of the rules 1/24/2023

Prevents any position in the federal competitive service, created after September 30, 2020, from being reclassified into the excepted service, outside the protection of merit system rules without the express consent of Congress.

The bill also requires the consent of an employee to be reclassified, mandates reporting of conversions to the Office of Personnel Management, and places caps on the number of employees converted to the excepted service via Schedule C.

Referred to the House Committee on Oversight and Accountability 2/15/2023

Codifies several recommendations for OPM by the National Academy of Public Administration (NAPA), such as clarifying that OPM stands at the center of federal civilian human resource management and ensuring the director of OPM possesses human capital and leadership expertise.

Referred to the House Committee on Oversight and Accountability 3/9/2023

Would make all federal employees at-will and enable workers to be removed for good cause, bad cause or no cause at all. The legislation would also abolish the Merit System Protections Board and limit removal appeals to claims of whistleblower retaliation and Equal Employment Opportunity Commission complaints before the US Court of Appeals.

Referred to the House Committee on Oversight and Accountability 5/5/2023

NARFE’s Position:

14

NARFE MAGAZINE AUGUST 2023

LATEST ACTION(S)

Referred to the Senate Committee on Homeland Security and Governmental Affairs 1/24/2023

Referred to the Senate Committee on Homeland Security and Governmental Affairs 2/14/2023

Referred to the Senate Committee on Homeland Security and Governmental Affairs 5/9/2023

Support

Oppose

No position

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NARFE BILL TRACKER

THE NARFE BILL TRACKER IS YOUR MONTHLY GUIDE TO LEGISLATION NARFE IS FOLLOWING. CHECK BACK EACH ISSUE FOR UPDATES. ISSUE

SOCIAL SECURITY

BILL NUMBER / NAME / SPONSOR

WHAT BILL WOULD DO

LATEST ACTION(S)

H.R. 82/S. 597: The Social Security Fairness Act / Rep. Garret Graves, R-LA / Sen. Sherrod Brown, D-OH

Repeals both the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP).

Referred to the House Committee on Ways and Means. 1/9/2023

Requires Social Security and federal retirement programs to use the Consumer Price Index for the Elderly (CPI-E) to calculate cost-of-living adjustments (COLAs) to retirement benefits.

Referred to the House Committees on Ways and Means, Veterans’ Affairs, Oversight and Accountability, and Armed Services 2/1/2023

H.R. 866: The Equal COLA Provides Federal Employees Act / Rep. Gerry Connolly, D-VA Retirement System (FERS) retirees with the same annual cost-of-living adjustment (COLA) as Civil Serve Retirement System Cosponsors: (CSRS) retirees.

H.R. 866: 24 (D) 2 (R)

Referred to the House Committee on Oversight and Accountability 2/8/2023

Cosponsors: H.R. 82: 197 (D) 87 (R) S. 597: 36 (D) 5 (R) 3 (I) H.R. 716: The Fair COLA for Seniors Act / Rep. John Garamendi, D-CA Cosponsors: H.R. 716: 28 (D) 0 (R)

FEDERAL ANNUITIES

Referred to the Senate Committee on Finance 3/1/2023

H.R. 536/ S. 124: The Federal Provides federal employees with Referred to the House Adjustment of Income Rates an 8.7 percent average pay raise Committee on Oversight and (FAIR) Act / Rep. Gerry Connolly, in 2024.

Accountability 1/26/2023 D-VA / Sen. Brian Schatz, D-HI Referred to the Senate Committee on Homeland Cosponsors: Security and Governmental H.R. 536: 67 (D) 1(R) Affairs 1/26/2023 S. 124: 19 (D) 0 (R) 1 (I)

FEDERAL COMPENSATION

H.R. 856/ S. 274: Comprehensive Paid Leave for Federal Employees Act / Rep. Don Beyer, D-VA / Sen Brian Schatz, D-HI

Extends paid leave to federal and postal employees for all conditions covered by the Family and Medical Leave Act (FMLA).

Referred to the Senate Committee on Homeland Security and Governmental Affairs 2/7/2023

Cosponsors: H.R. 856: 33 (D) 2 (R) S.274: 9 (D) 0 (R) 1 (I)

H.R. 1301/ S. 640: Federal Employees Civil Relief Act / Rep. Derek Kilmer, D-WA / Sen. Brian Schatz, D-HI Cosponsors: H.R. 1301: 2 (D) 0 (R) S. 640 15 (D) 0 (R) 1 (I)

Protects federal workers and contractors from a variety of civil financial penalties during a lapse in appropriations or a breach of the debt ceiling.

NARFE MAGAZINE AUGUST 2023

Referred to the House Committees on Oversight and Accountability, Financial Services, Ways and Means, Judiciary, Education and Workforce, and House Administration. 3/1/2023 Referred to the Senate Committee on Finance 3/2/2023

NARFE’s Position: 16

Referred to the House Committee on Oversight and Accountability, Veteran’s Affairs and House Administration 2/7/2023

Support

Oppose

No position

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Questions & Answers

Q&A

THE FOLLOWING QUESTIONS & ANSWERS were compiled by NARFE’s Federal Benefits Institute experts. NARFE does not provide legal, financial planning or tax advice or assistance.

EMPLOYMENT FERS DISABILITY RETIREMENT

Q

I retired with a disability retirement under FERS just over 15 years ago. Upon reaching my 62nd birthday, it’s my understanding that OPM will automatically recompute my annuity as if I had been working the entire time. Can you explain that?

A

As a FERS employee, if you were approved

by OPM for a disability retirement and did not meet the age and service requirement to qualify for a full, unreduced age-based retirement upon separation, then you would have received 60% of your high-3 average salary for the first 12 months of your retirement (offset by 100% of any Social Security disability benefits you might have received), and beginning the 13th month, your disability retirement would have been reduced to 40% of your high-3 average salary (offset by 60% of any Social Security disability benefits you might have received).

Upon reaching the age of 62, OPM automatically recomputes your FERS disability retirement using the regular 20

NARFE MAGAZINE AUGUST 2023

FERS computation formula by considering the amount of federal service that was already creditable under FERS prior to your separation and then adds the amount of service you would have had if you had continued your federal career up until the day before your 62nd birthday. They also consider your unused sick leave balance upon separation to possibly increase the length of service used in this recalculation.

OPM also recomputes your high-3 average salary based on the cost-of-living adjustments that were previously applied to your retirement.

The regular FERS formula states that you receive at least 1% of your high-3 average salary for all years and months of creditable service in the computation of your FERS annuity. But for

disability annuitants who have at least 20 years of service credit in the automatic recalculation at 62, they receive 1.1% of their high-3 average salary for all their years and months of creditable service.

For example, if you only had two years of FERS service upon separation for a disability retirement and 15 years later reached age 62, the automatic recalculation of your annuity would equate to 17% of your recalculated high-3 average salary (i.e., 17 years x 1% = 17%).

But if you had five years of FERS service upon separation for a disability retirement and reached the age of 62 fifteen years later, the automatic recalculation of your annuity would equate to 22% of your recalculated high-3 average salary (i.e., 20 years x 1.1% = 22%).

Note for Special Category employees: An additional annuity accrual rate—1.7%—will generally be included in the computation of the earned annuity if an employee has performed service as a law enforcement officer,

firefighter, nuclear materials courier, Customs and Border Protection officer, member of the Supreme Court Police, member of the Capitol Police or air traffic controller. The 1.7% annuity accrual rate will be applied to all such service up to 20 years.

Please refer to chapters 60 and 61 of the CSRS/FERS Handbook for more information about disability retirement.

Visit https://www.narfe.org/ csrsfers-handbook.

SICK LEAVE AND RETIREMENT

Q

I’m thinking about retiring soon. How can I determine how many hours of sick leave will be used in the computation of my retirement and how many will be forfeited if I don’t use them before I separate?

A

If you are eligible for an immediate retirement, which is defined as one that begins to accrue no later than one month after you leave federal service, then your service will be increased by the days of unused sick leave to your credit on the date of retirement.

OPM will receive your final sick leave balance from your agency payroll office; upon converting your unused hours into years, months, and days, OPM will increase the length of service by this amount in the computation of your annuity.

To determine the number of sick leave hours that will be used in the computation of your annuity, you will need to make a projection of your final leave balance. First, find your current sick leave balance on your most recent Statement of Earnings and Leave (SEL). Secondly, using a payroll calendar and beginning with the very next pay period, count how many full pay periods you have left between the pay period reflected on your SEL

and the date of your separation for retirement. Don’t count your final pay period unless you expect to work the full 80 hours; your final leave accrual is not pro-rated. A full-time employee earns four hours of sick leave for every full pay period worked. Multiply the number of remaining full pay periods by four and add that number to your current sick leave balance. This will be your projected sick leave balance (deduct any sick leave that will be used).

Use the Sick Leave chart on page 51 of Chapter 50 of the CSRS & FERS Handbook at https://www.narfe.org/csrsfershandbook to convert your projected sick leave balance into months and days. Keep in mind that 2087 hours equals one year of service credit.

For example, if someone projected to have a maximum of 2,450 hours upon separation, they would subtract 2,087 from 2,450 and take the remaining 363 hours and convert them to two months and three days,

according to the sick leave chart.

When the hours fall between two numbers on the chart, round up to the next higher number on the chart and use that to determine the number of months and days.

Sick leave of 2,450 hours is equal to one year, two months and three days of service credit.

You won’t be able to determine the “leftover” days until you add your sick leave to your service that you will have on the date of retirement. For example, if you had 21 years, three months and 15 days of creditable service and added one year, two months and three days of unused sick leave, that would equal 22 years, five months and 18 days. The 18 days are “leftover” since OPM will only use whole years and months to calculate your retirement. Using the sick leave chart mentioned above, find the 18 days under the column labeled “DAYS” on the left side of the chart; to the right of 18 days you will find 104 hours. In this example, 104 hours of sick leave could

COUNTDOWN TO COLA The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.22%in May 2023. To calculate the 2024 cost-of-living adjustment (COLA), the 2023 third-quarter indices Monthly % % Change MONTH CPI-W Change from 291.901 will be averaged and OCTOBER 2022 293.003 0.40 0.38 compared with the 2022 third-quarter NOVEMBER 292.495 -0.17 0.20 average of 291.901.

DECEMBER 291.051 -0.49 -0.29 The percentage JANUARY 2023 293.565 0.90 0.57 increase determines FEBRUARY 295.057 0.50 1.10 the COLA. May’s index, MARCH 296.021 0.33 1.40 298.382, is up 2.2% from the base.

APRIL 297.730 0.58 2.0 The CPI represents purchases of food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services.

MAY

298.382

0.22

2.2

JUNE JULY AUGUST SEPTEMBER

For FECA COLA updates, visit narfe.org and search for FECA.

NARFE MAGAZINE www.NARFE.org

21

Questions & Answers potentially be used before the date of retirement without affecting the computation of their annuity. Of course, there are rules that govern the use of sick leave. Your agency retirement officer should be able to assist you with this calculation when you request your final retirement estimate.

RETIREMENT CHANGING VOLUNTARY WITHHOLDINGS WITH OPM

Q A

How do I change the voluntary withholdings from my annuity payment?

If you use a computer and have access to the internet, the easiest method for making any changes to your voluntary withholdings from your annuity payment would be to access your account via OPM’s Services Online at https:// www.servicesonline.opm.gov/ Access to Services Online requires enrolling in Login.gov, which is the government’s secure login tool. Once you register your Services Online account with Login.gov, you will use your Login.gov credentials to sign-in to Services Online.

To learn more about Services Online and how to log in using Login.gov, review the steps at https://narfe.org/qa-sol-login.

You can use OPM’s Retirement Services Online to: • Start, change, or stop Federal and State income tax withholdings.

• Request a duplicate tax filing statement (1099R).

• Change your Personal Identification Number (PIN) for accessing OPM’s automated systems.

• Establish, change, or stop an allotment to an organization.

• Change your mailing address.

22

NARFE MAGAZINE AUGUST 2023

• Start direct deposit of your payment or change the account or financial institution to which your payment is sent.

• Establish, change, or stop a checking or savings allotment; and • View a statement describing your annuity payment.

You may also contact OPM by phone if you can’t find an answer to your question on OPM.gov or if you can’t sign in to OPM Retirement Services Online to manage your annuity account.

Phone:1-888-767-6738 TTY: 711 Hours: Monday through Friday, 7:40 a.m. to 5 p.m. ET Closed on federal holidays.

The busiest time is between 10:30 a.m. and 1:30 p.m. ET. Near the middle of the month, OPM generally authorizes payments that are due for the first business day of the following month. Therefore, if you want a change to be reflected in your next payment, you will need to submit your request as early in the month as possible.

REDUCTION TO ANNUITY AT AGE 62

Q

I’m a retired CSRS Offset employee. When I reach 62, OPM will apply a reduction to my annuity because I’ll be eligible for Social Security at that time. Since I have less than 30 years of substantial earnings under Social Security, my SSA benefit will be reduced by the WEP. When OPM computes the offset to my annuity, will they use the unreduced SSA benefit amount payable OR will they use the SSA benefit amount payable after it’s reduced for the WEP?

A

As a CSRS Offset annuitant, you are correct that OPM will apply an offset (reduction) to your annuity

when you become eligible for Social Security at 62, whether you decide to claim your Social Security retirement benefit at that time or not. It will be up to you to decide if you want to begin Social Security payments at age 62. It is important to consider all the factors that may influence your decision to file for Social Security including: • The permanent reduction for filing for Social Security before your full retirement age or FRA (65 to 67, depending on your year of birth; 67 for those born in 1960 or later).

• The delayed credits available for claiming Social Security retirement benefits after reaching your FRA. • Dependents who may be eligible to receive benefits based on your work record.

• Your health and life expectancy.

• Whether you plan to continue working or become reemployed. There is an earnings limit until you’ve reached your FRA. The information that OPM obtains from the Social Security Administration (SSA) is used to compute the offset to your annuity and it should be based on the amount of Social Security potentially payable after it has been reduced by the Windfall Elimination Provision (WEP).

Learn more about the WEP on at www.narfe.org/ssa-wep.

