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PUBLIC-SECTOR WORKER

TRANSITIONS

How the Platform Integrates with Federal, Military, and State Employee Benefits

How does the platform interact with FEHB, TRICARE, and state-administered employee benefits?

What about federal pensions, military retirement, and state pension systems?

How does the platform handle workers not covered by Social Security under Section 218 agreements?

An Analytical Framing Document

Jason Robertson

v1.0 · Created May 5, 2026 for v2.16

Ohio · 2026

The Question This Document Addresses

Approximately 22 million Americans work in public-sector employment with established benefit structures that interact with the platform in distinctive ways. Federal civilian employees number about 2.3 million and have access to FEHB (the Federal Employees Health Benefits program) and FERS (the Federal Employees Retirement System). Military service members number about 1.3 million on active duty plus 800,000 in reserves and guard, with access to TRICARE and military retirement. Postal Service employees number about 640,000 with their own quasi-federal benefit structure. State and local government employees number approximately 19.5 million, with health benefits and pensions varying substantially by jurisdiction. About a quarter of state and local employees do not participate in Social Security under Section 218 agreements, relying entirely on state pension systems for retirement income.

These public-sector benefit structures are not minor variations on private-sector employment. FEHB and TRICARE are two of the most expensive employer-sponsored health benefit programs in the United States, providing comprehensive coverage that often exceeds typical private-sector employer plans. FERS provides a defined benefit pension component layered with Social Security and the Thrift Savings Plan. Military retirement includes a defined benefit pension after twenty years of service (under traditional rules) or the newer Blended Retirement System. State pension systems are constitutionally protected as vested rights in most states, often with stronger protections than private pensions enjoy. Public-sector unions are politically organized and negotiate aggressively to protect existing benefits.

The platform's universal healthcare commitment, its Community Contribution Plan replacing FICA (Federal Insurance Contributions Act), and its tax architecture all interact with this complex public-sector benefit landscape. The platform package does not currently specify these interactions in detail. This document maps the platform's commitments against each major public-sector worker category, identifies the design choices the platform must make about preservation versus absorption of existing benefits, examines the constitutional vested rights doctrine that constrains how the platform can modify accrued benefits, and analyzes the failure modes that arise when public-sector workers face transition uncertainty. As with the v2.15 documents, the analysis is framework-level rather than statute-detailed; specific benefit calculation mechanics for FERS, TRICARE, or particular state pension systems are beyond this document's scope and would require expert review before implementation.

Federal Civilian Employees

Federal civilian employees are organized under the General Schedule (GS) and several alternative pay systems. They have access to one of the most comprehensive employer-sponsored benefit packages in the country: FEHB for health insurance, FERS for retirement (or CSRS (Civil Service Retirement System) for hires before 1984), the Thrift Savings Plan for defined contribution savings, Federal Employees' Group Life Insurance, the Flexible Spending Account program, and several others. The platform's interaction with each requires explicit treatment.

FEHB and the universal healthcare Question

FEHB provides health insurance to approximately 8 million federal employees, retirees, and their dependents. The federal government pays approximately 72 percent of premiums for active employees; employees pay the remainder through payroll deductions. FEHB plans typically offer broader provider networks, lower out-of-pocket costs, and richer benefits than median private-sector plans. The program has operated since 1960 and is a significant component of federal employment compensation.

The platform's universal healthcare commitment must specify how it relates to FEHB. Three approaches are plausible. Approach A: FEHB continues as a federal employer-sponsored supplement to universal healthcare. Federal employees receive both universal coverage (through the platform's contribution architecture) and FEHB coverage (as enhanced benefit through their employment), similar to how some employees in countries with universal healthcare also have employer supplemental coverage. Federal employees would still pay the universal healthcare contribution through payroll. The federal government's existing FEHB premium subsidies would continue, providing the supplemental layer. Approach B: FEHB is absorbed into universal healthcare. Federal employees receive universal coverage and the federal government's FEHB premium contribution becomes part of the federal funding for universal healthcare overall. Federal employees lose access to FEHB-specific benefit features that exceed universal healthcare's standard coverage but gain the same coverage as everyone else. Approach C: FEHB is preserved unchanged for current federal employees and retirees but is closed to new federal hires, who receive universal healthcare. This is the gradual transition path used by some prior federal benefit reforms.

