automatically have three percent of their base pay deferred on their behalf the level at which would receive a hundred agency match the ninety day grace period from the date of the first automatic contribution included in proposal any automatically enrolled participants who did not wish to participate in the withdrawal withdraw the current market value of their employee contributions time during this period the withdraw would be taxable as ordinary income in the first year it was distributed but would not be subject to early withdrawal penalties a participant could still stop or change their contributions any time after the grace period expired but the account would be subject to normal withdrawal rules the board hired an independent consultancy watson wyatt worldwide to conduct the survey gauging participation participant satisfaction with the t s p and input on proposed changes including automatic enrollment in the program the survey reveals strong support for automatic enrollment of new employees nearly two thirds of all respondents agreed that automatic enrollment of new employees is a good idea compared with only twenty per cent who disagree neither age nor income made a large difference in the respondents support for automatic enrollment discussed the automatic enrollment issue at our june twelfth two thousand and seven meeting and there was widespread support for the post there was some minimal concern about the administrative costs and working in implementing the change but overall sense of the council was that the benefits of automatic enrollment outweighed the implementation cos council members made a number of arguments in favor of the automatic enrollment starting the habit of early saving on one's career increases the likelihood that an employer will continue contributing throughout his or her career thro ugh com pounding earnings even a modest automatic three percent contribution may lead to a sizeable account balance over time particularly when three percent is combined with the automatic one percent aid agency contribution an additional three percent and matching funds that the employer will receive initiating automatic enrollment will ensure that those employees who do not intentionally refrain from investing in t s p will not continue to miss out a dollar for dollar matching funds to which they are entitled the council feels that all federal employees should invest in however new hires will be educated on the change and presented with the necessary information to make an informed decision about their participation in the plan we do not believe this information would be difficult for them to access or understand and the grace period and related opt out provision ensure that they all have time to make these decisions without penalty for all these reasons the tax strongly supports automatic enrollment in the t s p for new employees the second change to the c s p proposed by the board is that all new employee enrollees in the plan do not make an investment election would have their contributions to age appropriate term retirement goals according to the board's proposed plan employees would have the same set of forms to choose from but the election would be would change from the g fun to an age appropriate else one based on specific participants estimated retirement age and the elf on money is allocated more heavily towards stocks for younger participants which may lead to greater asset fluctuation and more risk but are also expected to produce higher many of us were initially skeptical of the plan but were much more supportive after reading the survey results and talking to our own members who generally so are supportive and understand that the t s p is intended to be a different within the plan as well as move their existing account balances one transfer any employee who does not wish to invest in the old one would be able to easily make a different investment decision participants consequently our statements to the congress are not submitted for clearance by the office of management and budget request two proposals we translated for consideration by the congress to improve the thrift savings plan for federal employees we appreciate your holding this hearing for example the proposals the board strongly supports amending the federal employee retirement system act of one thousand nine hundred six or to authorize automatic enrollment of all newly hired federal and postal employees into the into the thrift savings plan and secondly to change the t s p default for new enrollees from the government securities investment fund to an age appropriate health fund t s p as a retirement savings and investment plan for federal and postal employees and members of the uniformed services it's a defined contribution plan that operates same type of benefits that many private sector employees receive on their four one k plan the t s p is available to employees covered by the civil service retirement system the federal employees retirement system and also members of the uniformed services under first employees and service members who wish to participate in the t s p must submit a contribution election to their employing a agency or ser also requires employing agencies to create an account for noncontributing for his employees following the completion of a statutory weighting agency's must deposit an amount equal to one percent of the first employee's basic paid the their accounts will remain invested in the g fund by default now following the passage of the pension protection act of two thousand and six of the p p a the board undertook a review of the t s p as policies in the light of that legislation particularly  focused on provisions of the t p a which applied to private sector qualified plans and for one plans but not the t s p this included automatic enrollment as well as a focus on qualified default investment alternatives or  the board conducted significant research and data collection on automatic enrollment and the research included an analysis of the four one k industry data trends or review of t s p specific data consideration of  survey findings consultation with the statutory employee advisory council solicitation of feedback from the agencies and finally a cost analysis agency matching contributions provide a strong incentive for employees to contribute their own funds and voluntary participation currently stands at eighty six percent compares very favorably private sector for one point however fourteen percent for his employees and seventy three