Although OPM will apply the offset reduction to your annuity at age 62, OPM will not apply any further reduction to your annuity once you begin drawing the larger benefit from Social Security later should you decide to delay your application for Social Security benefits. Use the WEP Online Calculator to estimate your Social Security benefit with using the modified WEP formula at www.narfe.org/wep-calc.

If you have provided a spousal survivor benefit, keep in mind that your spouse’s survivor annuity may also be subject to a reduction due to the offset unless they are entitled to a larger Social Security benefit based on their own work record or unless they are affected by the Government Pension Offset (GPO). If affected, the GPO may have eliminated their right to a Social Security survivor benefit based on your work record. To learn more about the GPO, visit www.narfe.org/ssa-gpo.

MEDICARE, FEHB AND TRICARE

Q

I’m a civil service annuitant and a military retiree. TRICARE requires enrollment in Medicare Parts A & B to qualify for TRICARE For Life at age 65. I’m thinking about canceling my

FEHB coverage. If I cancel FEHB, will I have the option to reenroll later if desired?

A

You may permanently cancel your FEHB coverage as an annuitant at any time, but unless you’re canceling to be covered under a spouse’s FEHB plan, you won’t be able to reenroll into the FEHB program later. The option you should use if you have TRICARE coverage is to suspend your FEHB enrollment, rather than canceling your coverage. If you want to reenroll into the FEHB program, you can do so later during any future open season. You are permitted to suspend FEHB coverage at any time.

You would use option D on the RI 79-9 form (Health Benefits Cancellation/Suspension

Confirmation), which allows suspension of FEHB to use TRICARE, TRICARE for Life, Peace Corps, or CHAMPVA. Find the form at www.narfe.org/ri79-9.

Return the form to OPM using the address below: U.S. Office of Personnel Management, Retirement Benefits Branch, P.O. Box 17, Washington, DC 20044 If you don’t have access to the internet, you can also call OPM’s Retirement Information Office at 1-888-767-6738 and request that they mail the form to you.

To obtain an answer to a federal benefits question, NARFE members should call 800-456-8410 and select option 2 for the Federal Benefits Institute; send the question by postal mail to NARFE Headquarters, ATTN: Federal Benefits; or submit it by email to fedbenefits@narfe.org.

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Benefits Brief

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Understand Your Options for Long-Term Care ong-term care involves a variety of services to help people live as independently and safely as possible when they can no longer perform everyday activities on their

own. Most long-term care is provided at home by unpaid family members and friends. It can also be in a facility such as a nursing home or in the community, such as in an adult day care center.

Long-term care can be expensive, and the cost is often paid with personal funds, including pensions, savings, and investments such as the TSP. According to the National Institute on Aging, https:// www.nia.nih.gov/, Americans spend billions of dollars a year on various services that provide supervision and assistance to individuals who need personal care. Another source of funding is government health insurance programs, such as Medicaid (Medicare and FEHB does not cover long-term care but may cover some costs of short-term care in a skilled care facility after a hospital stay.) Veterans may be able to receive long-term care in a variety of settings and information is available at https://www.va.gov/healthcare/about-va-health-benefits/ long-term-care/ or by calling 1-800-698-2411.

New applications for the Federal Long Term Care Insurance Program (FLTCIP) have been suspended as of December 2022, to allow time to assess current benefit offerings while establishing reasonable premium rates that will reflect the cost of the benefits that will be provided.

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will not change if premiums are paid. For those in a claim status, there is no change to coverage or the claims reimbursement process if benefits have not been exhausted. The FLTCIP website states the suspension will remain in effect for 24 months unless OPM issues a subsequent notice to end or extend the suspension.

Learn more about FLTCIP at www.ltcfeds.com.

If you are in the market for long-term care insurance coverage, you may purchase long-term care policies through a financial planner, an insurance broker or agent. When shopping for LTC insurance, it is important to understand the following terms: • Elimination period. This is a waiting period from qualifying for long-term care benefits until the policy begins to cover the cost of care. This can be as short as 30 days or as much as 180 days. The cost of care will be paid out of pocket during this period.

• Benefit period. This is the length of time benefits will be paid. This could be as little as two years or as much as five years or even longer.

Unlimited policies are very expensive and may be hard to find in a new policy.

• Daily benefit. This is the maximum amount the policy will pay for care per day. If the actual cost is less than the daily benefit amount, the length of coverage may be extended beyond the benefit period.

• Increasing payment.

Some policies will offer an “increasing payment” feature to help offset the rising cost of care. This feature will allow the benefits to increase at a certain rate (i.e., 3%, 5%, etc.) every year automatically without a corresponding rate increase. There are also policies that offer the option to periodically purchase increasing benefits when the cost of care has increased.

Along with your age at the time of purchase, these factors will determine the cost of your long-term care policy. You will also be subject to medical underwriting to qualify for a policy.

You may also cover some long-term care costs through a rider attached to a life insurance policy. This is different from a stand-alone long-term care policy as the benefits are directly tied to the amount of life insurance and, when used as a long-term care benefit, will reduce the insurance payout.

For example, monthly benefits providing for a residential facility are typically based on a percentage of the life insurance amount. A $100,000 policy with a 2% benefit would give you $2,000 a month. A

monthly benefit for home health care, when covered under the rider, is usually half of the nursing home benefit. One such policy is offered through Worldwide Assurance for Employees of Public Agencies (WAEPA). Information can be found at https://www.waepa.org/products/ chronic-illness-rider/.

It is important to consider the need for long-term care planning when the following demographic statistics show that: • There were 55.7 million adults age 65+ living in the U.S. in 2020. This included 30.8 million women and 24.8 million men.

• America’s older population has grown by 38% since 2010, compared to an increase of 2% for the under-65 population.

• There were 104,819 people aged 100 and older in 2020—more than triple the number in 1980 (32,194).

Not everyone needs or can qualify or afford longterm care insurance, however, it is important to consider long-term care planning when planning for your life after retirement.

—MICHELE BOLLIER IS A RETIREMENT AND BENEFITS SPECIALIST WITH RETIRE FEDERAL.

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Our Fall 2023 schedule can take you from Latin America to the Mayans and from films of Alaska to Music Along the Silk Road. From Bob Dylan to the history of rock ‘n’ roll.

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Using Your Voice on Capitol Hill: Grassroots Advocacy Strategies to Get Your Point Across and Make a Difference

BY BRADFORD FITCH

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“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.”

— First Amendment to the United States Constitution

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F

irst Amendment scholars tend to focus more on the freedoms of religion, speech, and press than on the right of citizens to petition government for a redress of grievances, but that right is no less fundamental to the mechanism of our democracy. Even more than the voting booth, it is where the connection lives between citizens and those who represent them in government. However, the mechanics of the right to petition have transformed in the last three decades.

Just prior to his retirement after 37 years as “the face of small business” in Washington, D.C., Dan Danner, President of the National Federation of Independent Business, was asked how lobbying had changed most during his time in our nation’s capital.

One of the biggest changes, he said, was the growth of grassroots advocacy. “Putting a real face on complicated issues,” Danner said. “Real people on Main Street saying, ‘I’m Betty’s Flowers, this is why this is important to me.’ That’s even more important now from a lobbying standpoint. To understand back home, be back home, and do things back in the districts, and let [lawmakers] know what people on Main Street back home are thinking,” he said.

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Much of these new grassroots efforts have come in the form of mass email campaigns from associations, nonprofits, and companies. As it has become easier to contact Congress the volume of email to Capitol Hill has exploded, and a growing gap has emerged between the opinions of elected officials and of citizens as to the nature and value of these interactions. For the most part, Congress values these exchanges with constituents, while citizens question whether their engagement really makes a difference. According to a July 2016 Rasmussen survey, only 11% of the voters surveyed thought the average member of Congress listens to the constituents he or she represents. Yet, as research from the Congressional Management Foundation shows, when congressional staff were asked what advocacy factors influence an “undecided” lawmaker, 94% said an “in-person visit from a constituent” would have some or a lot of influence and 92% said an “individualized email message” from a constituent would. Despite the haranguing of mainstream media to the contrary, and popular culture insisting that citizen voices are muted in Washington, research shows that constituents remain significant factors to legislators’ decision-making.

The cynical view would hold that enhanced power by constituents who participate with like-

minded others in organized groups (e.g., “special interests”) would skew lawmakers’ decision-making process and lead to worse policy outcomes. But in fact, congressional staff reported that they appreciate a well-prepared constituent, as it makes it easier to understand the implications of public policy on those they represent. Better policy decisions are made through better citizen advocacy.

Yet this is not the first research to document the potential for strong bonds between the government and the governed. In 1978 political scientist Richard Fenno wrote a seminal work on Congress, “Home Style: House Members in Their Districts.” For over 110 days, he traveled with 18 members of Congress in their districts, listening to the constituents who talked to legislators, and interviewing the legislators about their views. Fenno observed the importance of the relationship between members of Congress and their constituents, and the value legislators place on building those relationships. He also noted that relationship building was not a cavalier undertaking.

“The more accessible they are, House members believe, the more will their constituents be encouraged to feel that they can communicate with the congressman when and if they wish…However, this kind of assurance is not obtained by one-shot

“Access and the assurance of access, communication and the assurance of communication – these are the irreducible underpinnings of representation.”

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%

11

of the voters surveyed thought the average member of Congress listens to the constituents he or she represents

When congressional staff were asked what advocacy factors influence an “undecided” lawmaker:

%

94

said an “in-person visit from a constituent” would have some or a lot of influence

%

92 30

said an “individualized email message” from a constituent have some or a lot of influence

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offers. It is created over a long time and underwritten by trust. Access and the assurance of access, communication and the assurance of communication – these are the irreducible underpinnings of representation.”

While Fenno’s research is decades old, it offers timeless insight for America, which is confirmed by this report. If citizens, the organizers of grassroots campaigns, and Congress can re-learn these “irreducible underpinnings” in the age of the internet, then perhaps part of the essential element of trust between citizens and Congress could be restored.

To Congress, it is often the best way for legislators to understand the impact of their decisions on citizens. This kind of “retail-level democracy” is how Fenno described how trust is built with elected officials. Regrettably, many citizens are ill-prepared for these important interactions. If you choose to connect with a legislator, here are some suggestions that congressional staff report they experience somewhat or very frequently in meetings with constituents.

Unhappy to Meet With Staffer. Sometimes the Senator or Representative is not available, the Scheduler will often set up a meeting with a staffer.

Sometimes the meeting will be with a staffer, even if it was on the legislator’s schedule, due to a lastminute schedule change. Meeting with a staffer does not mean the legislator does not care about the meeting or the issue. It simply means the he or she is not available, and the office wants to accommodate the group. Congressional aides are knowledgeable and have the trust of the legislator, so a meeting with them can be as effective as a meeting with

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the legislator. “A meeting with staff can be very beneficial and much more likely to happen. There is only one congressman with only so many minutes in his day. There are usually three to five legislative staffers with more availability than the member,” said one House Scheduler.

Unaware of the Member’s Background.

A sizable percentage (78%) of congressional staff in a CMF survey said constituents didn’t know the legislator’s relevant committee assignments and 87% didn’t know the member’s history on the issue discussed. In age of the internet, this is simply a case of bad homework. While not every member of Congress is hosting an award-winning website, the majority of members are linking to their sponsorships and voting records, and are offering more statements on policy issues. Constituents can also Google the legislator’s name and an issue to read newspaper and blog articles on their topic.

Not Sending Thoughtful Follow-Ups. Once you’ve established a relationship with a congressional staffer, either in an in-person meeting

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or via virtual, you have something incredibly valuable: the staffer’s e-mail address. Use it wisely and don’t overuse it. If an important development has occurred, or if NARFE wishes to reach out again, feel free to do so. Staffers appreciate being alerted to changes in their issues. Keep the messages short (one to two paragraphs), with clear subject lines. Timing is also important. Congressional staff can track only those activities that are one to two weeks in advance. A well-timed follow up alert could mean the difference between a yea and a nay from the member of Congress.

And remember: if you deliver a poor performance for a member or staff, it is very unlikely they’ll tell you. You’re a voter, and they’re politicians, and they want to make nice to everyone. They will, however, bemoan the interaction – perhaps even endangering the chances they’ll support your cause. Since that is the point of the meeting, it’s best to do it well.

—BRADFORD FITCH IS THE PRESIDENT AND CEO OF THE CONGRESSIONAL MANAGEMENT FOUNDATION, A FORMER CONGRESSIONAL STAFFER, AND THE AUTHOR OF THE CITIZENS HANDBOOK TO INFLUENCING ELECTED OFFICIALS.

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S AV I N G F O R

H

ow students, parents and grandparents can meet the rising costs of higher education while minimizing taxes

BY EVERETT A. CHASEN

In 2021, my wife and I became grandparents. Like all grandparents, we have many hopes and dreams for our grandson. While he will shape that future on his own, there’s one wish we can do something about ourselves: We want him to be able to attend the best college that accepts him without being crushed by a lifetime of debt.

To help accomplish this goal, we opened a Section 529 savings plan account with our grandson as the beneficiary.

The US Securities and Exchange Commission (SEC) defines a 529 plan as “a tax-advantaged savings plan designed to encourage saving for future education costs.” Such plans are sponsored by states, state agencies or educational institutions, and are authorized by Section 529 of the Internal Revenue Code.

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here are two types of 529 plans: prepaid tuition and education savings.

All 50 states and the District of Columbia sponsor at least one of these, and a number of private colleges and universities also sponsor prepaid tuition plans.

In prepaid tuition plans, parents, grandparents, and other interested parties can “lock in” today’s tuition rates, and the program will pay out future college tuition at any eligible state-run college or university.

If the student chooses to attend a non-state university, the program will pay out an equal amount to that school.

Education savings plans allow participants to save money in a special college savings account on behalf of their designated beneficiary’s qualified higher education expenses.

Both programs are considered “qualified state tuition programs” by the Internal Revenue Service (IRS). Earnings from investments that are used to pay for qualified higher education expenses are federally tax exempt. Most states also exempt earnings from state income tax, and some states allow families to deduct the full or a partial amount of their contribution from their state income tax. Earnings on most other savings or investment accounts, like mutual funds, are commonly subject to capital gains taxes when they are withdrawn.