Approach A is most consistent with the platform's universal-by-default design and least disruptive to existing federal employees. It preserves FEHB as supplemental coverage, similar to how Medicare beneficiaries can have Medigap supplemental coverage. The federal government's premium contribution continues; federal employees do not lose any benefits they currently have; new federal hires receive universal coverage with optional FEHB supplemental. This approach also avoids the political opposition that would accompany absorbing or eliminating FEHB. The cost is mild redundancy and complexity in benefit administration, which seems acceptable given the alternative.

Approach B is most consistent with single-payer simplification but requires absorbing the most politically organized employee benefit program in the country. Federal employee unions would oppose this aggressively, and the political cost would likely exceed the administrative simplification benefit. Approach C produces a multi-decade transition during which federal employees in the same department have different health coverage based on hire date, which seems administratively awkward.

The platform should commit to Approach A or some variant: universal healthcare as the foundation; FEHB continues as federal supplemental coverage. The federal employer subsidy continues as employer benefit. Federal employees pay the universal healthcare contribution (4% employer + 2% employee) like all other workers, with their FEHB coverage as enhanced benefit. This is the cleanest design that respects existing federal employee benefits while integrating with the platform's universal architecture.

FERS and Federal Pension Vested Rights

FERS is a three-tier retirement system: a defined benefit Basic Benefit Plan (calculated from years of service and high-3 salary), Social Security (federal employees pay FICA and qualify for Social Security retirement benefits), and the Thrift Savings Plan (a defined contribution plan similar to private-sector 401(k) plans with federal matching contributions). CSRS is the older system for federal hires before 1984; CSRS employees do not pay Social Security on their federal earnings and rely on a more generous Basic Benefit calculation. CSRS is closed to new entrants but continues for grandfathered employees and retirees.

The platform's Community Contribution Plan replaces FICA at a revenue-neutral rate in mature steady state. For FERS employees, the Community Contribution Plan replaces the Social Security component of their retirement structure. The platform's design should specify how the FERS Basic Benefit Plan and Social Security replacement interact. Two interpretations are plausible: the Community Contribution Plan becomes the second leg of FERS retirement (replacing the Social Security leg with a revenue-neutral CCP-equivalent), or the Community Contribution Plan operates alongside FERS Basic Benefit as a third retirement income source while existing Social Security obligations are honored separately. The latter is more administratively complex but more consistent with vested rights protection.

Vested rights doctrine, applied to public pensions, generally protects accrued benefits as a contractual obligation that cannot be impaired by subsequent legislation. Federal courts have applied this principle to FERS and CSRS in various contexts. The platform's Community Contribution Plan transition cannot reduce FERS or CSRS benefits accrued under existing rules. This is not a complication so much as a constraint: the platform's redesign of retirement architecture must apply prospectively for new accruals while honoring all existing accrued benefits unchanged.

Federal Employee Retirement Healthcare

Federal retirees can continue FEHB coverage in retirement, with the federal government continuing to pay its portion of premiums. Most federal retirees become Medicare-eligible at 65 and use Medicare as primary with FEHB as secondary. Under Approach A above, this structure continues unchanged: universal healthcare absorbs Medicare; FEHB continues as supplemental; the federal employer continues to subsidize FEHB premiums for retirees. Federal retirees do not pay the universal healthcare contribution (since they are not earning wages subject to payroll tax), so their universal coverage is funded through other channels of the platform's architecture.

Military Service Members and Veterans

Military personnel have a distinctive benefit structure that combines current-employment benefits, retirement benefits, and veterans' benefits in ways no civilian employment matches. The platform's interaction with each requires explicit treatment.