percent of uniform service employees who are not contributing currently to the t s p are less likely to be financially self sufficient retirement than their counterparts who do further noncontributing participants are failing to collect the  matching contributions which the congress authorized for their benefit the statutory expressed support for automatic enrollment meeting and feedback from the civilian agencies are generally favorable our analysis indicates that the system communications staffing modifications required will be minimal that legislative proposal authorizes immediate automatic contributions from all newly hired employees who did not affirmatively decline to contribute a portion of their pay to the t s initial contribution would be three percent of basic but employees may opt out or change their contribution at a time participants would also have a ninety day grace period from the date of their first contribution in which to redraw withdraw the funds i'm aware that under congressional budget rules the automatic enrollment proposal could generate a potentially significant cost i hope that a way can be found to overcome that obstacle so that more employees will make full use of the t s p in order to be better prepared for that  so they need every dime basically with this and when the i need every dime of my pay and i'm not anxious to put money in there and get matched is that right yes that's correct have you ever tried to navigate your web site but let me let me just talk about that for a moment because if nothing else happens out here i want to deal with your web site the other day i went to the web site and literally it is not the easiest thing to navigate i'm just telling you and i've heard that from other people also might have heard it from constituents and staff and i want you to just just take a look at it i mean you know otherwise get some experts to look at it and talk to some  expressions but i'm telling you what i feel and what i've observed ok but let me just be clear because you all are here today talking about suggestions for trying to improve  and have a more open situation for people to come into well the fact is that it is difficult to navigate a website that's a problem and all i'm asking you to do is to take a look at it and get some folks who are just regular people and just find out what they think and how they think it can be improved sometimes i think we do things because we have been doing and sometimes i think we need to take a look at you know situations i literally had to go to member services to get somebody to help me get through the website because i wanted to do just try to make some changes and find out exactly where my money was in that kind of thing and so i noted if i'm know what is the good news we have accepted your recommendation and we're doing exactly that about three months ago i hired a consultant wonderful at and their job is specifically to aid us first of all in conducting focus groups and that we will be redesigning the website i am familiar with that our website is functional although it needs to be updated and the navigation issues are real and they are very real and i was so frustrated i'm serious i was so frustrated and i wouldn't even be bringing this up if it if it if it were not for my frustration i said there for half an hour trying to figure this thing out and ended up having a call member services and then we got on the phone and went through it together to get to m little because i just think that i just think that in today's world if something is inviting and if a person can easily navigate i think that helps i really  do and i think we have to i think it needs to be i know you consultants don't tell you what to do but you've got to also keep in mind that an older generation will have learned how to deal with computers from of hold them to something i mean we let me just tell you i got let me just tell you what what i'm concerned about since i've been in congress i had these i chair some hearings and one of things that i've noticed is that  people will come before us not you will come before us until they got tell us they're going to do things right and then we don't have another hearing about it till the next congress or maybe two congresses later every play as a change jam and change and a lot of times that things have not gotten done and i would really like for you to give our chairman our committee i mean when you get back i'm not trying t force you to come up with a date right now but we need to be dealing with some deadlines because i think if you recognize three months ago or longer that there was a problem then then that means that just based on what you just said six six months are going to go by at least where we haven't done anything about this problem and i am convinced that government can move faster i really am and i think government should move very fast when it comes to people's money particularly in this day and age and i think that all the threats to have money in there and your plan would be elated i think we sometimes need this the move as fast as as fast as private industry would move i know it's hard i know you've got to get some things to jump over but let me tell you something what you come in here and said to us and i think by the way up through i agree with you we need to do do the things that you said i agree with you a million percent but at the same time i just think that there are certain things that you are need to do too and need to do faster ok thank you thank you i'm pleased to be here today to discuss the issue of health insurance coverage for young adult dependents of federal employees and retirees the office of personnel management office numerous tools for federal agencies to recruit and retain an effective civilian workforce at o p m we believe that success in our mission helps the total workforce succeed safeguarding the health security and la bella lobbying vala merican  personnel policies and practices just make good business overall the government provides comprehensive benefits programs with care for employee and that's being an important aspect of an effective workforce o p m administers the federal employees health benefits program which covers approximately eight million federal employees retirees and their dependents the f t h b program offers competitive health benefits products for federal workers by contracting with private sector health plans we emphasize flexibility and consumer choice is important features of the program in