Recent federal workforce reductions have had a devastating impact on Texas, with thousands of government employees in Austin, Dallas, and Houston losing their jobs. While the immediate loss of income is the most obvious consequence, many workers are also facing an unexpected financial shock—the sudden loss of their Federal Employees’ Group Life Insurance (FEGLI) coverage.
For many, the layoffs were abrupt, with little to no warning. Without proper planning, affected workers are now scrambling to replace their lost benefits or facing significantly higher costs to secure new life insurance at a time when financial stability is already uncertain.
In Austin, mass layoffs at the IRS blindsided employees, leaving many unsure of how they will manage their expenses in the coming months. Eddie Walker, president of the National Treasury Employees Union’s 247th chapter, described the terminations as an overnight assault. Many workers had expected to continue through tax season, only to find themselves without jobs, income, or the safety net of employer-sponsored benefits.
In Dallas, federal workers were informed of their termination via email, including those in the middle of serious medical treatments. Kara Bond, a federal employee undergoing breast cancer treatment, was fired on Valentine’s Day. In addition to her health battle, she now faces the challenge of securing new insurance coverage while managing mounting medical bills. Her situation reflects the growing concern for workers who not only lost their income but also the protections they depended on during one of the most vulnerable times in their lives.
Houston has also been hit hard by federal job cuts, with agencies reducing staff through layoffs and forced early retirements. Many workers are being pushed out before they are financially ready, suddenly finding themselves without health insurance, pension security, or life insurance coverage.
Michael A. Scarpati, CEO of RetireUS, warns that many affected workers are unaware of just how vulnerable they are. He explains that federal employees impacted by workforce reductions will lose their FEGLI coverage unless they qualify for immediate retirement and meet eligibility requirements to carry it into retirement. For those who do not qualify, FEGLI offers a 31-day free extension of coverage and the option to convert to an individual policy without a medical exam. However, these private policies are often far more expensive than federal group coverage, adding a financial burden for workers already struggling with job loss.
For Texas federal employees, this creates a double financial crisis—losing income while also facing higher costs to replace their life insurance. The situation is particularly dire for those who are too young to qualify for Medicare or Social Security benefits, as they must find alternative solutions to avoid gaps in coverage.
Scarpati emphasizes that the key to managing this transition is acting quickly. Employees must determine if they qualify to keep their FEGLI coverage in retirement and explore alternative insurance options before their free extension period expires. Without a clear plan, they risk either losing coverage altogether or paying significantly higher premiums.
To help government workers make informed decisions before it is too late, RetireUS has launched Government Transition Decision HQ, a free resource providing guidance on retirement planning, life insurance options, and financial strategies. The initiative aims to give federal employees the tools they need to navigate this sudden disruption and secure their financial future.
The ongoing layoffs in Texas highlight the broader challenges facing federal workers across the country. Many of these employees have dedicated decades to public service, only to find themselves abruptly dismissed with little guidance on what to do next. The loss of employer-provided life insurance is just one of many financial hurdles they must now overcome.
As job cuts continue, the need for accessible financial education and support has never been greater. For workers facing unexpected layoffs, understanding their benefits and taking action as soon as possible will be critical to maintaining their financial security in the months ahead.