TRICARE and Active-Duty Healthcare

TRICARE provides comprehensive healthcare to active-duty service members, military retirees, and their dependents. Active-duty members and their dependents receive care through military facilities or TRICARE-contracted civilian providers at minimal cost. Military retirees enrolled in TRICARE pay reasonable premiums for coverage that often exceeds private-sector employer plans. The Department of Defense funds TRICARE through the defense budget.

The platform's universal healthcare commitment interacts with TRICARE similarly to FEHB. The cleanest design treats TRICARE as enhanced coverage layered atop universal healthcare. Active-duty members receive both universal healthcare (their gross pay is subject to the universal healthcare contribution like any other worker) and TRICARE (as condition of service). Military retirees receive universal healthcare plus TRICARE for Life as supplemental. The DoD's TRICARE funding continues; the universal healthcare funding architecture provides the foundation. This preserves TRICARE benefits unchanged while integrating with universal coverage. Military service members and veterans organizations are politically powerful, and this layered approach minimizes their reasons for opposition.

Military Retirement and the Blended Retirement System

Traditional military retirement provided a defined benefit pension after twenty years of service, equal to 2.5 percent of base pay times years of service (so a 20-year retiree would receive 50 percent of base pay for life). The Blended Retirement System (BRS), implemented in 2018 for new entrants, reduces the defined benefit multiplier to 2.0 percent and adds Thrift Savings Plan matching contributions to provide a 401(k)-style supplemental benefit. Service members entering after 2018 are under BRS; longer-serving members had a one-time choice. Both systems are vested rights; the platform's transition cannot reduce accrued benefits under either system.

The platform's Community Contribution Plan does not directly affect military retirement, since military retirement is funded through the defense budget rather than through FICA. Military service members do pay FICA (and would pay the Community Contribution Plan in mature steady state) on their military pay, qualifying for Social Security retirement benefits separately from military retirement. So a 20-year military retiree typically has three retirement income sources: military pension, Social Security (eventually), and Thrift Savings Plan withdrawals. The platform preserves this structure with the Community Contribution Plan replacing FICA's Social Security tax revenue-neutrally; military retirees' overall retirement income should be approximately unchanged.

VA (Department of Veterans Affairs) Benefits

Veterans Health Administration provides healthcare to eligible veterans, primarily those with service-connected disabilities or financial need. VA benefits operate through a separate federal infrastructure (the Veterans Health Administration's hospital and clinic network). The Federal Program Integration Plan addresses VA preservation: the platform's universal healthcare exists alongside VA, providing veterans with both universal coverage and VA-specific care. Veterans use whichever is more appropriate for their needs; many use VA for service-connected conditions and universal healthcare or TRICARE for general care. This layering continues under the platform unchanged.

VA disability compensation, education benefits (GI Bill), home loan guarantees, and other non-healthcare VA programs continue unchanged under the platform. They are not labor income and are not subject to the universal healthcare contribution. They are not Social Security and are not affected by the Community Contribution Plan transition. Veterans' benefits are largely insulated from the platform's architectural changes.

Postal Service Employees

The United States Postal Service is a quasi-independent federal entity. Its 640,000 employees have access to FEHB and FERS like other federal employees but operate under modified employment terms. The Postal Service's financial position has been unstable for decades due to required prefunding of retiree health benefits and declining mail volume. The platform's interaction with Postal Service employees follows the federal civilian pattern (FEHB continues as federal supplemental; FERS continues with vested rights protection; Community Contribution Plan replaces FICA in mature steady state).

One specific consideration: the Postal Service Reform Act of 2022 substantially restructured the prefunding requirement for retiree healthcare. The platform's universal healthcare integration should account for the new structure rather than the pre-2022 obligations. This is detail-level work that would benefit from review by Postal Service benefits experts.

