Have My Federal Benefits Changed in 2025

2025 brings a host of changes for federal employees, from higher TSP contribution limits to increased healthcare premiums and expanded benefits. Image: Fah061043/Shutterstock.com

As we step into 2025, there are several important changes to FERS benefits that federal employees should be aware of. From Thrift Savings Plan (TSP) contribution limits to significant updates on health benefits, these changes offer both challenges and opportunities for maximizing savings. Here’s an overview of the most crucial updates affecting federal employees in 2025.

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1. TSP Contribution Limits for 2025

The TSP has increased contribution limits for 2025. This applies to both traditional and Roth TSP contributions combined.

● Under Age 50: The contribution limit rises to $23,500 for 2025.

● Age 50 and Older: By taking advantage of “catch-up” contributions, the contribution limit rises to $31,000 in 2025.

● Age 60-63: By taking advantage of higher “catch-up” contributions, the contribution limit rises to $34,750 in 2025.

Maximizing your TSP contributions is an excellent way to boost your retirement savings, and these higher limits will help you do so, particularly if you’re nearing retirement age. To see how much to contribute to your retirement each pay period, check out this table:

Age | Contribution Limit | Amount Per Pay Period (Assuming 26 Per Year)
Under 50 Years | $23,500 | $903
Ages 50 through 59 and over age 63 | $31,000 | $1,192
Ages 60, 61, 62, and 63 | $34,750 | $1,336

Not all federal employees max out their TSP every year. In fact, it might not make sense for you to contribute this much. But, it is important to remember that there is still an employer match of 5% of your salary if you contribute at least 5% of your salary to the TSP.

2. Health Savings Account (HSA) & Flexible Spending Account (FSA) Updates

Both HSAs and FSAs are valuable tools for managing healthcare costs and saving on taxes. In 2025, there are several key updates to these accounts:

Flexible Spending Accounts (FSAs)

● Contribution Limits: FSAs will allow a contribution of $3,300 in 2025, up from $3,200 in 2024.

● Rollover Rules: FSAs are subject to the “use-it-or-lose-it” rule, with a rollover limit of $660 for 2025. Any unused funds above this amount will be forfeited.

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● Eligible Expenses: FSAs can be used for medical, dental, vision, and various other health-related expenses. However, they don’t allow for investment growth and are tied to your employer.

Health Savings Accounts (HSAs)

● Contribution Limits: The 2025 contribution limits for HSAs are set at $4,300 for individual coverage and $8,550 for family coverage. People aged 55 or older can contribute an additional $1,000 as a catch-up contribution.

● Rollover Rules: Unlike FSAs, HSAs allow unused funds to roll over indefinitely, making them a great tool for long-term healthcare savings.

● Eligible Expenses: HSAs cover a broader range of medical expenses than FSAs, including Medicare premiums and long-term care insurance.

● Investment Options: One significant advantage of HSAs is the ability to invest the funds, potentially growing your savings over time, which is especially helpful for retirement planning.

3. 13.5% Increase to FEHB Premiums

For 2025, the average increase in premiums for the Federal Employees Health Benefits Program (FEHB) is 13.5%. This increase is higher than the previous years (7.7% in 2024 and 8.7% in 2023).

Despite this, the federal government continues to pay about 70% of the total premium cost, meaning your share will increase, but still at a more affordable rate than the full premium.

4. Federal Employees Dental and Vision Insurance Program (FEDVIP) Premiums

For 2025, the average premiums for the Federal Employees Dental and Vision Insurance Program (FEDVIP) will see modest increases:

● Dental Plans: Premiums will rise by 2.97%.

● Vision Plans: Premiums will increase by 0.87%.

These increases are relatively small compared to the dramatic rise in FEHB premiums, making dental and vision coverage still an affordable option for most federal employees.

5. Cost-of-Living Adjustments (COLA) and Federal Pay Raise

Federal retirees will see an expected Cost-of-Living Adjustment (COLA) and federal pay raise of 2%. Normally, COLA and pay raises are slightly different numbers, but for 2025 they will both be 2%.

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This means that all active federal employees will get an increase in pay of 2% and all retired federal employees will get a 2% increase to their pension.

Conclusion

2025 brings a host of changes for federal employees, from higher TSP contribution limits to increased healthcare premiums and expanded benefits. Understanding how to navigate these changes—whether through strategic TSP contributions, making use of FSAs and HSAs, or adjusting to the new FEHB costs—will help federal employees maximize their benefits and save more effectively for the future.

Dallen Haws is a Financial Advisor who is dedicated to helping federal employees live their best life and plan an incredible retirement. He hosts a podcast and YouTube channel all about federal benefits and retirement. You can learn more about him at Haws Federal Advisors.

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