In addition, 529 plan contributions are considered by the IRS to be a gift to students. In 2023, contributions of up to $17,000 a year from individuals, or $34,000 a year from married couples, are tax-free gifts.

The US Securities and Exchange Commission (SEC) defines a 529 plan as “a tax-advantaged savings plan designed to encourage saving for future education costs.” Such plans are sponsored by states, state agencies or educational institutions, and are authorized by Section 529 of the Internal Revenue Code.

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The IRS defines eligible institutions as “any college, university, vocational school, or other post-secondary educational institution eligible to participate in a student aid program administered by the US Department of Education (ED).” Certain foreign institutions are also included. Tuition payments can also be made to elementary or secondary public, private or religious schools.

ED offers a Federal School Code Search program at https://studentaid.gov to help applicants determine if a desired school is eligible.

The search tool also provides detailed information by school, including tuition and fee amounts and graduation rates, and allows users to compare that information for up to 10 colleges at a time.

The Department notes that each qualified state tuition program operates under the laws of the individual state, so 529 programs may vary from state to state.

Although our grandson and his parents live in another state, we chose to open an account for him in our home state of Virginia. It allows us to deduct contributions of up to $4,000 per account per year with an unlimited carry forward to future tax years, subject to certain restrictions. Once we reach age 70, we can deduct the entire amount we contribute.

We decided on an education savings plan, not a prepaid tuition plan, because although the state in which our grandson lives has an excellent state university system (as does Virginia), we hope our contributions will allow him to attend the best school he qualifies for and wants to attend, anywhere in the world.

Advice From a Financial Planner

“We’ve set up a number of 529 plans for my retired clients and their grandkids,” Mark A. Keen, a Certified Financial Planner who writes NARFE magazine’s “Managing Money” column, tells us.

“Most of my [older] clients are well off and can afford retirement without any issues. Regardless of what goes on in life, they’re not going to spend down all their assets. So, they’re going to die with money in the bank. They won’t get any fulfillment from seeing [their heirs] enjoy that.”

“So, I encourage my clients to gift to their kids and grandkids, including to help pay for expenses that may otherwise be out of reach for them,” he continues. “College is a big one [in that category.]

In many cases, 529 plans offer a great solution.”

Keen prefers education savings plans to prepaid tuition plans. “I usually don’t recommend [prepaid plans.] I just find they’re too limiting. You obviously get the biggest bang for your buck when

you buy a Virginia plan and your child goes to a Virginia state school, but what if your child doesn’t want to go to a school in Virginia?”

“Also, some schools don’t participate in the prepaid program,” he adds. “I’d rather someone have a 529 savings plan, which has a lot more flexibility, and the student can go anywhere in the country, or even internationally.”

For parents, however, Keen has different advice.

“First and foremost, my recommendation to parents is to make sure you’re focusing on your retirement. Prioritize retirement before you start allocating your cash flow to college savings, whether it’s a 529 plan or some other type of college account,” he said. “There’s only a finite amount of time to save, and there’s only one way to pay for retirement—with your own money. Some people [like federal employees] have pensions or Social Security to supplement their savings, but that’s typically not enough.

“There are multiple ways to cover the cost of college, whether it involves using assets, current income, loans, grants, scholarships or work-study programs,” Keen said. “I always recommend clients focus on prioritizing their retirement first.”

Keen also advises parents to have conversations with their children as they get close to college age to set parameters about what they will and will not pay for. He suggests parents with limited means tell their kids: “We’re going to pay for an in-state school.

And if you want to go to an Ivy League or another private school that’s going to cost two or three times what the state school is going to cost, that’s going to be on you. I just don’t agree with parents who feel they owe it to their kids to pay for their college educations regardless of the cost.”

Roth IRAs vs. 529 Accounts

There are ways to save for college other than 529 plans, of course. One vehicle Keen likes is the Roth Individual Retirement Account, or Roth IRA. IRAs are retirement savings accounts that offer tax advantages. Contributions to traditional IRAs may be fully or partially tax-deductible, depending on filing status and income. In general, funds in a traditional IRA, including earnings on investments, are not taxed until they are withdrawn.

Roth IRAs differ from traditional IRAs in that Roth IRA contributions cannot be deducted on your taxes. However, if you satisfy IRS requirements, qualified withdrawals are tax free. Accounts must be designated as Roth IRAs when they are set up.

“If income limits allow [my clients] to contribute directly to a Roth IRA, I encourage them to do that,” Keen explains. “I like the flexibility they offer, because you always have the ability to pull out your contributions taxand penalty-free, so you can use the money for other options than retirement.” Roth IRAs allow investments in stocks, bonds, mutual funds or exchange-traded funds (ETFs), whereas most states invest 529 contributions solely in mutual funds.

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College Right Around the Corner? Try These Strategies If your child has reached the age where college is just a few years away, and your college savings are small or nonexistent, there are still a few things you can do besides filling out the FAFSA and hoping for the best. These include: • Encouraging your child to look for private scholarships as soon as possible, and to start planning to apply to any programs for which they may qualify.

• Suggesting your child take as many advanced placement (AP) courses or dual enrollment classes as possible, so the student can accumulate as many credits as possible at a cheaper price. Dual enrollment classes are taught at local colleges and are open to high school students.

• Starting to save now: you’ll be surprised how much you can save in just a few years.

• Curbing your family’s spending.

• Not being afraid to ask others for help.

Everyone knows what college costs nowadays, and friends or family members may be in a position to assist.

Unlike 529 plans, third parties cannot contribute to Roth IRAs, but parents and grandparents can give students gifts, which the students can then contribute to their own account.

All family members and friends can contribute to 529 plans, regardless of who owns the account.

In addition, Roth IRA retirement accounts are not considered assets on the Free Application for Financial Aid (FAFSA) form, the form needed to apply for federal student aid, including federal grants, work-study funds and student loans. Many states and colleges use the information on FAFSA to determine eligibility for state and school aid, and some private financial aid providers also use FAFSA information to determine whether students qualify for scholarships. Taxable earnings from Roth IRAs, however, are considered income on FAFSA, while non-taxable earnings are not considered income.

By contrast, the value of 529 plans—whether they are owned by a student or a parent—is considered a parental asset on the FAFSA, but withdrawals from parent- or student-owned accounts are excluded from federal income tax returns and do not have to be added back as income on the following year’s FAFSA. There are income limits to establish Roth IRAs—in 2023, those are $138,000 or less for single filers wanting to make a maximum contribution, and $218,000 or less for married couples filing jointly—whereas there are none for 529 accounts. There are also contribution limits of $6,500 per year for IRAs for those under 50 years of age and $7,500 for those age 50 or older, compared to no limits for 529 plans. Certified Financial Planners like Keen can help you make the right choice for your family.

Other Options

Other options to help your child or grandchild save for college include Coverdell Education Savings Accounts (ESAs). Coverdell ESAs are taxadvantaged trust or custodial accounts specifically used to save for educational expenses. Earnings from the account are not subject to income or capital gains taxes as long as they are used for qualified educational expenses, and the savings can also be used toward educational expenses for elementary and high school.

“I very rarely see those,” Keen said.“You can’t put a lot of money in them. The contributions are limited to $2,000 per year—and they’re subject to lower income limits than Roth IRA accounts.” The 38

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income limit for the maximum contribution is $190,000 for joint filers. Parents with incomes above $220,000 are ineligible.

Federal employees and others may consider investing in U.S. Savings Bonds. They can do so through TreasuryDirect (www.treasurydirect.gov), a web-based system to purchase, manage, and redeem electronic savings bonds. TreasuryDirect allows government employees to participate through direct deposit deductions, which can be set up on the TreasuryDirect website and the Office of Personnel Management’s (OPM) Employee Express payroll system (www.employeeexpress.com.)

Savings bonds are federally tax-deferred and state tax-free, and series EE and I bonds purchased after 1989 are federally tax-free for qualifying higher education expenses for married couples with incomes under $128,650, or $100,800 for individuals. They are also a low-risk investment, but the return on that investment is generally not high.

The current values of the bonds, not their face value, are considered assets by FAFSA. If the bonds are in the parents’ name, they are counted as parental assets, and if they are in the child’s name, they are assets of the child. Parental assets have a lower impact on students’ potential aid.

Other investments include mutual funds, diversified investments managed by financial advisers, or bank investment specialists. You can spend the funds you save on anything you’d like, including education expenses, and there’s no limit to what you can invest. Mutual funds are subject to annual income taxes, and any capital gains, dividends, or bond coupon payments are taxed when shares are sold.

Custodial accounts are another option. These are brokerage accounts opened by adults on a child’s behalf, usually transferred to them once they turn 18, 21, or 25. Funds held in these accounts can be used on anything for the benefit of the minor; there is no limit to the amount that can be invested, and the value of the account is removed from the donor’s estate.

These accounts are taxed to the child, however, which can have tax disadvantages if the income on the account exceeds $2,300 in a year. Also, the accounts are considered student assets on the FAFSA, and can significantly reduce the amount of aid for which a student qualifies.

Regardless of how you choose to save for your child’s education, Keen has a final piece of financial advice: Pick a college that makes economic sense for you and your child.

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“I went to a two-year college to cut costs, and then to an in-state college,” Keen recalls. “I had a little bit of debt coming out of school, but not much.

Certain colleges make sense for certain students.

There’s got to be a balance between college costs and college benefits. Today, it’s like we don’t want to look at these alternatives. But there’s a choice to be made. We have a choice.”

—EVERETT A. (EV) CHASEN IS A WRITER AND COMMUNICATIONS CONSULTANT IN THE WASHINGTON, DC, AREA. HE RETIRED FROM THE FEDERAL GOVERNMENT AFTER 35 YEARS OF SERVICE.

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The Federal Family

NARFE’s Resource on the Federal Family

N

ARFE provides the entire federal community with sources of information to advance your

advocacy efforts. The chart on the following page offers data on current and retired Feds as well as a synopsis of demographic trends, such as increases or decreases in the number of employees and annuitants since the previous fiscal year. The Office of Personnel Management (OPM) and the U.S. Postal Service serve as sources for this Federal Family chart.

The chart includes the total number of annuitants in fiscal year 2022, which is then further categorized into employee annuitants and survivor annuitants. Since fiscal year 2021, the number of annuitants increased overall, and survivor annuitants decreased slightly.

On the other hand, the number of both federal and postal employees decreased while pensions provided to annuitants increased.

Although the number of federal employees and annuitants fluctuates annually, the federal community continues to hold a presence in every congressional district nationwide. You are encouraged to utilize this chart and other NARFE resources to better assist you in meetings with lawmakers.

Visit the NARFE advocacy webpage, www.narfe.org/

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MEAN (AVERAGE) AND MEDIAN (MIDPOINT) MONTHLY ANNUITIES BY SYSTEM BY YEAR CSRS 2022 FERS 2022 CSRS 2021 FERS 2021 CSRS 2020 FERS 2020 EMPLOYEE MEAN* $4,464

$1,810

$4,163

$1,693

$4,055

$1,639

EMPLOYEE MEDIAN $3,897

$1,452

$3,631

$1,355

$3,532

$1,304

SURVIVOR MEAN** $1,938

$715

$1,805

$688

$1,758

$645

SURVIVOR MEDIAN

$560

$1,593

$520

$1,553

$501

* Employee Annuitants

$1,712

** Survivor Annuitants

advocacy, to access state-specific federal family fact sheets and policy issue briefs. The number of federal retirees and employees in each state, as well as the departments and agencies they work for, can be found in our advocacy resources.

In addition, a comparison between the size of agencies to private-sector employers in each state can be found in these documents as well.

Fact sheets detailing the number of federal annuitants in each congressional district are

published by NARFE. NARFE encourages you to utilize this invaluable information when it comes time to interact with your lawmakers, as it displays the size and influence that the federal community has in each district and state.

Any questions/concerns regarding the data provided here or by any other resources provided by the advocacy department, please call 1-800-456-8410 and select options 3, or email us at advocacy@narfe.org.

—BY SETH ICKES, POLITICAL ASSOCIATE

The Federal Family

Federal Employees, Postal Employees and All Civilian Annuitants The chart is a snapshot in time of the federal family. Dates and sources of the data are listed below. Please note: federal and U.S. Postal Service (USPS) employee categories are based on place of employment, not residence. Use these numbers in communications with elected officials. (Note: Blue numbers denote annual decrease.)