State and Local Government Employees

Approximately 19.5 million Americans work for state and local governments. Their benefit structures vary enormously across jurisdictions, ranging from California's CalPERS (managing approximately $500 billion in pension assets and providing retirement benefits to over 2 million members) to small municipal pension systems with a few hundred members. Health benefits range from comprehensive state-administered programs (similar in scope to FEHB) to no employer health coverage at all. Generalizing about state and local employees requires acknowledging this variation.

The Section 218 Agreement Issue

Approximately 25 percent of state and local government employees do not participate in Social Security. This dates to the original Social Security Act, which excluded state and local government employees from coverage. Section 218 of the Social Security Act, added in 1950, allows states to enter agreements to bring their employees into Social Security coverage. Many states have done so, but several states (including California for some employee categories, Massachusetts for many, and several others) have substantial public-sector employee populations not covered by Social Security.

Non-covered workers do not pay FICA on their state or local government wages. They do not accrue Social Security benefits from those wages. They rely entirely on their state pension system for retirement income from that employment. This creates a meaningful design question for the platform: does the universal healthcare contribution apply to non-covered state and local government workers?

If the universal healthcare contribution is structured as a payroll tax operating through the same mechanism as FICA, non-covered state and local government workers may be excluded by default. This would mean a state employee in Massachusetts (where many municipal employees are non-covered) does not pay the universal healthcare contribution but presumably wants universal healthcare coverage. The platform must resolve this. Options include: extending the universal healthcare contribution to all employees regardless of Social Security coverage status (requiring a different statutory mechanism); funding universal healthcare for non-covered workers from general revenues rather than payroll; or requiring states to bring all public-sector employees into the contribution structure. The third option requires state cooperation in ways the v2.14 state cooperation analysis examines, and would likely fail in some states.

This is a real implementation question that the platform's existing documents do not address. It affects roughly 5 million workers and the design choice has substantial political and constitutional implications. Resolution requires drafting specific statutory language and reviewing constitutional viability.

State Pension Systems

State and local pension systems are generally state-administered defined benefit programs funded through a combination of employer contributions, employee contributions, and investment returns. Most state pension systems are constitutionally or statutorily protected as vested rights, often with stronger protections than federal pensions or private pensions. Several states have constitutional provisions explicitly protecting public pension benefits. Court precedent in many states establishes that pension benefits accrued under existing rules cannot be reduced even by future legislation.

The platform's Community Contribution Plan transition affects state pension systems primarily through the Social Security replacement: state employees who participate in Social Security will see their FICA contributions replaced by Community Contribution Plan contributions in mature steady state. State pension systems that integrate with Social Security (assuming Social Security as part of total retirement income calculation) will need to integrate with the Community Contribution Plan instead. This is administratively complex but does not affect pension benefit levels.

State pension systems' financial health varies substantially. Some are well-funded (Wisconsin, South Dakota); some are severely underfunded (Illinois, Kentucky, several others). The platform does not directly address state pension funding shortfalls; that is a state fiscal problem the federal government has historically left to states. Whether the platform's broader fiscal architecture creates pressure for federal involvement in state pension reform is an open question; this document does not propose such involvement but notes the political pressure may emerge.

State Employee Health Benefits

State employee health benefit programs vary from comprehensive (similar to FEHB in scope, often using FEHB-style multi-plan competitive structure) to limited or absent. The platform's universal healthcare provides a baseline that supersedes the absence-of-coverage cases and supplements the limited-coverage cases. For states with comprehensive employee health programs, the platform's universal healthcare integration follows the FEHB pattern: state employee health programs continue as state supplemental coverage layered on universal coverage. State employees pay the universal healthcare contribution like other workers; their state employer continues to fund the state-specific supplemental program. This preserves state employee benefits while integrating with universal coverage.

Interaction with state cooperation is real here: a state that refuses to cooperate with the platform's architecture may also resist letting its employees participate in universal healthcare. This compounds the v2.14 state cooperation analysis with public-sector-employment-specific resistance. The federal-direct fallback for state employees in non-cooperating states is the same as the federal-direct fallback for state residents generally: federal-administered universal healthcare delivery without state participation.