addition to the two hundred eighty three plan choices offered under the program federal and rowley's may choose between cell phone like or family coverage dependents under family coverage or spouses and unmarried children under twenty two years of age including adopted foster step children at age twenty two young adult dependents lose at the h b coverage but my enroll in temporary continuation of coverage for the full cost of premium plus to a two percent administrative fee t c c enrollments may be continued for up to thirty six months following the last of eligibility therefore t c c currently assists young adult dependent children with additional insurance coverage to age twenty five d c c allows dependen the choice to enroll in a different health plan than their parents family coverage dependents may therefore and grow in a lower cost plan the average at the h p premium for self only coverage in two thousand and eight is four hundred thirty three dollars per month including both government and enrollees shares however the mail handlers value option has a two thousand and eight premium self only premium of one hundred seventy eight dollars a month in addition some  carriers offer offended the products which are not in ministered by o p m but which provide enrollees with stand alone dependent coverage for young adults over the age of twenty two for example one of the at the h b care yours offers an affinity product with dependent coverage for young adults at age twenty seven at one hundred ninety four dollars per month we understand the chairman davis will be introducing a substitute for the current h r fifty five fifty it would be premature for the administration to state a position ahead at the substitutes introduction nonetheless we've considered this general topic in the past and offer the following observations regarding extended dependent coverage where young adult children simply changing the age of dependent children under family and romance is proposed in the current h r fifty five fifty would rise total premium costs for the government and all enroll ease to offer additional benefits for only part of the population in two thousand and five at the request of congress o p m reviewed the potential costs associated with adding coverage for dependent full time students up to age twenty five we found that adding those dependents alone would increase at the h b cost by over two hundred million dollars a year approximately one hundred sixty million dollars would be borne by the government with the remainder of the cost paid by enrollees through increased premiums chairman davis's substitute for h r fifty five fifty proposes to offer extended dependent coverage for employees premiums for the voluntary option would not include a government contribution and dependents would need to have been covered under the b program at the age twenty two to qualify we estimate there are about two hundred forty five thousand dependent students nine students in the target age group in two thousand and six actuaries estimated the cost of extending at the h b benefits for unmarried full time student dependents under twenty three years of age at about one thousand considered dependents for insurance purposes up to age twenty five or for two years after they are no longer claimed on their parent's tax returns whichever comes first and maryland enact a law last year requiring plans to cover unmarried young people who reside with the policyholder until age twenty five it is not surprising then that federal employees and retirees who participate in it are disappointed that the federal government is far behind if the states require private policies to carry dependents past age twenty two why not the federal government private insurers offer coverage for young people out there in the state one of the largest health insurance plans in the country one that serves almost nine million people is way behind the curve if employees working in the private sector can have their dependents covered well beyond the time they turn twenty two then surely the federal government with the largest risk in the country should be able to do the same let's have the federal government lead on this issue rather than follow barely a day goes by without an article about the pending retirement tsunami and the need to attract and retain talent in the federal workforce the bill before us is an excellent place to begin increasing the age for young adults health coverage is a move toward personnel competitiveness recruiting and retaining talent and realizing workforce equity in the federal sector let me provide to real life examples a daughter of one of our members lost her insurance at age twenty two and while in college and at the same time working for a company that did not offer health insurance she fell downstairs and had to have removed and repaired her parents could not afford to carry a separate policy on her daughter incurred a debt of twenty five thousand dollars in medical expenses needless to say as a young person she could not readily pay this and she was required to get a full time job to pay off her debt and put college on hold as o p m has noted offers temporary continuation of coverage t plus paying his daughter's deductible plus the family's premiums the father wrote this to us in an email and i quote i would be better off working for a private employer in new jersey i have worked almost thirty three years with the issue might be the one that forces me to leave before i wanted to i might have to find another job in the private sector as to cost to my knowledge there has not been an in depth examination by impartial experts but common sense would suggest that infusing a large number of young and generally healthy individuals into a risk pool of government employees who are older or retired should not cost much o p m did a cursory three page paper in two thousand and five and came up  with seven tenths of a percent increase in premiums i find even the small increase hard to believe and i urge the subcommittee to authorize an impartial study of the issue in its entirety let me reaffirm our fifty five fifty i good public policy would surely help the federal government retain its talented workforce and attract new employees we very much appreciate your leadership on this issue mr chairman and i look forward to working with you to make it happen thank you  million in two thousand and six is up from thirteen point three million in two thousand and five young adults are just proportionately represented