STATE/AREA

ALABAMA ALASKA ARIZONA ARKANSAS CALIFORNIA COLORADO CONNECTICUT DELAWARE DISTRICT OF COLUMBIA FLORIDA GEORGIA GUAM HAWAII IDAHO ILLINOIS INDIANA IOWA KANSAS KENTUCKY LOUISIANA MAINE MARYLAND MASSACHUSETTS MICHIGAN MINNESOTA MISSISSIPPI MISSOURI MONTANA NEBRASKA NEVADA NEW HAMPSHIRE NEW JERSEY NEW MEXICO NEW YORK NORTH CAROLINA NORTH DAKOTA OHIO OKLAHOMA OREGON PENNSYLVANIA PUERTO RICO RHODE ISLAND SOUTH CAROLINA SOUTH DAKOTA TENNESSEE TEXAS US VIRGIN ISLANDS UTAH VERMONT VIRGINIA WASHINGTON WEST VIRGINIA WISCONSIN WYOMING ABROAD & TERRITORIES

TOTAL

TOTAL ANNUITANTS1

EMPLOYEE ANNUITANTS1

SURVIVOR ANNUITANTS1

60,114 9,011 64,822 25,435 210,967 53,550 15,282 13,186 42,874 200,896 95,381 2,362 24,713 17,617 71,019 39,619 22,056 25,687 34,970 29,040 14,860 169,637 41,533 49,472 32,266 26,934 56,324 15,054 14,131 27,918 13,910 51,830 29,540 94,028 87,800 6,973 78,038 47,539 35,256 109,918 12,185 7,579 50,669 11,830 53,115 186,884 595 34,695 5,042 150,604 72,481 19,708 31,080 6,645 20,141

48,412 7,797 54,441 20,571 171,811 45,134 12,480 11,212 36,349 168,149 78,716 1,630 19,281 14,886 59,235 32,934 18,175 21,332 28,912 24,035 12,245 142,331 33,659 42,176 27,021 21,854 46,860 12,849 11,605 23,757 11,543 41,417 24,777 77,660 73,015 5,793 64,173 38,104 29,413 89,920 9,998 6,054 41,668 10,064 43,992 152,454 481 28,318 4,230 125,452 60,364 16,598 26,176 5,746 11,994

11,702 1,214 10,381 4,864 39,156 8,416 2,802 1,974 6,525 32,747 16,665 732 5,432 2,731 11,784 6,685 3,881 4,355 6,058 5,005 2,615 27,306 7,874 7,296 5,245 5,080 9,464 2,205 2,526 4,161 2,367 10,413 4,763 16,368 14,785 1,180 13,865 9,435 5,843 19,998 2,187 1,525 9,001 1,766 9,123 34,430 114 6,377 812 25,152 12,117 3,110 4,904 899 8,147

2,724,815

2,249,253

475,562

MONTHLY ANNUITIES ($000s)1

FEDERAL EMPLOYEES2

USPS EMPLOYEES3

$170,363 $24,911 $174,935 $59,300 $596,458 $157,942 $41,223 $45,109 $180,833 $577,979 $261,388 $4,720 $76,340 $46,646 $200,803 $100,170 $53,730 $66,740 $83,560 $75,501 $38,056 $703,145 $117,842 $130,934 $82,552 $67,847 $146,731 $39,679 $34,182 $76,139 $40,439 $162,396 $81,163 $244,229 $248,032 $16,288 $217,632 $119,308 $96,889 $308,365 $26,377 $20,817 $136,467 $28,531 $140,263 $502,749 $1,375 $95,531 $12,553 $559,876 $206,643 $52,748 $74,472 $16,611 $36,833

39,054 10,533 32,171 13,429 141,475 37,717 8,388 3,433 160,991 87,878 76,788 2,846 23,675 8,762 42,310 23,622 8,981 17,190 21,866 18,606 11,759 138,892 24,546 27,228 16,796 18,533 35,926 9,282 9,845 12,715 4,578 21,340 21,559 51,038 47,502 5,372 52,004 40,292 18,136 63,344 13,735 8,080 22,913 8,339 29,001 121,511 395 31,374 3,205 140,479 54,080 16,296 16,605 5,652 32,193

9,805 1,560 10,134 5,518 62,474 10,286 8,313 2,170 6,789 38,387 18,710 127 2,652 2,686 29,329 12,098 7,385 6,419 8,011 8,911 3,433 12,793 15,921 21,892 11,937 5,151 14,993 1,993 4,364 4,886 3,446 20,792 3,251 43,646 20,484 1,687 23,747 7,295 7,095 29,338 3,401 2,731 9,049 1,989 13,918 46,661 150 5,297 1,533 16,304 11,960 3,744 11,279 1,040 23

108,973 21,104 107,127 44,382 414,916 101,553 31,983 18,789 210,654 327,161 190,879 5,335 51,040 29,065 142,658 75,339 38,422 49,296 64,847 56,557 30,052 321,322 82,000 98,592 60,999 50,618 107,243 26,329 28,340 45,519 21,934 93,962 54,350 188,712 155,786 14,032 153,789 95,126 60,487 202,600 29,321 18,390 82,631 22,158 96,034 355,056 1,140 71,366 9,780 307,387 138,521 39,748 58,964 13,337 52,357

$7,882,345

2,176,983

638,987

5,540,785

TOTAL2

OFFICE OF PERSONNEL MANAGEMENT, FISCAL YEAR 2022 OFFICE OF PERSONNEL MANAGEMENT FEDSCOPE, DECEMBER 2022 (Location data of 262,723 employees suppressed for security and not included in individual state totals.

Suppressed employee figure is included in overall total figure.)

3 POSTAL REGULATORY COMMISSION, MAY 2023 1

2

NARFE MAGAZINE www.NARFE.org

43

Managing Money

How to Improve Your After-Tax Returns When Investing Outside of a Retirement Plan

W

hen it comes to investing outside of a retirement plan, such as the Thrift Savings Plan (TSP) or an Individual Retirement Account (IRA), focusing on

tax-efficient investments is a critical aspect that can significantly improve your after-tax returns.

Many individuals invest in mutual funds, which are a type of investment vehicle that pools money from many investors and invests it in a portfolio of securities, such as stocks, bonds or other assets. While mutual funds offer several benefits to investors, such as diversification, liquidity and convenience, in many cases they are not the best option for taxable accounts.

Many mutual funds tend to pay out capital gains distributions each year, which can have a negative impact on an investor’s after-tax return. Capital gains distributions are payments that reflect a fund’s realized net gains from selling securities in its portfolio. Mutual funds are required by law to distribute at least 90% of their net investment income and net realized capital gains to their shareholders each year. And unless the mutual fund is held in a tax-advantaged retirement account, investors must report the capital gains distributions on their tax return.

It’s important to understand capital gains distributions provide no economic benefit to investors, even when the distributions are reinvested to purchase additional shares. When a fund pays out a capital gains distribution, the net asset value of the fund

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NARFE MAGAZINE AUGUST 2023

drops by the same amount as the distribution. So, although the investor ends up with more shares when reinvesting the distributions, the total value of their mutual fund investment

WHILE MUTUAL FUNDS OFFER SEVERAL BENEFITS TO INVESTORS, SUCH AS DIVERSIFICATION, LIQUIDITY AND CONVENIENCE, IN MANY CASES THEY ARE NOT THE BEST OPTION FOR TAXABLE ACCOUNTS. remains the same due to the drop in the fund’s net asset value.

To improve after-tax returns when investing in taxable accounts, it’s important to focus on investment vehicles that minimize capital gains distributions. If you invest your taxable accounts in mutual funds, stick with passive funds that track broad market indexes, such as the S&P 500 Index (there are thousands of stock indexes) versus actively managed mutual funds.

Actively managed funds are handled by fund managers who actively buy and sell securities with the goal of beating a specific benchmark or market index.

The ongoing buying and selling of securities (turnover) increase the chances of generating capital gains that must ultimately be distributed to a fund’s shareholders. Passive, or index, mutual funds simply track a market index and have very little turnover year to year, reducing the chance of capital gains distributions.

An even better option than an index mutual fund is an exchange-traded fund, or ETF. Like a mutual fund, an ETF is a type of investment vehicle that allows investors to diversify their portfolios and access a variety of markets and sectors, but there are some key differences that make ETFs the more tax-efficient option.

Most ETFs are index funds, which as discussed, tend to be more tax efficient than actively managed funds. But what makes ETFs more tax efficient than mutual funds – even their index mutual fund counterpart—is the way in which they trade and what’s referred to as the in-kind creation and redemption process.

When a mutual fund investor wants to sell her shares, she must sell them back to the mutual fund company, which in turn must sell securities held by the fund to raise cash to meet the redemption. And to the extent the mutual fund realizes a net gain on

BENEFITS RESOURCES NARFE OFFERS MEMBERS a wide range of information on federal benefits. Visit www.narfe.org/federal-benefits-institute.

the sale of securities, it must pay out a capital gains distribution to the fund’s shareholders.

ETFs are traded on exchanges like stocks, so when an ETF investor wants to sell her shares, she simply sells to another investor in exchange for cash.

The ETF doesn’t have to sell securities and therefore has no gains to distribute to the ETF’s shareholders.

When an ETF company wants to issue new shares of its ETF, an authorized participant (AP) acquires the securities to be held in the ETF and delivers the shares of securities to the ETF company in exchange for equally valued ETF shares. The AP then resells those shares to investors at a profit.

If an ETF company wants so reduce shares of an ETF, the AP purchases shares of the ETF from investors and delivers those shares to the ETF

FEDERAL RETIREMENT BOOTCAMP Proper Asset Allocation

company. In exchange, the ETF company issues securities of equal value “in kind” from the ETF to the AP. No selling, no gains, no distributions.

It’s not what you make, it’s what you keep that counts, and when investing outside of a retirement account, it’s important to utilize tax-efficient vehicles so you can keep more of what you make.

MARK A. KEEN, CFP®, PARTNER, KEEN & POCOCK. SECURITIES OFFERED THROUGH THE STRATEGIC FINANCIAL ALLIANCE, INC. (SFA), MEMBER FINRA/SIPC. ADVISORY SERVICES OFFERED THROUGH STRATEGIC BLUEPRINT LLC AND SFA. MARK KEEN IS A REGISTERED PRINCIPAL OF SFA AND AN INVESTMENT ADVISER REPRESENTATIVE OF SFA AND STRATEGIC BLUEPRINT, LLC. SFA AND STRATEGIC BLUEPRINT ARE AFFILIATED THROUGH COMMON OWNERSHIP BUT OTHERWISE UNAFFILIATED WITH KEEN & POCOCK. NEITHER STRATEGIC BLUEPRINT NOR SFA PROVIDE TAX OR LEGAL ADVICE.

Learn how to maximize YOUR federal benefits

Asset Allocation Social Security claiming strategies Roth conversion strategies Stealth taxes Beneficiary designations FEHB and FEGLI in retirement Retirement income projections Tax-efficient investing & withdrawal strategies

Call TODAY for a complimentary meeting

$300 discount for NARFE members

703-691-9200 KEENPOCOCK.COM INFO@KEENPOCOCK.COM

Advisory services offered through Strategic Blueprint, LLC. Securities offered through The Strategic Financial Alliance, Inc. (SFA), member FINRA/SIPC. Strategic Blueprint and SFA are affiliated through common ownership but otherwise unaffiliated with Keen & Pocock.

NARFE MAGAZINE www.NARFE.org

45

NARFE News

Introducing the Newest NARFE Perk: 1-800-GOT-JUNK?

A

s junk starts to accumulate in your home, it can become quite overwhelming trying to remove it by yourself. Instead of stressing about the work ahead, consider bringing in some outside help! Whether you’re moving to a new home, downsizing, tackling a

renovation, or just need support with your decluttering, 1-800-GOT-JUNK?—NARFE’s latest affinity partner—is happy to help.

NARFE members can immediately begin taking advantage of this new valuable benefit. When you use 1-800-GOT-JUNK? to haul away your unwanted items, you’ll be left feeling lighter, happier and relieved—not to mention the amount of time you will save.

Not only do they clear out unwanted items, but 1-800-GOT-JUNK? delivers exceptional customer service the entire time. From the moment truck teams arrive, you’ll receive a premium experience.

When they say they’re full-service Junk Removal, they mean it! All you have to do is point to the items you want removed, and their friendly,

uniformed team members will make them disappear. It’s also good for the environment: 1-800-GOT-JUNK? tries to donate and recycle items whenever possible.

1-800-GOT-JUNK? charges based on the space your items take up in the truck, from a minimum charge all the way up to a full truckload. No job is too big or too small for their teams.

Want to experience the sweet feeling of “junk relief” for yourself? NARFE members receive an exclusive 10% discount on junk removal services from 1-800-GOT-JUNK? with code NARFE10.

2023 CONFERENCES & EVENTS

IOWA: September 19-20, hybrid; 1504 305th Street, Meskawke Conference Center, Tama, Iowa; email Dorman Otte, dormanotte@gmail.com, for more information.

Information as of June 1: REGION X: September 12-14, Frankfort, KY; email Robert Allen, rvp10@narfe.org, for more information.

ALASKA: September 23, virtual; email Paul McIntosh, mcintoshpaul10@gmail.com, for more information; https://us02web. zoom.us/j/88666139423, passcode SDNCV0xROW1RRk96RytVTkwwZ2l4QT09.

ILLINOIS: September 26-28, 1202 N. Keller Drive, Thelma Keller Convention Center, Effingham; federal election and business meeting September 28 during conference; email Linda J. Glasgow, glasgowljg43@aol.com, or visit http:// www.narfe.net/site/il/ for more information.

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NARFE MAGAZINE AUGUST 2023

SEE JUNK ON P.48

MONTANA: September 11; email Leland “Wally” Walbruch, leland.walbruch@gmail.com, for more information and to register.

NEW HAMPSHIRE: November 1, 172 N. Main St., Concord, NH, Holiday Inn Concord Downtown; email Patricia Grandmaison, patspoint2@gmail. com, for more information.

WASHINGTON: September 27; email Cray Henry, www.cray.henry@gmail.com, or visit http://narfewa. org for more information.

WISCONSIN: November 6; contact Melanie Miller, melanie.miller@wisc.edu, for more information.

New Director of Member Engagement at NARFE

N

ora MacDonald has joined NARFE as director of member engagement. In this role, she is responsible for recruiting and retaining members and supporting chapter and federation leaders as they expand NARFE’s reach.

Nora graduated from Shenandoah University in Winchester, VA, with a B.S. in Arts Management and worked at several nonprofit arts organizations including the Arts Council of Fairfax County, Round House Theater and the Kennedy Center before taking on a full-time role at Americans for the Arts.

As Member Services Associate and then Membership Marketing Coordinator, she was involved with supporting both the professional

membership and the Arts Action Fund membership programs.

In 2011, she transitioned to the American Horticultural Society, where she was quickly promoted to Associate Director of Membership and Member Programs. For 12 years she oversaw the membership renewal and acquisition programs and assisted with the appeals (fundraising) program, as well as managing the organizational membership program for public gardens, awards and an annual symposium for garden educators.

Nora and her husband, Matt, live with their 7-year-old daughter, Elena, and 14-year-old dog named Toby in Alexandria, VA. She currently is PTA Treasurer of her daughter’s school. You will often find the family at local sporting

events where Matt is working or Elena is playing.

“I’m excited for the opportunities and potential here for membership growth,” Nora says, “and I’m so pleased to be at NARFE.” Welcome, Nora!

