Feds Will Pay 7.4 Percent More Toward Health Care Premiums in 2016

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Federal employees and retirees will pay an average of 7.4 percent more toward their health insurance premiums in 2016, the Office of Personnel Management announced Tuesday.

Federal Employees Health Benefits Program enrollees with self-only coverage will contribute an average of $5.50 more per paycheck, while those with family coverage will pay about $19.61 more. For the first time ever, FEHBP participants can select the self-plus-one enrollment category. Those enrollees will see an average increase of $8.92 per paycheck -- or 4.9 percent -- over what they paid in 2015, assuming they were previously in the self-and-family category.

About 95 percent of self-plus-one enrollees will pay lower premiums than self-and-family participants in enrolled in the same plan. Self-plus-one premiums are lower than self-and-family in every case, but a quirk in the contribution share formula led to some instances in which enrollees with just two people joining a plan would be better off choosing self-and-family. In a conference call on Tuesday, OPM officials encouraged FEHBP participants to check to ensure switching to self-plus-one is in their best interest.

Federal employees and retirees’ share of their health care premiums will go up by a higher percentage than the government contribution, which will rise 6 percent. OPM said the government share of premiums “is based on a lower average as enrollees select lower cost plans.” OPM pays about 70 percent of FEHBP participants’ premiums.

Overall premiums for non-postal employees and annuitants, including all enrollment options and both the employee and government portions, will increase by 6.4 percent. The increase is double that of the 2015 bump, and the largest since 2011. The jump is the first in five years to surpass 4 percent.

John O’Brien, OPM’s director of healthcare and insurance, said FEHBP is coming off a “low period,” adding “we are still in the midst of the lowest consecutive five-year period of premium increases in the FEHB program.” Despite the uptick, O’Brien called the increase “relatively modest.” He attributed the increase to a jump in prescription drug costs, saying such spikes disproportionately affect FEHBP because federal retirees are included in the program’s risk pool.

O’Brien also emphasized that while the private sector has seen increased copays and deductibles, there are no changes in those rates for FEHBP participants. Those attempts to assuage federal employees and retirees were unsuccessful with the groups that represent them.

“The government is shifting more of the cost increase to enrollees, further eating away at their take-home pay,” American Federation of Government Employees National President J. David Cox said. “Federal employees have endured five years of frozen or minuscule pay raises, while retirees aren’t getting a dime of additional support next year. How are they supposed to maintain their standard of living when costs for essential things like health care keep going up?”

By comparison, state employees in California will see a 7 percent to 11 percent increase in their premiums, depending on which insurance option they choose. The consulting firm Mercer, however, projected a 4.2 percent premium increase in 2016.

Next year’s exact increase will vary from plan to plan. The most popular plan -- the Blue Cross and Blue Shield Standard Option -- will see a $9.15 increase for self-only enrollees per paycheck; family enrollees in the plan will pay an extra $24.93 per paycheck, and self-plus-one enrollees will pay $18 more than they paid for self-and-family in 2015. About 40 percent of FEHBP participants are enrolled in that plan.

The company noted that federal enrollees can now earn up to $170 -- a 50 percent increase from last year -- by participating in various wellness initiatives.

U.S. Postal Service employees will pay an average of 13 percent more for their premiums, or $16.61 per paycheck. Self-only enrollees will pay 12 percent more, while family participants will see a 17 percent jump. The government share will increase by 4.7 percent.

FEHBP will offer a total of 252 plans in 2016, five fewer than it did in 2015. Every plan will offer self-only, self-plus-one and self-and-family enrollment options. Four of the plans are new offerings, and 11 will be offered to all participants regardless of where they live or work. Six plans will drop out of FEHBP next year, affecting 3,000 individuals.

About 8.2 million federal employees, retirees and their family members enroll in FEHBP. More than 1.6 million participate in the federal dental benefit, while 1.2 million enroll in vision plans. Premiums for those benefits will increase 2.23 percent and 3.61, respectively, in 2016.

Open Season, the period in which federal employees and retirees can enroll in FEHBP or switch plans, will run from Nov. 9 through Dec. 14. Between 4 percent and 7 percent of enrollees typically switch plans annually. OPM will also open a “special enrollment period” in the month of February to allow active federal employee enrollees who would have been better served switching to self-plus-one more time to make the change. OPM officials said federal workers often do not pay much attention to Open Season and, in anticipation of receiving complaints from individuals who missed the opportunity to select a cheaper option, they decided to preemptively create an extra enrollment period. 

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