Vested Rights Doctrine

Public pensions in the United States are generally protected as vested contractual rights. The doctrine has multiple sources and varies by jurisdiction, but the unified principle is that a public employee's accrued pension benefits constitute property that cannot be reduced by subsequent legislation. The Supreme Court has not directly addressed this principle for federal pensions but has applied analogous protections in other contexts. State courts have consistently protected state pensions through state constitutional and contract clauses.

For the platform, vested rights mean: any restructuring of public pension architecture applies prospectively for new accruals only. Federal employees in FERS who have accrued ten years of Basic Benefit credits cannot have those credits reduced. Military retirees receiving pension payments cannot have those payments reduced. State pensioners with vested benefits cannot lose them. The platform's prospective changes (for example, transitioning new federal hires to a different retirement architecture, or adopting a different state pension structure for new state hires) do not violate vested rights, but cannot apply to existing accrued benefits.

This constraint is not unusual; most major retirement system reforms throughout US history have honored vested rights and applied changes prospectively. The Social Security Act amendments of 1983 raised the retirement age but did so prospectively for younger workers. The shift from CSRS to FERS in 1984 was prospective for new federal hires. State pension reforms in the post-2008 fiscal stress era have generally been prospective. The platform's Community Contribution Plan transition follows this established pattern: prospective change for future accruals, full preservation of existing accrued rights.

Public-Sector Union Considerations

Public-sector unions represent approximately 7 million government employees and are among the most politically organized constituencies in American politics. The American Federation of Government Employees represents most federal civilian workers; the National Association of Letter Carriers represents postal workers; American Federation of State, County and Municipal Employees represents state and local government workers; the National Education Association represents most public school teachers; police and firefighter unions are highly organized at municipal level. These organizations will scrutinize platform design choices affecting their members' benefits.

Public-sector unions are unlikely to support platform deployments that diminish their members' existing benefits. They are likely to support deployments that integrate with existing benefits (Approach A throughout this document) and preserve vested rights. The platform's design should engage public-sector union leadership early, addressing their specific concerns about FEHB preservation, FERS continuity, military retirement preservation, and state pension protection. This engagement is part of the federal-state cooperation infrastructure the v2.14 analysis identified as needing development.

Specific union negotiation dynamics are not predictable in this document. They depend on the political environment, the specific platform legislation language, and the relationship between platform proponents and labor leadership. What is predictable is that public-sector union opposition can substantially complicate or prevent deployment, and that public-sector union support can substantially help. The platform's design should optimize for the latter rather than create unnecessary opposition through poorly-considered benefit changes.

Failure Modes

The Vested Rights Litigation Failure Mode

If the platform's enabling legislation inadvertently affects accrued public pension or healthcare benefits, vested rights litigation will follow. Courts may issue injunctions blocking platform implementation pending resolution of constitutional challenges. The platform's design should include explicit vested rights preservation language in enabling legislation to forestall this failure mode. Specific statutory drafting is required and would benefit from legal review.

The Section 218 Coverage Gap Failure Mode

If the platform's universal healthcare contribution is structured as a Social Security-equivalent payroll tax that automatically excludes Section 218 non-covered workers, approximately 5 million state and local government employees will be excluded from the contribution architecture. Either they will not have universal healthcare access (a failure of universality), or universal healthcare must be funded for them through a different mechanism (a parallel funding structure that complicates the architecture). Resolution requires explicit statutory design that the current platform documents do not provide.

The Public-Sector Union Opposition Failure Mode

If public-sector union leadership perceives the platform as threatening their members' benefits, they will mobilize against deployment. Public-sector unions have substantial political and electoral influence, particularly in Democratic Party politics where many platform commitments would be most likely to find support. Union opposition can split potential coalitions and complicate legislative passage even where the platform is otherwise advantageous to union members. Engagement with union leadership during platform design is the mitigation; the engagement work has not been done.