NARFE MAGAZINE www.NARFE.org

47

NARFE News 606 North Washington Street Alexandria, Virginia 22314-1914 www.narfe.org

P238571

N

ARFE’s 2023 Photo Contest brought in hundreds of wonderful photographs from NARFE members. Narrowing the selection from several hundred photos was a tremendous effort this year, but the result is a magnificent 2024 NARFE Calendar, which is being distributed during NARFE’s fundraising efforts this year. Check next month’s issue for details on entering 2024 Photo Contest.

Proudly made in the U.S.A.

FRONT COVER • BEYOND THE FOREST — Rocky Mountain National Park, CO • George W. Gootee • Bowling Green, KY • National Member

606 North Washington Street Alexandria, Virginia 22314-1914 www.narfe.org

FRONT COVER • BEYOND THE FOREST — Rocky Mountain National Park, CO • George W. Gootee • Bowling Green, KY • National Member

Proudly made in the U.S.A.

LIST OF 2023 PHOTO CONTEST WINNERS P238571

Cover: “Beyond the Forest (Rocky Mountain National Park, CO)”

by George Gootee, Bowling Green, KY, National Member.

January: “Blue Wonderland (Private Pond in Lancaster, PA)” by Jose R. Mojica, Paradise, PA, Chapter 0301 .

February: “Storm Clouds Over Bass Harbor Head Lighthouse in Acadia National Park” by Rodney Hendrickson, London, KY, Chapter 1249.

March: “The Alaska Railroad Ride” by Belinda Huff, Lexington, KY, National Member .

April: “Albuquerque International Balloon Festival” by Roger Peterson, Buckeye, AZ, National Member.

May: “Blue—A Field of Lovely Iris” by Robert C. Peterson, Summerville, SC, Chapter 1082.

June: “Lobster Trap Floats” by Norajean Flanagan, Philadelphia, PA, National Member.

July: “The Fourth” by Stephen Aprile, Taneytown, MD, Chapter 2306 August: ‘The Arch, “Gateway to the West”’ by William Shirah, Pevely, MO, Chapter 1278.

September: “American Bald Eagle” by Randy R. Feuerstein, Littleton, CO, National Member.

October: “Colorful Cheese Display” by Andrée S. Neri, Columbia, MD, Chapter 1734.

November: “The Color of Bellagio Opus (Bellagio Botanical Gardens)” by Ronaldo Dizon Las Vegas, NV, Chapter 423.

December: “The Lonely Bench (Shoreline of Lake Superior)” by Ruth Ann Spinner, DuLuth, MN, National Member.

JUNK FROM P.46

RESERVE YOUR CALENDAR NOW Like what you see above? The 2024 NARFE Calendar will be sent to select NARFE members later this month. You can get ahead of the crowd and reserve your copy with a small donation to NARFE. Remember, your contributions support NARFE’s important advocacy and education initiatives on behalf of all federal employees and retirees. Visit www.narfe.org/reserve-calendar to make your gift today! Allow 6 to 8 weeks for delivery.

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NARFE MAGAZINE AUGUST 2023

To learn more, visit the NARFE Perks page at https:// www.narfe.org/perks or call 1-800-468-5865.

Remember: Taking advantage of just one NARFE Perks offer could more than pay for your annual membership!

Donate

to NARFE programs

Donate to NARFE

Enclosed is my NARFE Contribution: $ __________________

MAKE CHECK PAYABLE TO: NARFE

Name: ___________________________________________________________

All donations go to the NARFE General Fund to support NARFE Programs and operations.

PLEASE MAIL COUPON AND CHECK TO: NARFE / 606 N. Washington St. / Alexandria, VA 22314 or donate online at www.narfe.org/ donate With NARFE’s thanks, you will receive a NARFE Photo Calendar

Address: _________________________________________________________

NARFE safeguards the earned pay and benefits of America’s five million federal workers, retirees, their spouses, and survivors. NARFE is YOUR legislative voice and tireless advocate.

Card Number: ____________________________________________________

NARFE contributions are NOT tax-deductible.

City:_____________________________________________________________ State:______________________________ ZIP: _________________________

Credit Card Information: q M/C q VISA q Discover q AMEX Expiration Date: ______ (mm)/ _____ (yy)

Security Code: ______________

Signature: ___________________________________ Date: ____ / ___/____ Name: (please print) _______________________________________________

Support Alzheimer’s Research NARFE members contributed for Alzheimer’s research: $16 Million Fund $15,741,859.72* *Total as of May 31, 2023. All contributions go directly to Alzheimer’s research, with the exception of funds given to the Walk to End Alzheimer’s or The Longest Day.

If you have any questions, write to: National Committee Chair Olivia Williams PO Box 2175 Columbia, SC 29202 OR EMAIL: oeashf3@gmail.com MAKE CHECK PAYABLE TO: NARFE-Alzheimer’s Research (write your chapter number on memo line)

Enclosed is my NARFE-Alzheimer’s contribution: $ ________ Every cent that is contributed is used for research.

Name: ___________________________________________________________ Address: _________________________________________________________ City:_____________________________________________________________ State:______________________________ ZIP: _________________________ Chapter number: __________________________________________________

PLEASE MAIL COUPON AND CHECK TO: Alzheimer’s Association 225 N. Michigan Ave., 17th Floor Chicago, IL 60601-7633

Credit Card Information: q M/C q VISA q Discover q AMEX

Your charitable contribution is tax-deductible to the fullest extent allowed by law.

Signature: ___________________________________ Date: ____ / ___ / ______

Give to the

NARFE-FEEA Fund MAKE CHECK PAYABLE TO: NARFE-FEEA Fund PLEASE MAIL COUPON AND CHECK TO: FEEA 1641 Prince St. Alexandria, VA 22314

Your charitable contribution is tax-deductible to the fullest extent allowed by law.

Card Number: ____________________________________________________ Expiration Date: ______ (mm)/ ____(yy)

Security Code: _______________

Name: (please print) _______________________________________________

The NARFE-FEEA Fund supports NARFE members during disasters; provides scholarships to their children, grandchildren and great-grandchildren; and funds other programs to support NARFE members at the direction of NARFE and FEEA. Enclosed is my NARFE-FEEA Fund Contribution: $ ________ Name: ___________________________________________________________ Address: _________________________________________________________ City:_____________________________________________________________ State:______________________________ ZIP: _________________________ Email: ___________________________________________________________

To make credit card or e-check contributions, visit www.feea.org/givenarfe.

NARFE MEMBER BENEFITS • Access the NARFE Federal Benefits Institute for powerful resources to help you fully understand and manage your benefits.

Active and Retired Federal Employees ...

Join NARFE Today!

The only organization dedicated solely to protecting and preserving the benefits of all federal workers and retirees, NARFE informs you of any developments and proposals that affect your compensation, retirement and health benefits, AND provides clear answers to your questions.

Who Should Join NARFE?

If your future security is tied to federal retirement benefits—federal retirees, current employees, spouses and individual survivors—you should join NARFE.

• Access to FEDHub, NARFE’s online community, where members share ideas, information and solutions—it’s the go-to place where active and retired Feds connect • Visit the Legislative Action Center to contact your representatives about bills affecting federal benefits.

• Get NARFE Magazine and our weekly e-newsletter, NewsLine—your best sources for the latest news and information on issues impacting federal employees and retirees.

• NARFE Perks discounts on insurance, travel, health services and more!

• Nearly 800 local chapters unite federal employees, retirees, their spouses and survivors, and provide networking, advocacy and leadership opportunities.

1Q6

NARFE MEMBERSHIP APPLICATION YES. I want to join NARFE for the low annual dues of $48.

q

q Mr. q Mrs. q Miss q Ms.

q MasterCard

______________________________________________

Full Name

______________________________________________

Street Address

______________________________________________ ______________________________________________

City

State

ZIP

______________________________________________

Phone

______________________________________________

Email

I am a (check all that apply) q Active Federal Employee

q Active Federal Employee Spouse

q Annuitant Spouse

q Survivor Annuitant

q Please enroll my spouse _________________________________________

Spouse’s Full Name

_________________________________________

Spouse’s Email

q VISA

q Discover

q AMEX

___________________________________________ Card No. Expiration Date _____ /________ mm

Apt./Unit

q Annuitant

PAYMENT OPTIONS q Check, Money Order or Bill Pay (Payable to NARFE) q Bill me (NARFE membership will start when payment is received.) q Charge my:

yyyy

___________________________________________ Name on Card ___________________________________________ Signature ___________________________________________ Date

TOTAL DUES $48 Annual Dues X ___________ = ___________ Per Person # Enrolling Total Dues Dues payments are not deductible as charitable contributions for federal income tax purposes.

LOOKING TO MEET OTHERS in the federal community and participate in NARFE at a local level? Call 800-456-8410 to learn about a NARFE chapter in your area.

Would you like to receive a FREE one-year chapter membership? Choose one: q Chapter closest to home OR q Chapter #____________

THANK YOUR RECRUITER Did someone introduce

THREE EASY WAYS TO JOIN 1. Complete this application and mail with your payment to NARFE Member Services / 606 N Washington St / Alexandria, VA 22314-1914.

2. Join online at www.NARFE.org.

3. Call 800-456-8410, Monday through Friday, 8 a.m. to 5 p.m. ET.

you to NARFE? Please provide their Name and Member ID. ___________________________________________ Recruiter’s Name ___________________________________________ Recruiter’s Membership ID NARFE respects the privacy of our members. Personal information is used to provide content and relevant communications to our members. Some NARFE member benefits are provided by third parties (NARFE Perks), and not NARFE. (03/23)

Special Section

Consolidated Financial Statements for the Year Ended December 31, 2022 REPORT OF THE NATIONAL SECRETARY/TREASURER The consolidated financial statements were prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP). Revenue is recognized when earned and expenses recognized when incurred. The statements represent both the operating funds of national NARFE and NARFE-PAC. Investments consist of mutual funds, corporate bonds and exchange-traded funds and are recorded at their fair value. Further definitions and explanations will be found in Notes to Consolidated Financial Statements in the following pages.

The FY 2022 Total Revenues were $7,501,164 with $9,185,545 in Expenses resulting in a decline of $1,684,381 in Net Assets. While the Net Assets are lower, the cash flow stayed positive. Note that $802,191 of revenue in NARFE-PAC was donor restricted. Inflation rose to 6.5% in 2022. For NARFE, 2022 was also a year of transition, with senior people departing and earnings from sponsored meetings lower or nonexistent. The team did a good job managing our overall finances.

We know the national economy did not perform well from daily reports of the inflation rates. While we are not pleased about the decline of our net assets in 2022, we are optimistic about how we will be able to hold the line on the management of our assets in 2023. It is reassuring to know that we have a large asset in the building in Alexandria, but it is aging like many of us. The next few years are going to challenge our management philosophy, and decisions will need to be made regarding how to stem the decrease in membership.

—Kathryn E. Hensley

REPORT OF THE NATIONAL EXECUTIVE BOARD AUDIT COMMITTEE On April 11, 2023, the association’s external auditors, Marcum LLP, met virtually with the NEB Audit Committee, Chair Region VI Marshall L. Richards, Committee Members Region VIII Vice President Robert Ruskamp and Region II Vice President Larry Walton, and staff members, Johann De Castro, SVP Finance and Administration/Interim Chief of Staff, and Veronica Clemons, Director of Finance. The purpose of the meeting was to review and discuss the annual financial audit for the year ended December 31, 2022.

The auditors presented a comprehensive and detailed review of NARFE’s Consolidated Financial Statements. They reported finding no material weaknesses in internal controls, which are the policies and procedures that ensure the reliability and accuracy of financial reporting. They provided an unqualified opinion, indicating that the association’s financial statements are free of material misstatements and conform to generally accepted accounting principles. This means that the association has received “a clean audit.”

Total assets declined $1,494,689 from 2021 to the end of 2022 to $13,336,728, mainly from the investment losses ($1,618,159) during 2022. NARFE’s National Executive Board (NEB) measures the performance of the operations without the performance of the investments; therefore, the combination of the investment losses, with high inflation, and donor restrictions were accountable for the total decline.

Pursuant to the Audit Committee’s recommendation, the NEB voted unanimously on May 19, 2023, to accept the 2022 Audited Financial Statements. The committee commends NARFE senior management and staff for their contributions to ensuring a “clean audit” for another year.

—Marshall L. Richards, Chair

NARFE MAGAZINE www.NARFE.org

51

Independent Auditors’ Report To the National Executive Board of National Active and Retired Federal Employees Association and Affiliate Opinion We have audited the consolidated financial statements of National Active and Retired Federal Employees Association and Affiliate (collectively referred to as the Association), which comprise the consolidated statement of financial position as of December 31, 2022, and the related consolidated statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Association as of December 31, 2022, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Association and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Association’s ability to continue as a going concern within one year after the date that the consolidated financial statements are available to be issued.

Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of

52

NARFE MAGAZINE AUGUST 2023

assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Association’s internal control. Accordingly, no such opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Association’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

Supplementary Information Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidating supplementary information is presented for purposes of additional analysis of the consolidated financial statements, and is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used

to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the consolidated financial statements as a whole.

an unmodified audit opinion on those audited consolidated financial statements in our report dated May 10, 2022. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2021, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.

