Federal health premiums to rise slightly in 2008

Premiums for the federal employee health plan will rise by an average of 2.1 percent overall in 2008, a minimal increase from last year.

The portion of that overall premium paid by the government will rise 1.7 percent while the part contributed by enrollees will grow 2.9 percent. For individual enrollees in the Federal Employees Health Benefits Program, this will translate to paying an extra $1.58 every two weeks for a total of $59.69. Those with family plans will pay an additional $4.11 for a total of $135.13, on average.

Under FEHBP, enrollees choose from among 283 separate providers, so the actual premium increase will depend on the provider. Office of Personnel Management Director Linda Springer said in a news conference Thursday that 32 percent of enrollees will experience an increase of less than 5 percent, and 91 percent of enrollees will get an increase of less than 10 percent.

"Obviously, 2.1 [percent] is an average," Springer said. "There are some that are higher, some that are lower. But overall, people will see single digit increases, by and large, in their premiums."

One of the reasons for the relatively small 2008 increase was the use of reserve funds, which are taken from participants' premiums each year and saved to cover unexpected medical costs. But Springer indicated that the reserve funds were not used as liberally this time around as they were the last time.

Despite the low average increase in premiums, the National Treasury Employees Union noted that the Blue Cross Blue Shield plan will go up by 8.5 percent. Nearly 60 percent of FEHBP enrollees are in Blue Cross Blue Shield.

"With more than 4 million people in the Blue Cross plan, this is a rate hike of staggering impact," said NTEU President Colleen M. Kelley.

The average premium increase for vision in the federal employee program for 2008 will be 0.7 percent, Springer said. But the average premium increase for dental benefits will rise by 6.1 percent, largely because MetLife's offering increased by 9 percent, putting it more in line with the other plans, she said.

FEHBP also will offer 32 high-deductible choices next year, an increase from the 29 available in 2007. HDHPs include health savings accounts and feature lower monthly premiums than traditional plans, in exchange for higher annual deductibles. Thus far, enrollment in such plans is low, with more than 9,000 enrolled in HDHPs and about 19,000 enrolled in consumer-driven health plans.

But enrollment in HDHPs next year may creep up under a pilot project being launched by Blue Cross Blue Shield. Under the carrier's basic plan, HDHPs will be available in Kansas, Missouri, Minnesota, Ohio and Tennessee in 2008. Employee groups have lobbied against the offering of HDHPs, arguing that such plans could result in higher premiums and reduced benefits for employees and retirees enrolled in more comprehensive, traditional offerings.

Meanwhile, some new benefits will be added to the federal program next year, including an offering by some plans to provide hearing benefits for children up to age 22. Many plans also are providing preventive care benefits, such as screenings and immunizations, OPM said.

Nancy Kichak, associate director for strategic human resources policy at OPM, said 14 plans dropped out of the federal employee program for 2008, which will require more than 29,000 employees to enroll in a new plan. Thirteen new plans have entered the program, she said.

The average increase in 2007 for premiums in the federal employee program was significantly lower than the industry average, according to a new survey by the Kaiser Family Foundation and Health Research and Educational Trust.

The average increase in premiums for industry-sponsored plans stood at 6.1 percent in 2007, the survey found. In contrast, the reported average increase for FEHBP premiums was 1.6 percent, according to OPM. About 63 percent of enrollees in the federal program had no increase in premiums for 2007, and another 15 percent got increases of less than 5 percent.

"We don't know what 2008 will be," Springer said, "but if history is any kind of indicator, we expect that we will continue to compare favorably, and federal employees will continue to experience a smaller percent increase in their premiums than what their counterparts outside the federal plan will experience."

Federal employees and retirees can change their health insurance plans during the open season, which will run from Nov. 12 to Dec. 10. Employees wishing to continue use of a flexible spending account will need to re-enroll.

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