The State Pension System Failure Mode

If the platform's transition disrupts state pension system financing or actuarial assumptions, state pension funds may face increased financial pressure. Several state pension systems are already severely underfunded (Illinois, Kentucky, Connecticut, New Jersey) and additional pressure could trigger state fiscal crises. The platform should not accelerate pre-existing state pension fragility. Specific design choices about how the Community Contribution Plan transition affects state pension financing require state-level analysis that this document does not provide.

Open Questions

How does the universal healthcare contribution apply to Section 218 non-covered workers? Approximately 5 million state and local government employees do not pay FICA. The platform must specify whether they pay the universal healthcare contribution through a different mechanism, are excluded from contribution but covered for healthcare, or some other arrangement. The choice has constitutional and political implications that require detailed analysis.

How does the platform's enabling legislation handle vested rights? Specific statutory language is required to forestall vested rights litigation. Drafting and legal review have not been done.

How does the Community Contribution Plan integrate with FERS Basic Benefit and CSRS calculations? The platform's Community Contribution Plan replaces FICA's Social Security tax revenue-neutrally, but the specific mechanics of how it interacts with FERS three-tier and CSRS architectures need detailed work.

How is TRICARE for Life integrated with universal healthcare? Active-duty TRICARE is straightforwardly layered atop universal coverage; TRICARE for Life (for retirees age 65 and over) interacts with both Medicare and universal healthcare in ways that need explicit specification.

How does the platform handle the 50 different state pension systems' diverse architectures? Each state pension system is distinct; generic analysis cannot provide specific guidance. State-by-state implementation guidance would require collaboration with state pension administrators.

What happens to state employee health benefit programs in non-cooperating states? The federal-direct fallback is the same as for state residents generally, but the public-sector-employment specifics (state employer FEHB-equivalent supplemental) are not addressed by federal-direct delivery.

How does the platform engage public-sector union leadership during deployment design? Specific engagement strategy and timeline are not currently developed.

What is the platform's position on Postal Service Reform Act 2022 interactions? The Postal Service's specific situation requires expert analysis.

How does the platform handle international agreements covering federal employees stationed abroad? Federal civilians and military stationed at overseas posts have specific healthcare and retirement arrangements (international SOFAs, status-of-forces agreements) that the platform's universal commitments must accommodate.

Closing

Public-sector worker transitions are not platform-fatal but require deliberate design work that the current platform documents have not provided. The cleanest design treats existing public-sector employee benefits (FEHB, TRICARE, FERS, military retirement, state benefits) as enhanced coverage layered atop the platform's universal foundation. This preserves existing benefits unchanged, respects vested rights, minimizes political opposition from organized public-sector constituencies, and integrates with the platform's universal architecture. The federal employer continues to fund existing employer subsidies; employees pay platform contributions like other workers; vested rights are protected through prospective-only changes for new accruals.

The most significant unresolved issue is treatment of Section 218 non-covered workers, who do not pay FICA and would be excluded by default from a FICA-equivalent universal healthcare contribution. Approximately 5 million state and local government employees fall into this category. Resolution requires explicit statutory design and probably state-level cooperation negotiation. This is a real implementation requirement that should be addressed before deployment, not after.

Public-sector union engagement during platform design is the single most important political success factor for this scope. Federal employees, military members and veterans, and state and local government workers and retirees together represent over 35 million Americans whose support or opposition can decisively affect platform deployment. Engagement that addresses their specific concerns about benefit preservation, vested rights protection, and benefit administration continuity is preferable to design choices that create unnecessary opposition. The platform's communication infrastructure should include public-sector-specific outreach materials and dedicated relationships with major union leadership.

The Community Contribution Plan's revenue-neutral replacement of FICA is the platform commitment most directly affecting public-sector workers' retirement architecture. Specific integration with FERS, military retirement, and state pension systems requires detailed actuarial analysis that this document does not provide. That analysis should be commissioned before the platform's enabling legislation is finalized.