Marcum LLP Other Matter Washington, DC Report on Summarized Comparative Information May 1, 2023 We have previously audited the Association’s 2021 NATIONAL ACTIVE AND RETIRED FEDERAL consolidated financial statements, and weASSOCIATION expressed EMPLOYEES AND AFFILIATE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

National Active and Retired Federal Employees Association and Affiliate DECEMBER 31, 2022 Consolidated Statement of Financial Position December 31, 2022 (WITH SUMMARIZED FINANCIAL INFORMATION AS OF DECEMBER 31, 2021) (With Summarized Financial Information for the Year Ended December 31, 2021)

National Active and Retired Federal Employees Association and Affiliate 2022 2021 Consolidated Statement of Financial Position ASSETS December 31, equivalents 2017 (With Comparative Totals as of December 31, and 2015) Cash and cash $ 2016 2,404,985 $ 2,035,800 Accounts receivable, net of allowance for doubtful accounts of $2,000 Prepaid expenses Investments Property and equipment, net TOTAL ASSETS LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued liabilities Accrued vacation and payroll benefits Chapter dues payable Deferred revenue

169,214 78,690 8,379,457 2,304,382 $

13,336,728

$

14,831,417

$

450,920 343,351 90,572 3,716,145

$

161,188 372,468 74,985 3,802,655

TOTAL LIABILITIES Net Assets Without donor restrictions With donor restrictions TOTAL NET ASSETS TOTAL LIABILITIES AND NET ASSETS

Additional NARFE Financial Data

The salaries of the National Executive Board, as of December 31, 2022, are as follows (rounded): President: $130,000 Secretary/Treasurer: $116,447 Regional Vice Presidents: $28,110* *changed to $14,055 on November 1, 2022, by membership vote

157,606 139,964 10,004,823 2,493,224

$

4,600,988

4,411,296

7,737,541 998,199

9,142,594 1,277,527

8,735,740

10,420,121

13,336,728

$

14,831,417

In 2022, NARFE’s investments were held with these firms: •O perating Fund: Morgan Stanley and The Vanguard Group •L ife Membership Trust Fund: Morgan Stanley • Contingency Fund: Morgan Stanley • PAC Fund: Raymond James

NARFE MAGAZINE www.NARFE.org The accompanying notes are an integral part of these consolidated financial statements.

53

NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION AND AFFILIATE

National Active and Retired Federal Employees Association and Affiliate CONSOLIDATED STATEMENT OF ACTIVITIES Consolidated Statement of Activities for the Year Ended December 31, 2022 FOR THE YEAR ENDED DECEMBER31, 31, 2021) 2022 (With Comparative Totals for the Year Ended December

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2021)

REVENUE AND SUPPORT Membership Contributions Investment loss (income), net Advertising Royalties Conferences and meetings Other income Net assets released from restrictions: Satisfaction of program restrictions

Without Donor Restrictions $

5,045,375 1,520,198 (1,618,159) 1,209,176 236,525 299,227 6,631

With Donor Restrictions $

2022 Total

-802,191 ------

$

2021 Total

5,045,375 2,322,389 (1,618,159) 1,209,176 236,525 299,227 6,631

$

5,044,408 2,602,018 745,812 1,240,787 355,113 191,050 26,652

1,081,519

(1,081,519)

--

--

7,780,492

(279,328)

7,501,164

10,205,840

2,147,836 1,409,074 964,699 1,030,168 384,925 739,622

-------

2,147,836 1,409,074 964,699 1,030,168 384,925 739,622

1,956,535 1,710,214 866,517 1,089,680 432,242 324,284

6,676,324

--

6,676,324

6,379,472

893,951 961,318 653,952

----

893,951 961,318 653,952

819,320 1,245,586 652,926

Total Supporting Services

2,509,221

--

2,509,221

2,717,832

TOTAL EXPENSES

9,185,545

--

9,185,545

9,097,304

CHANGE IN NET ASSETS

(1,405,053)

(279,328)

(1,684,381)

1,108,536

NET ASSETS, BEGINNING OF YEAR

9,142,594

1,277,527

10,420,121

9,311,585

TOTAL REVENUE AND SUPPORT EXPENSES Program Services: Communications Membership services Political Action Committee Legislative program Federal benefits program Conferences and meetings Total Program Services Supporting Services: General and administrative Membership recruitment Fundraising

NET ASSETS, END OF YEAR

$

7,737,541

$

998,199

$

8,735,740

$

10,420,121

The accompanying notes are an integral part of these consolidated financial statements.

5

54

NARFE MAGAZINE AUGUST 2023

NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES National Active and Retired Federal Employees Association and AffiliateASSOCIATION AND AFFILIATE

Consolidated Statement of Functional Expenses for the Year Ended December 2022 CONSOLIDATED STATEMENT31, OF FUNCTIONAL EXPENSES (With Comparative Totals for the Year Ended December 31, 2021)FOR THE YEAR ENDED DECEMBER 31, 2022

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, Program Services

Communications

Salaries and benefits $ 765,904 Printing and postage 1,032,768 Contract services 65,574 Political contributions 175 Meetings and conferences 10,158 Professional fees 78,149 ONAL ACTIVEOffice ANDexpenses RETIRED FEDERAL113,451 Advertising AND AFFILIATE 2,118 LOYEES ASSOCIATION Bank fees and taxes 44,981 Depreciation and amortization 34,558

$

DATED STATEMENT OF FUNCTIONAL EXPENSES

TOTAL EXPENSES $ OR THE YEAR ENDED DECEMBER 31, 2022

2,147,836

Political Action Committee

Membership Services

$

1,027,645 12,936 51,764 250 46,169 76,779 76,878 3,026 64,259 49,368 1,409,074

NCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2021)

$

$

227,719 2,107 60,145 50 1,614 48,856 21,103 605 12,852 021)9,874

Conferences and Meetings $

384,925 ing Services $

mbership ruitment

Total Program Services

Salaries 68,618 and benefits $ 2,781,762 Printing 1,310 and postage 1,185,483 Contract 2,294 services 195,177 Political 25 contributions 774,650 Advertising 515,455 586,042 Office expenses 483,941 124,258 15,996 and conferences 327,740 Meetings 303 8,170 Professional fees 6,426 Bank fees and taxes200,064 4,937 133,295 Depreciation 739,622

Fundraising

TOTAL

$ EXPENSES 6,676,324 Total Supporting Services

350,831 200,981 76,999 25 2,319 7,678 24,300 286,822 6,426 4,937

$

75,527 and benefits $ 947,071 Salaries 1,054 and postage213,626 Printing 545,973 services 648,208 Contract 25 contributions 325 Political 779 11,662 Advertising 7,678 99,813 Office expenses 11,250 and conferences 150,347 Meetings 303 Professional fees 290,453 6,426 Bank fees and taxes 83,537 4,937 64,179 Depreciation

961,318

$

653,952

TOTAL

$ EXPENSES 2,509,221

Federal Benefits Program

Legislative Program

130,040 1,635 774,000 7,915 7,678 5,200 303 32,991 4,937 964,699

$

$

691,876 6,322 13,765 150 4,731 148,221 95,112 1,815 38,555 29,621

$

1,030,168

$

Conferences and Meetings

Total Program Services

General and Administrative

M Re

227,719 $ 68,618 $ 2,781,762 $ 520,713 $ 2,107 1,310 1,185,483 11,591 60,145 2,294 195,177 25,236 50 25 774,650 275 1,614 515,455 586,042 8,564 48,856 124,258 483,941 84,457 NATIONAL ACTIVE AND RETIRED FED 21,103 15,996 327,740 114,797 EMPLOYEES ASSOCIATION AND 605 303 8,170 3,328AFFIL 12,852 6,426 200,064 70,685 9,874 CONSOLIDATED 4,937 133,295 54,305 STATEMENT OF FUNCTIONA

For the Year Ended December 31, 2019 (With Summarized Financial Information$for the Year Ende 384,925 $ 739,622 $ 6,676,324 893,951 $ _______________

Program Services

Supporting Services

ederal enefits ogram

Suppo

General and Communications Administrative

Membership Membership Services Recruitment

Political Action Committee Fundraising

$$

444,239 520,713 1,112,571 11,591 244,320 25,236 275 8,564 7,958 84,457 114,797 4,226 3,328 11,790 70,685 54,305 -

$$

704,102 350,831 10,044 200,981 561,193 76,999 25 2,319 15,242 7,678 24,300 286,822 6,426 4,937 -

$$

699,634 $ $3,728,833 228,046 $ 4,100,754 $ 108,282 $ 2,184,3 75,527$ $ 947,071 103,515 46,491 1,273,6 1,054 213,626 1,399,109 9 1,266,1971,001 8,454 26,528 850,4 545,973 648,208843,385 889,8519,997 NATIONAL ACTIVE AND RETIRED FED 616,000 616,0 25 325774,975 554,500 EMPLOYEES ASSOCIATION AND AFFIL77911,662597,704 238,668 22,147 20,976 6,487 15,484 88,2 583,754 537,838 7,678 99,813 OF FUNCTIONA 11,250 150,347 478,087 471,252 17,702 9,732 CONSOLIDATED 4,302 STATEMENT 155,502 191,4 For the Year Ended December 31,224,4 2019 303 290,453 298,623 433,011 674 113,304 96,529 2,188 (With Financial Information 6,426 83,537 283,601 393,914 - for the Year Ende 29,876 - Summarized 29,8 _______________ 4,93764,179197,474 211,319 -

$$

893,951 1,825,104

$$

961,318 1,290,581

$ $

Services $ 653,952 798,368 $ Program $ 2,509,221 890,137

2022

Communications Total

Total Legislative Supporting program Services

Political Action Committee

Membership 2021 Services Total

Federal

benefits 2022 program Total

$9,185,545 361,901 $ Federal benefits program

Legislative program

Total Program Services

Conferences 2021 and meetings Total

9,097,304 $ 292,454

$

5,458,5

T

Total Program Services

Conferences and meetings

$$

3,728,833 444,239 1,399,109 1,112,571 843,385 244,320 774,975 597,704 583,754 7,958 478,087 4,226 298,623 11,790 283,601 197,474 -

$ $ 4,100,754 704,102 1,266,197 10,044 889,851 561,193 554,500 238,668 537,838 15,242 471,252 433,011 393,914 211,319 -

$

103,515 8,454 616,000 22,147 17,702 674 29,876 -

$

699,634 46,491 20,976 9,732 113,304 -

$

228,046 9 26,528 6,487 4,302 96,529 -

$

108,282 1,001 9,997 15,484 155,502 2,188 -

$

2,184,3 1,273,6 850,4 616,0 88,2 191,4 224,4 29,8 -

$$

9,185,545 1,825,104

$ $ 9,097,304 1,290,581

$

798,368

$

890,137

$

361,901

$

292,454

$

5,458,5

NARFE MAGAZINE www.NARFE.org The accompanying notes are an integral part of these consolidated financial statements.

55

EMPLOYEES ASSOCIATION AND AFFILIATE CONSOLIDATED STATEMENT OF CASH FLOWS

National Active and Retired Federal Employees Association and Affiliate FOR THE YEAR ENDED DECEMBER 31, 2022 (WITH Statement SUMMARIZED INFORMATION THEDecember YEAR ENDED 31, 2021) Consolidated of FINANCIAL Cash Flows for the Year FOR Ended 31,DECEMBER 2022 (With Comparative Totals for the Year Ended December 31, 2021) CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization Net realized and unrealized losses (gains) Changes in assets and liabilities: Accounts receivable Prepaid expenses Accounts payable and accrued liabilities Accrued vacation and payroll benefits Chapter dues payable Deferred revenue

2022

2021

$ (1,684,381)

NET CASH PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment Purchases of investments Proceeds from sales of investments NET CASH USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Payment for line of credit NET CASH USED IN FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

$

1,108,536

197,474 1,949,546

211,320 (128,397)

(11,608) 61,274 289,732 (29,117) 15,587 (86,510)

143,066 45,047 (167,389) (21,884) 5,822 212,649

701,997

1,408,770

(8,631) (700,898) 376,717

(47,602) (1,181,121) 535,950

(332,812)

(692,773)

--

(300,000)

--

(300,000)

369,185

415,997

2,035,800

1,619,803

CASH AND CASH EQUIVALENTS, END OF YEAR

$

2,404,985

$

2,035,800

SUPPLEMENTAL INFORMATION Interest paid Income taxes paid

$ $

5,187 128,673

$ $

5,187 128,673

The accompanying notes are an integral part of these consolidated financial statements.

National Active and Retired Federal Employees Association and Affiliate Notes to Consolidated Financial Statements December 31, 2022 federal benefits, communications to facilitate local activities. In addition, there are 783 chapters affiliated and conferences. These activities are with NARFE that are located in the primarily funded by membership dues United States and some international and contributions and revenue derived Organization: National Active and locations. The chapters are established from advertising.

Retired Federal Employees Association by members to increase the scope and There are fifty-four (54) federations, notes are an integral part of these consolidated financial statements.

(NARFE) was established in 1921 to The accompanying effectiveness of NARFE. Chapter dues located in the United States, District of advance the general welfare of its more are established by the chapters and are Columbia, Panama, Puerto Rico, and 7 than 142,000 members and to aid them billed and collected by NARFE with the the Philippines, that are affiliated with in securing their rights under federal national dues. NARFE rebates to the NARFE and conduct local independent retirement laws. NARFE is incorporated programs. Ten percent of all eligible chapters one-third of the national fee under the laws of District of Columbia. charged for all new members joining member national dues collected are Its programs include legislative, passed- through to these federations chapters.

NOTE 1 – NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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NARFE MAGAZINE AUGUST 2023

The federations and chapters are independent and autonomous organizations. As NARFE has no economic interest in or control of federations and chapters affiliates, their financial activities are not included in the accompanying consolidated financial statements of NARFE. The federations’ bylaws must adhere to NARFE’s bylaws.

NARFE has created a political action committee called NARFE PAC.

Basis of Accounting: These consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP).

Consequently, revenue is recognized when earned and expenses are recognized when incurred.

Principles of Consolidation: The accompanying financial statements as of and for the year ended December 31, 2022, of NARFE and its affiliate, NARFE PAC (collectively referred to as the Association) have been consolidated because they are under common control. All material intercompany balances and transactions have been eliminated on consolidation.

Cash and Cash Equivalents: Cash and cash equivalents are composed of demand deposits and money market funds.

Accounts Receivables: The Association uses the allowance method to record accounts receivable at their estimated net realizable value. The allowance for doubtful accounts is based on various factors, including management’s analysis of the collectability of the accounts, historical write-off of expenses and current economic conditions. A provision for doubtful accounts is made when collection of the full amount is no longer probable.

Investments: Investments consist of mutual funds, corporate bonds and exchange-traded funds. Investments are recorded in the accompanying consolidated financial statements at their fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability through an orderly transaction between market participants at the measurement date.

Purchases and sales are reflected on a trade-date basis. Interest, dividends and realized gains or losses are recorded when earned. Changes in the

fair value of the portfolio are recorded as unrealized gains or losses.

