Federal health premiums to rise 7 percent in 2009

Premiums for the federal employee health plan will rise by an average of 7 percent in 2009, a sizable increase from the previous year.

The government's portion of the overall premium for the Federal Employees Health Benefits Program will rise 6.5 percent while the increase for employees will average 7.9 percent. On average, that translates to an extra $4.83 every two weeks for employees with individual plans, while those with family plans will pay an additional $11.12. Premium hikes will vary, depending on which health plan an employee has enrolled in.

Enrollees in the Blue Cross Blue Shield standard option, the most popular FEHB plan, will see their premiums increase 12.9 percent for self-only coverage and 13.4 percent for family coverage. Nearly 60 percent of FEHB enrollees are in Blue Cross Blue Shield.

"It is very discouraging to see average increases of this magnitude," said Colleen Kelley, president of the National Treasury Employees Union, "particularly given the bargaining power [the Office of Personnel Management] should be able to exercise as manager of the nation's largest group health plan."

Under FEHBP, enrollees choose from among 269 providers. Nancy Kichak, associate director for strategic human resources policy at OPM, said at a news conference on Thursday that 20 percent of enrollees will experience an increase of less than 5 percent.

"I appreciate the tough environment in which the FEHB program currently operates," Kichak said. "While we worked very hard to contain premium costs -- and we were more successful with some health plans than with others -- federal employees and retirees can take comfort in knowing they are enrolled in a solid program that provides outstanding benefits and customer service."

Kichak noted that the use of reserve funds, which are taken from participants' premiums each year and saved to cover unexpected medical costs, helped reduce the average increase by 3.1 percent for 2009.

The average premium hike for vision plans will be 1.1 percent, Kichak said. Dental benefits will rise by 5.7 percent, with plans such as Aetna and GEHA increasing their annual benefit maximums, and MetLife offering coverage for dental implants.

FEHBP will offer 27 high-deductible choices next year, down from 32 in 2008. The plans offer health savings accounts and lower monthly premiums than traditional plans, in exchange for higher annual deductibles. Enrollment in these plans remained low in 2008 at 11,925 enrollees, but increased from 9,229 enrollees in 2007.

Some new benefits will be added to the federal program in 2009. For example, 10 fee-for-service plans and some health maintenance organizations will expand hearing benefits for adults. Some carriers added hearing benefits for children up to age 22 in 2008.

Kichak added that OPM has pushed to ensure that all FEHB carriers limit co-pays for specialty prescription drugs. A report by Government Executive earlier this year found that more than 87,000 employees in FEHBP plans pay higher prices for certain specialized drugs than they would under standard co-payment systems.

"We have worked very hard this year and for 2009 to make sure that folks who have certain specialty drugs and have not been protected by some of the catastrophic limits in our plans will have that protection for 2009," Kichak said. "We went through the drug coverage and made sure there was a max out-of-pocket expense for drugs in some forms."

The 2009 premium hike for FEHBP marks the largest since 2005. The previous increase was 2.1 percent -- lower than the industry average for 2008. A study by Aon Consulting Worldwide found that private sector health care costs are expected to increase by 10.6 percent in 2009, with the aging population, the rise of prescription drug costs and patient demand for services fueling much of the increase.

OPM plans to unveil a new federal benefits Web site on Nov. 3 that will enable enrollees to compare the benefits and costs of up to four different plans simultaneously. The Web site also will allow them to determine how their benefits coordinate between the FEHB program and supplemental insurance, such as dental and vision plans.

Federal employees and retirees can change their health insurance plans during the open season, which will run from Nov. 10 to Dec. 8. Employees planning to continue using a flexible spending account must re-enroll.