among people who lack health insurance accounting for thirty percent of the forty six million non elderly uninsured people even though they comprise  seventeen percent of the population why do young adults become an insured the most gaping hole in our voluntary employment based health insurance system occurs when people do not have access to employer coverage and have incomes that are too high to qualify for medicaid in the state children's health insurance program the individual insurance market has proven to be a largely an adequate substitute for employer coverage because of underwriting and the fact that people face a full cost of the premium young people making the transition from childhood to adulthood fall into this gap in greater frequency than any other age group young adults are at risk of losing access to employer coverage or public insurance programs at two critical transition point one hundred or graduation from high school and graduation from college young adults covered as dependence on their parents employer policies often lose their eligibility for that coverage at nineteen or graduation from high school particulate they don't go on to college medicaid and s chip reclassify all teenagers as adults on the nineteenth birthday meaning meaning that most most lose coverage as a result of these changes uninsured rates sharply at age nineteen rising from eleven percent among children under age eighteen to thirty percent among young adults to twenty nine low income young adults are particularly at risk of losing coverage among those in families with incomes under poverty more than half are uninsured compared with about one in five low income children half of young adults who graduate from high school but do not go on to college are uninsured for sometime during the year following their graduate this is twice the rate for young adults to attend college among young adults to go to college the year following their college graduation can also be perilous as new entrants to the labor they confront hazards that reduce their likelihood of having coverage like those faced by high school high school graduate waiting periods temporary positions low wage jobs employment small firms and job turnover to a five college graduates can expect to spend at least some time uninsured in the year just after graduation what are the consequences of going without health insurance while young adults are in average in better health and older adults losing coverage disrupt their access to health care and  ve them and their families at risk for high out of pocket costs health risks that are prevalent among young adults include obesity which increased by seventy percent in the age group in the one nine hundred ninety s there are three and a half million pregnancies each year in this age group one third of all diagnoses are made among young adults injury related visits to emergency rooms are far more common among young adults and they are among either children or older adults the commonwealth fund biennial health insurance survey found that half of uninsured young adults nineteen twenty nine because of cost either had failed to fill a prescription not gone to a doctor or a specialist when they were sick or skipped a recommended medical test treatment or follow up visit this is compared about thirty percent of young adults who are insured all year just one third of uninsured young adults one hundred twenty nine have a regular doctor compared with eighty one percent of those who are insured forty six percent of uninsured young adults in the commonwealth fund survey reported problems with their medical bills including having trouble making payments being contacted by a collection agency because of inability to pay bills significantly changing their way of life in order to pay bills or pay off medical debt overtime this is compared to about a quarter of young adults who had who had coverage or reported such problems federal action to expand affordable comprehensive health everyone would help ensure that young adults avoid gaps in their health insurance massachusetts has led the nation on expanding health insurance to all and has included policy targeted dakota thirty in new jersey twelve states have settled on age twenty five in the absence of universal coverage at the federal level three targeted policy changes would help cover more and extend eligibility for medica members many children of federal employees are forced to delay completion of college degrees because they must work to earn the money necessary to pay ever increasing college tuition some young adults may be pursuing the advanced degrees which are increasingly necessary even for entry level jobs in some professions professional occupations finally a large number of young adults whose parents are federal employees are working but hold jobs that provide either no lawyer sponsored health insurance or health insurance options that are entirely on affordable according to the robert wood johnson foundation as of two thousand and four approximately thirteen point seven million americans between the ages of nineteen and twenty nine were uninsured unless they are full time students or their parents full time caregiver caregivers they lose eligibility for coverage under their parents family coverage unmarried children can be covered up until age twenty two f e h p will not cover dependents over age twenty two unless the child is incapable of supporting him or herself because of a disability that began before age twenty two at least fourteen states have passed legislation that redefines dependent for purposes of family health insurance coverage and most of those have extended coverage the age of twenty five and beyond the legislation introduced by you mr chairman h r fifty five fifty was an attempt to bring the federal government up to the standards set by these progressive states and other employers against whom the federal agencies compete to recruit and retain employees strongly supports h r fifty five fifty because it provides a straightforward answer to the problem of insurance coverage for the young adult dependents of federal employees the actual cost to effie h p p of extending family coverage to those in a general twenty two to twenty five are likely to be negligible but the benefit to families would be substantial but compromise bill before us today whatever o p m make available for purchase a separate insurance policy for the young adult dependents well certainly no one for this compromise to be a model for future