Fair Value of Financial Instruments: In accordance with the accounting standards for fair value measurement for those assets and liabilities that are measured at fair value on a recurring basis, the Association has categorized its applicable assets and liabilities measured at fair value into a required fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level-input that is significant to the fair value measurement of the instrument.

Applicable financial assets and liabilities are categorized on the basis of the inputs to the valuation techniques as follows: Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the client has the ability to access.

Level 2 – Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

As of and for the year ended December 31, 2022, only the Association’s investments, as described in Note 2 to these consolidated financial statements, were measured at fair value on a recurring basis.

Property and Equipment: All acquisitions of property and equipment greater than $1,500 and an economic life in excess of one year are capitalized at cost. Depreciation and amortization is computed by using the straight-line method based upon the estimated useful lives of the assets. Building and improvements are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 20 to 40 years. Furniture, equipment and software are recorded

at cost and depreciated using the straight-line method over their estimated useful lives of three to eight years. Expenditures for major repairs and improvements that extend the useful life of an asset are capitalized, whereas expenditures for minor repairs and maintenance costs are expensed when incurred. The cost of property and equipment retired or disposed of is removed from the accounts along with the related accumulated depreciation, and any gain or loss is reflected in revenue and support or expenses in the accompanying consolidated statement of activities.

Classification of Net Assets: NARFE’s net assets are reported as follows: • Net assets without donor restrictions represent the portion of expendable funds that are available for any purpose in performing the primary objectives of the Association at the discretion of the Association’s management and the National Executive Board (the Board). From time to time, the Board designates a portion of these net assets for specific purposes, which makes them unavailable for use at management’s discretion. The Board has designated $2,000,000 of net assets without donor restrictions to serve as a working capital reserve to secure the Association’s long-term financial viability. Also included in board-designated net assets is the life membership fund in the amount of $1,356,192.

• Net assets with donor restrictions represent funds that are specifically restricted by donors for use in various programs and/or for specific periods of time. These donor restrictions can be temporary in nature in that they will be met by actions of the Association or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated that the funds be maintained in perpetuity. As of December 31, 2022, the Association had no net assets with donor restrictions that are required to be maintained in perpetuity.

Revenue Recognition Membership Dues: Membership dues are on an anniversary-date basis and are recognized ratably over the membership period since there are no distinct performance obligations and the general member benefits are considered a bundled group of performance obligations that are delivered to members throughout the membership period.

NARFE MAGAZINE www.NARFE.org

57

Life membership dues are recognized as revenue over the duration of the life membership based on the collective average life expectancy for life members, according to life expectancy tables. Accordingly, dues paid by members in advance of the reporting period to which the dues pertain are reported as deferred revenue in the accompanying consolidated statement of financial position.

Advertising: Advertising revenue is recognized based upon when the advertisements are published, which is consistent with when the performance obligation is satisfied.

Revenue from these activities received in advance of the period to which the revenue pertains is reported as deferred revenue in the accompanying consolidated statement of financial position.

Property, Plant and Equipment, the Association reviews its property for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If the fair value is less than the carrying amount of the asset, an impairment loss is recognized for the difference. As of December 31, 2022, the Association has not recognized an impairment loss.

Contributions: Unconditional Royalties: The Association Functional Allocation of contributions received are recorded receives various royalties from other Expenses: The costs of providing the as revenue with or without donor organizations. These royalties are various programs and other activities restrictions, depending on the existence primarily from membership benefits have been summarized on a functional and/or nature of any donor stipulations. offered to members of the Association. basis in the accompanying statement of Donor restricted contributions are The revenue is recognized when earned functional expenses. Expenses directly NATIONAL ACTIVE AND RETIRED FEDERAL reported as an increase in net assets according to contractual agreements attributed to a specific functional area with donor restrictions, depending EMPLOYEES ASSOCIATION AFFILIATE with eachAND organization. of the Association are reported as on the nature of the stipulation. expenses of those functional areas and Conferences and meetings: When a restriction expires (that is, NOTES TO CONSOLIDATED FINANCIAL STATEMENTS are charged directly to the programs Conferences and meetings revenue when a stipulated time restriction those items support. Shared costs such consists of registrations, event sales and ends or purpose of aFOR restriction is THE YEAR ENDED DECEMBER 31, 2022 as office expenses are allocated to the sponsorship fees and is recognized in accomplished), net assets with donor functional area and the programs pro the year in which the conference takes restrictions are reclassified to net assets rata based on estimated time and efforts place.

Revenue from these activities without donor restrictions and reported NOTE 1 – NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES by employees. received in advance of the meeting is in the accompanying consolidated (CONTINUED) reported as deferred revenue in the statement of activities as net assets Estimates: The preparation of accompanying consolidated statement released from restrictions.

ESTIMATES consolidated financial statements of financial position. in conformity with GAAP requires Investment Income: Realized preparation of and consolidated financialImpairment statements in conformity with GAAP requires management to make estimates and of Long-Lived and The unrealized gains losses and management to make affect certainwith reported assumptions that affect certain reported In accordance the amounts and Assets:that investment income (loss)estimates derivedand assumptions Accordingly, actual differ from those estimates. amounts and disclosures. Accordingly, provisions of Financial Accounting fromdisclosures. investment transactions areresults could actual results could differ from those Standards Board (FASB) Accounting included as income in the year earned.

Standards Codification Topic 360, estimates.

NOTE 2 – INVESTMENTS AND FAIR VALUE MEASUREMENT

The2following table summarizes the FAIR Association’s assets measured at fair value on a recurring NOTE – INVESTMENTS AND VALUE MEASUREMENTS

aggregated by type andthe fairAssociation’s value hierarchy levelmeasured within which those measurements The basis, following table summarizes assets at fair value on a recurring basis, aggregated by type and fair were made: level within which those measurements were made: value hierarchy

Total Fair Value

Quoted Prices in Active Markets for Other Assets/ Liabilities (Level 1)

Significant Observable Inputs (Level 2)

Unobservable Inputs (Level 3)

Mutual funds: Equity Fixed-income Corporate bonds Exchange-traded funds

$ 3,743,934 $ 3,743,934 $ 3,398,419 3,398,419 678,096 559,008 559,008

$ 678,096 -

-

Total Investments

$ 8,379,457 $ 7,701,361 $

678,096 $

-

ForFor the the yearyear ended December 31, 31, 2022, the the Association used thethe following methods andand significant assumptions to estimate fair ended December 2022, Association used following methods significant assumptions to estimate value for investments recorded at fair value: value for investments recorded at fairfair value:

Mutual funds and exchange-traded – of Value these is funds is on based on quoted Mutual funds and exchange-traded funds –funds Value theseoffunds based quoted market prices in active markets. market prices in active markets.

Corporate bonds – bonds Valued– at fair value discounting the related cash flows basedbased on current yields of similar instruments with Corporate Valued at fairbyvalue by discounting the related cash flows on comparable characteristics. current yields of similar instruments with comparable characteristics.

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NARFE MAGAZINE AUGUST 2023

13

FOREQUIPMENT THE YEAR ENDED DECEMBER 31, 2022 NOTE 3 – PROPERTY AND AND RELATED DEPRECIATION NOTE 3 – PROPERTY AND EQUIPMENT AND RELATED DEPRECIATION The Association held the following property and equipment as of December 31, 2022: heldEthe followingAND property and equipment as of December 31, 2022: NOTEThe 3 – Association PROPERTY AND QUIPMENT RELATED DEPRECIATION Land 3 – PROPERTY AND EQUIPMENT AND RELATED DEPRECIATION $ 700,000 NOTE Land 700,000 Building and building 4,618,392 The Association held the theimprovements followingproperty property and equipment asDecember of December 31, 2022: The Association held following and equipment as of 31,$2022: Building and 4,618,392 Furniture and building computerimprovements equipment 2,072,645 Furniture and computer equipment 2,072,645 Land $ 7,391,037 700,000 Total Property and Equipment Building and building improvements 4,618,392 Total Property and Equipment 7,391,037 Less: Accumulated Depreciation (5,086,655) Furniture and computer equipment 2,072,645 Less: Accumulated Depreciation (5,086,655) Property and Equipment, Net $ 2,304,382 Total Property and Equipment 7,391,037 Property and Equipment, Net $ 2,304,382 Less: Accumulated Depreciation Depreciation and amortization expense was $197,474 for the year ended December(5,086,655) 31, 2022.

Depreciation and amortization expense was $197,474 for the year ended December 31, 2022.

Property and Equipment, Net $ 2,304,382 NOTE 4 – NET ASSETS Depreciation andamortization amortization expense $211,320 for year the year ended December 31, 2022.

Depreciation and expense waswas $197,474 for the ended December 31, 2022.

NOTE 4 – NET ASSETS NET ASSETS WITHOUT DONOR RESTRICTIONS N4ET AET SSETS WITHOUT DONOR RESTRICTIONS NOTE –N NOTE 4 A–SSETS NET ASSETS As of December 31, 2022, the Association’s net assets without donor restrictions were Net Assets Without Donor Restrictions AsETof December 31, 2022, Association’s net assets without donor restrictions were composed ofW the following: N ASSETS ITHOUT DONORthe RESTRICTIONS As of December 2022, the Association’s net assets without donor restrictions were composed of the following: composed of the 31, following: $ 4,381,349 AsUndesignated of December 31, 2022, the Association’s net assets without donor restrictions were Undesignated $ 1,356,192 4,381,349 Board-designated life membership fund composed of the following: life membership 1,356,192 Board-designated operating reservefund 2,000,000 Board-designated operating reserve 2,000,000 Undesignated $ 4,381,349 Total Net Assets Without Donor Restrictions $ 7,737,541 Board-designated life membership fund 1,356,192 Total Net Assets Without Donor Restrictions $ 7,737,541 Board-designated reserve 2,000,000 NET ASSETS WITH Doperating ONOR RESTRICTIONS NET ASSETS ITH DDonor ONOR RESTRICTIONS Total Net W Assets Without Donor Restrictions $ 7,737,541 Net Assets With Restrictions Asof ofDecember December 31, 31, 2022, 2022, net assets donor restrictions were available for the As net assetswith with donor restrictions were available forfollowing the following purposes: NATIONAL ACTIVE AND FEDERAL AsETofADecember 31,D2022, net assets with donorRETIRED restrictions were available for the following purposes: N SSETS WITH ONOR R ESTRICTIONS purposes: EMPLOYEES ASSOCIATION AND AFFILIATE PAC –31, political contributions $ following 957,370 AsNARFE of December 2022, net assets with donor restrictions were available for the TO CONSOLIDATED NARFENOTES PACfund – political contributions FINANCIAL STATEMENTS $ 957,370 Alzheimer’s 40,829 purposes: Alzheimer’s fund 40,829 Total Net Assets With Donor Restrictions $ 998,199 THEcontributions YEAR ENDED DECEMBER 31, 2022 NARFE PAC –FOR political $$ 957,370 Total Net Assets With Donor Restrictions 998,199 Alzheimer’s fund 40,829 Total Net Assets With Donor Restrictions NOTE 5 – REVENUE FROM CONTRACTS WITH CUSTOMERS

NOTE 5 – REVENUE FROM CONTRACTS WITH CUSTOMERS

$

998,199

The about significant significantchanges changesin in the the Association’s Association’s deferred membership revenue for The following following table table provides provides information information about the year membership ended December 31,for 2022: deferred revenue the year ended December 31, 2022: 14 Deferred membership revenue, beginning of year $ 3,694,982 14 Membership revenue recognized that was included in deferred membership revenue at the beginning of year (2,419,736) 14 Increase in deferred membership revenue due to cash received during the period 2,212,523

Deferred Membership Revenue, End of Year

$ 3,487,769

NOTE 6 – CONCENTRATION OF CREDIT RISK may exceed the Federal Deposit financial by the FDIC was approximately The Association maintains its cash andOF cash equivalents with a certain commercial NOTE 6 – CONCENTRATION CREDIT Insurance Corporation institution,RISK which aggregate balance, at times, may exceed the Federal(FDIC) Deposit Insurance $1,606,000. The Association

Corporation (FDIC) insured limit of $250,000 insured per depositor As of December monitors the creditworthiness of this The Association maintains its cash limitper of institution. $250,000 per 31, 2022, amount in excess the maximumdepositor limit insured the FDIC was and cash the equivalents with aof certain institution and has not experienced perby institution.

Asapproximately of $1,606,000. The Association monitors the creditworthiness of this the institution and commercial financial institution, December 31, 2022, amount in has not any credit losses on its cash and cash experienced any credit lossesatontimes, its cash and cash equivalents. which aggregate balance, equivalents. excess of the maximum limit insured NOTE 7 – AVAILABILITY AND LIQUIDITY The Association regularly monitors liquidity required to meet its annual operating needs and other contractual commitments, while also striving to preserve the principal and return on the investment of its funds. The Association’s financial assets available within one year of the statement of financial position date for general expenditures at December 31, 2022, were as follows: Cash and cash equivalents Accounts receivable Investments Total Financial Assets Available Within One Year Less: Amounts unavailable for general expenditures within one year due to donor’s restriction with purpose restriction

$ 2,404,985 169,214 8,379,457 10,953,656 NARFE MAGAZINE www.NARFE.org

998,199

59

experienced any credit losses on its cash and cash equivalents.

NOTE 7 – AVAILABILITY AND LIQUIDITY The Association regularly monitors liquidity required to meet its annual operating needs and NOTE 7 – AVAILABILITY AND LIQUIDITY

other contractual commitments, while also striving to preserve the principal and return on the The Association regularly monitors liquidity required to meet its annual operating needs and other contractual commitments, investment of its funds. The Association’s financial assets available within one year of the while also striving to preserve thedate principal and return on the at investment its2022, funds.were Theas Association’s financial assets available statement of financial position for general expenditures Decemberof31, within one year of the statement of financial position date for general expenditures at December 31, 2022, were as follows: follows: Cash and cash equivalents Accounts receivable Investments Total Financial Assets Available Within One Year Less: Amounts unavailable for general expenditures within one year due to donor’s restriction with purpose restriction Financial Assets Available to Meet General Expenditures Within One Year

NOTE 7 (CONT.)