efforts to improve health insurance for federal employees and their families it is important to note that employee pay all insurance products are not employee benefits it is unclear how many federal employees would be able to afford coverage their dependents age twenty two to twenty five but since thousands of federal employees remain uninsured altogether because they cannot afford f e h p p premiums we can only conclude that there are many thousands more in the lower grades of the general schedule in the federal wage system who can barely afford their current plan and cannot possibly afford to purchase additional individual plans for their adult young adult dependents where the government to claim it cannot afford to extend the current f family coverage to dependents is especially frustrating to hear since the bush administration continues to refuse to take advantage of rebates made available under the medicare modernization act this law stablish in the medicare part  prescription drug program allowed subsidies for employers who provide their retirees with prescription drug coverage according to a recent g a o study if o p m were to apply for these rebates b p premiums would be cut immediately by roughly two percent and future premium growth would be reduced as well it is not too late for o p m to apply for and receive the medicare part d subsidy federal employees pay on average thirty percent of premiums in each of the d employer subsidy provision we believe that these funds are adequate to pay for both an extension and eligibility for dependent coverage to age twenty five as provided in h r fifty five fifty and the improvement in  financing that is provided for h r twelve fifty six in closing we commend the chairman for introducing fifty five fifty and we hope that many federal employees will be able to afford the plans that o p m chooses to make available for th age group and commerce and a new administration will be successful in addressing in a more comprehensive way the many problems of health care in america that concludes my statement mr chairman thank you very much  be more than that depending upon the final bell and how it's proposed it's simple math however our actual tell us that the average medical expenses for young and welfare is of concern to us this has been an issue and we know it is of concern to to federal employees and to members of congress we've heard from them we've heard from members of congress we recently o p m implemented the dental and vision law for federal employees and as you know it's been very popular with enrollees with both employees and retirees  i think at last check over seven hundred a thousand people had rolled in one or the other or both programs so we have some experience with that and if this is such a bill became law would certainly implemented as effectively as we now have because i do think that it would be a challenge but nonetheless doable to come up with a balance of premium and benefit that made it attractive to  for folks because there is no it's automatic issue you don't need to take it isn't underwritten you don't need to take a medical exam to be covered thank you very much  well from a cost offset standpoint i would be willing to work with the subcommittee and look for that but i guess i have to say that my biggest concern about the cost right now is that when i think about the cost of a standalone plan  employees or their families would have to buy for them versus amending the current it seems to me that the cost is going to be more in a standalone plan and it also seems to me that there is a lot of successful experience out there in the states that everyone has cited and i've never seen any kind of analysis of what the states either minimize or eliminate cost or what success they've had that's one of the reasons that we would like to work with the subcommittee on having some kind of an impartial expert one hundred percent of the premium borne by the employees and that is not one that we would normally support so i believe there are probably some other options out there of how this can be costed and i don't think that that analysis or research has been appropriately and impartial expert and that's what i would ask the subcommittee helping having  an appreciable premium increase for the for the other participants in the plan so i think i think we ought to put everything on the table here and recognize that this is a huge problem for federal employees and their families and make sure that i just can't believe in actuarial numbers and underwriting that this is a simple matter of multiplying the number of potential times  absurd at a time when republicans and democrats are saying that the entire country should have access to the f d a to b p that's the big plan that people run around the country with and have been talking about now for these a decade one of the ways to give health care to everybody is left in with this to this large pool and the whole point denying access to consistently we hear from members of congress on both sides of the aisle access or the relatives of people already in and already part workforce of federal government to have an influx of new young bodies who would it would it would it would it would add to the pool and by people who would look at our pool and talk about what what would adding new people between the ages we are talking about about their rather small in number what it would mean we don't have any other information and we know what the rules are and we have to abide by  them i believe that the bill itself is the whistle of the bill itself cannot be doubted here's a country that's unwilling to provide health care for these youngsters we're talking about people who get out of school where there are almost automatically low wage people very often they're tampa where even out of some health insurance plan that not nearly give you the benefits that going into it they have lower lower wages some of them are still in school for goodness sakes they are that they also carrying their law school loans were already making impossible for these young people they go back home to live because of the cost of housing compared we've had to go this way although i don't see any way consistent with what we know now but but your suggestions that we need to find out and we need to find out more then then we know i also wan to suggest that we are talking to employees who are dealing with the same federal contribution to the federal health care plan in memory i can't remember when this has