The Association has various sources of liquidity at its disposal, including cash and cash equivalents and investments, which are available for general expenditures, liabilities and other obligations as they come due. Management is focused on sustaining the financial liquidity of the Association throughout the year.

This is done through monitoring and reviewing the Association’s cash flow needs on a regular basis. As a result, management is aware of the cyclical nature of the Association’s cash flow related to the Association’s various funding sources and is therefore able to ensure that there is cash available to meet current liquidity needs. As part of its liquidity plan, excess cash is invested in publicly traded investment vehicles, including mutual funds, or to support organizational initiatives.

The Association can liquidate its investments anytime, and therefore the investments are available to meet current cash flow needs.

NOTE 8 – PENSION PLAN

The Association has a Retirement Savings Plan (the Plan). Employees are eligible to participate in the Plan on the first day of the month coinciding with or next following the employee’s hire date. Employees become eligible for employer matching funds on the first day of the Plan Year (January 1) or the first day of the seventh month of the Plan Year (July 1) coinciding with or next following hire date. Once eligible, an employee is 100% vested.

The Association matches 60% of each employee’s voluntary contribution up to 6% of annual compensation. Total

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NARFE MAGAZINE AUGUST 2023

$ 2,404,985 169,214 8,379,457 10,953,656

998,199 $ 9,955,457

contributions made by the Association were approximately $61,255 for the year ended December 31, 2022.

NOTE 9 – INCOME TAXES

The Association is exempt from federal income taxes under Section 501(c)(5) of the Internal Revenue Code (IRC). However, income from certain activities not directly related to the Association’s tax-exempt purpose is subject to taxation as unrelated business income. The Association generates unrelated business income from advertising.

The Association’s provision for unrelated business income tax expense was approximately $37,780 for the year ended December 31, 2022.

NARFE PAC is subject to federal income taxes under IRC Section 527 with respect to certain investment income. For the years ended December 31, 2022 no provision for federal or state income taxes was made, as there was no significant taxable income.

The Association follows the authoritative guidance relating to accounting for uncertainty in income taxes included in FASB ASC Topic 740, Income Taxes. These provisions provide consistent guidance for the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribe a threshold of “more likely than not” for recognition and derecognition of tax positions taken or expected to be taken in a tax return.

The Association performed an evaluation of uncertainty in income taxes for the year ended December 31, 2022, and determined that there were no matters that would require

15 recognition in the consolidated financial statements or that may have an effect on its tax-exempt status. As of December 31, 2022, there are no audits for any tax periods that are currently pending or in progress. It is the Association’s policy to recognize interest and/ or penalties related to uncertainty in income taxes, if any, in income tax or interest expense. As of December 31, 2022, the Association had no accruals for interest and/or penalties.

NOTE 10 – PRIOR YEAR SUMMARIZED FINANCIAL INFORMATION

The accompanying financial statements include certain prior year summarized comparative information in total, but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with GAAP. Accordingly, such information should be read in conjunction with the Association’s financial statements for the year ended December 31, 2021, from which the summarized information was derived.

NOTE 11 – SUBSEQUENT EVENTS

The Association’s management has evaluated, for potential recognition or disclosure, events and transactions through May 1, 2023, the date the financial statements were available to be issued. There were no subsequent events identified that require recognition or disclosure in these consolidated financial statements.

NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION AND AFFILIATE

Supplementary Information CONSOLIDATING SCHEDULE OF FINANCIAL POSITION Consolidating Schedule of Financial Position FOR THE YEAR ENDED DECEMBER 31, 2022 December 31, 2022 ASSETS Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $2,000 Prepaid expenses Investments Property and equipment, net

Association $

1,712,756

NARFE PAC $

166,941 78,690 7,951,165 2,304,382

Eliminations

Total

694,502

(2,273)

2,273 -428,292 --

----

$

2,404,985 169,214 78,690 8,379,457 2,304,382

$

12,213,934

$

1,125,067

$

(2,273)

$

13,336,728

LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued liabilities $ Accrued vacation and payroll benefits Chapter dues payable Deferred revenue

334,932 343,351 90,572 3,716,145

$

118,261 ----

$

(2,273) ----

$

450,920 343,351 90,572 3,716,145

TOTAL ASSETS

TOTAL LIABILITIES Net Assets Without donor restrictions With donor restrictions TOTAL NET ASSETS

4,485,000

118,261

(2,273)

4,600,988

7,688,105 40,829

49,436 957,370

---

7,737,541 998,199

7,728,934

1,006,806

--

8,735,740

TOTAL LIABILITIES AND NET ASSETS $ ACTIVE 12,213,934AND$RETIRED 1,125,067FEDERAL $ (2,273) NATIONAL

$

13,336,728

EMPLOYEES ASSOCIATION AND AFFILIATE

Consolidating Schedule ofCONSOLIDATING Activities SCHEDULE OF ACTIVITIES FOR THE ENDED DECEMBER 31, 2022 for the Year Ended December 31,YEAR 2022 REVENUE AND SUPPORT Membership Contributions Investment loss Advertising Royalties Conferences and meetings Administrative fee Other income

Association $

TOTAL REVENUE AND SUPPORT

5,045,375 1,524,965 (1,577,350) 1,209,176 236,525 299,227 113,755 6,631

NARFE PAC $

-797,424 (40,809) ------

Eliminations $

------(113,755) --

Total $

5,045,375 2,322,389 (1,618,159) 1,209,176 236,525 299,227 -6,631

7,501,164

6,858,304

756,615

2,147,836 1,409,074 -1,030,168 384,925 739,622

--1,078,454 ----

5,711,625

1,078,454

(113,755)

6,676,324

893,951 961,318 653,952

----

----

893,951 961,318 653,952

Total Supporting Services

2,509,221

--

--

2,509,221

TOTAL EXPENSES

8,220,846

1,078,454

(113,755)

9,185,545

CHANGE IN NET ASSETS

(1,362,542)

(321,839)

--

(1,684,381)

NET ASSETS, BEGINNING OF YEAR

9,091,476

1,328,645

--

10,420,121

EXPENSES Program Services: Communications Membership services Political Action Committee Legislative program Federal benefits program Conferences and meetings Total Program Services Supporting Services: General and administrative Membership recruitment Fundraising

NET ASSETS, END OF YEAR

$

7,728,934

$

1,006,806

(113,755)

-2,147,836 See independent auditors' report.

-1,409,074 (113,755) 964,69918 -1,030,168 -384,925 -739,622

$

--

$

8,735,740

NARFE MAGAZINE www.NARFE.org

61

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PRODUCTS...........................................................................................................................................

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Whether it’s big, small or somewhere in between, you have affordable legal help when you need it. Members receive the discounted rate of $18.95 for families of 10 (two adults and up to 8 children) when you sign up through the website above.

ODP Business Solutions | 1-800-650-1222 | www.officediscounts.org/narfe

(Previously Office Depot/Office Max)

Because you’re a member of NARFE, you now have access to exclusive members only discounts at ODP Business Solutions (previously Office Depot/Office Max). Members save up to 75% off on ODP Business Solutions Best Value list of preferred products and can take advantage of products discounted off the officedepot.com regular prices. Restrictions may apply so visit officediscounts.org/narfe for details.

Product and service discounts may no longer be available for in-store purchases.

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While not a discount program, Purchasing Power is an exclusive purchase program helps members buy brand-name computers, electronics, appliances and furniture via annuity allotment when cash is not an option. No credit check or down payments.

WELLNESS..............................................................................................................................................

Active&Fit Direct | https://www.narfe.org/narfe-perks-for-members/activefit-direct/

Stay active from anywhere for $28/mo. Active&Fit Direct includes 12,200+ Gyms, 9,300+ On-Demand Videos and 1:1 Well-Being Coaching. A fitness program with no annual fees and no long-term contracts. Switch gyms anytime. Membership options for your spouse.

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As the largest operator of senior living communities in the US, Brookdale has over 1,000 locations all across the country. Members are eligible for 7.5% discount at Brookdale Independent Living, Assisted Living and Memory Care communities and 10% discounts on Brookdale Private Duty Home Care.

Discounts are for new move-ins/customers only.

R

Life Line Screening | 800-324-9906 | www.lifelinescreening.com/NARFE

Life Line Screening, America’s leading provider of community-based preventive health screenings, will conduct health screenings using state-of-the-art ultrasound technology in your neighborhood.

Operator code BKHN075.

PRE-PLANNING...................................................................................................................................

Neptune Society | 800-NEPTUNE (637-8863) | www.neptunesociety.com

Our prearranged plans cover all necessary expenses for one guaranteed price even if the services are not needed for 40 or 50 years. The Neptune Society offers a $100 discount to all NARFE members. *Discounted offer is not valid for residents of Louisiana, Tennessee and Kentucky. Void Where Prohibited.

ADDITIONAL PERKS........................................................................................................................

MOVING SERVICES............................................................................................................................

1-800-GOT-JUNK? | 800-468-5865 | www.narfe.org/1-800-got-junk

NEW! NARFE Members Save 10% with 1-800-GOT-JUNK? Do you have old furniture, appliances, electronics, construction debris, yard waste or other junk you need to make disappear?

1-800-GOT-JUNK? can take away almost any material we can fit in our trucks, without you ever lifting a finger—all you have to do is point! Use code NARFE10 when you book. To get started, give us a call or book online.

Coleman Allied | 850-375-0917 | jack.jacobs@colemanallied.com

With over 300 agency partners and an entire team dedicated to a quality move experience, Coleman Allied provides customized discount levels for all NARFE members for Interstate moves. *The NARFE pricing only applies to moves that leave the state you currently reside in.

Wheaton World Wide Moving | 800-248-7960 | narfe@wvlcorp.com

At Wheaton, we know interstate relocation is much more than trucks and boxes. With a network of topquality agents throughout the United States, Wheaton provides peace of mind with every relocation.

TRAVEL, TRANSPORT & ENTERTAINMENT............................................................................

Choice Hotels International | 800-258-2847 | www.choicehotels.com

With 6,400 hotels throughout the world, Choice Hotels offers something for everyone. As a member, receive 20% off your next stay at participating hotels when you use Special Rate ID 00801967.

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With over 160 tours to all 7 continents and travel styles varying from small group to river cruising, Collette offers something for everyone. As a NARFE member, you receive an additional $50-$100 off all tours including sales and offers! Just use your member benefit code NARFESAVE or let our reservation agent know you are a NARFE Member when booking.

Enterprise Rent-A-Car® | Book Now! | https://partners.rentalcar.com/narfe

When you’re ready to go, Enterprise Rent-A-Car makes it easy. We offer everyday low rates on a great selection of cars, trucks and vans and customers are picked up at no extra cost*. See website for exclusions.

Hotel Engine | https://members.hotelengine.com/join/narfe175

Hotel Engine, a private booking platform, connects organizations and their members to deeply discounted hotel rates.

Member Deals | https://memberdeals.com/narfe/?login=1

MemberDeals is your one stop for great discounts on nationwide travel and entertainment! Find exclusive discounts, special offers, preferred seating, and tickets to top attractions, theme parks, shows, sporting events, hotels, and much more. Visit MemberDeals and find savings such as up to 40% on top theme parks nationwide and preferred access tickets to your favorite concerts, sports & more!

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NARFE members receive great rates with National Car Rental! At National, we pride ourselves on always providing you with unsurpassed convenience and choice. https://partners.rentalcar.com/narfe

INSURANCE..........................................................................................................................................

AMBA

NARFE Insurance Services | 800-233-5764 | www.narfeinsurance.com

Designed exclusively for NARFE members, (plans administered by AMBA Administrators, Inc.) Senior Age Whole Life Insurance, Senior Term Life Insurance, Hospital Indemnity and Short Term Recovery Insurance, Dental Insurance, Vision Insurance, AssistPlus, Discount Prescription Plan and Pet Insurance.

Member Options | 833-378-8224 | https://www.member-options.com/narfe

Member Options Auto and Home Insurance Program - Save Money with Multiple Quotes! Get quotes from toprated insurance carriers on Auto, Home, Renters, Pet insurance and more in a matter of minutes. Answer a few simple questions online or over the phone with our licensed insurance experts to compare multiple options that meet your specific needs. To review and choose what’s best for you, go to the link above or call 833-378-8224.

The Way We Worked

Monitoring Sea Turtles National Park Service employee Jim Walters studies the nesting habits of loggerhead turtles in Everglades National Park, FL, in 1972. Everglades is a habitat for five of the seven sea turtle species in the world. Along with the loggerhead, the green turtle, leatherback, Kemp’s ridley and hawksbill live there, and they are all either threatened or endangered under the Endangered Species Act. NPS works with other federal agencies to track and monitor turtles and their nesting in the park and along its coastline.

PHOTO from the Records of the Environmental Protection Agency, courtesy of the National Archives History Office, in collaboration with the Society for History in the Federal Government (SHFG), bringing together government professionals, academics, consultants, students and citizens interested in understanding federal history work and the historical development of the federal government. To join, visit www.shfg.org.

64

NARFE MAGAZINE AUGUST 2023

DID YOU KNOW? The National Park Service has about 20,000 permanent, temporary and seasonal employees, but also hundreds of thousands of volunteers.

Learn more at https://www.nps. gov/aboutus/faqs.htm

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Do not rely on this communication piece alone for complete benefit information. All benefits are subject to the definitions, limitations, and exclusions in the Blue Cross and Blue Shield Service Benefit Plan brochure. Blue365® offers access to savings on health and wellness products and services that members may purchase from independent vendors, which are not covered benefits under the Blue Cross and Blue Shield Federal Employee Program, Blue Cross Blue Shield FEP Dental and/or Blue Cross Blue Shield FEP Vision. These products and services will be offered to you through the entire benefit year.

During the year, the independent vendors may offer additional discounts on these products and services. To find out what is covered under your policy, contact the customer service number on your member ID card. Any disputes regarding your health insurance products and services may be subject to your plan’s grievance process. BCBSA may receive payments from vendors providing products and services on or accessible through the Site.

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