Feds Will Pay 4.4 Percent More Toward Health Care Premiums in 2014

Employee contributions rise faster than government’s share.

This story has been updated. 

Federal employees will pay 4.4 percent more toward their health insurance premiums in 2014, the Office of Personnel Management announced Tuesday.

Federal Employees Health Benefits Program enrollees with self-only coverage will contribute an average of $3.28 more per paycheck, while those with family coverage will pay about $7.90 more.

This increase is steeper than the rise in the government’s portion of the premiums, which will go up 3.3 percent. The employee share is increasing faster due to the particular FEHBP plans enrollees have selected, OPM said. Overall, the government pays about 70 percent of employees’ premiums.

Total premiums for non-postal FEHBP enrollees including both the employee and government portion will increase by 3.7 percent in 2014, OPM said. Postal enrollees, who make up about 25 percent of FEHBP, will see an overall increase of 3.8 percent.

The overall increase is slightly more than last year’s, when premiums rose by an average of 3.4 percent. Still, OPM officials said the increase comes as relatively positive news for federal employees, as it marks the first time in more than 30 years FEHBP premiums have increased less than 4 percent for three consecutive years.

The exact change for enrollees will vary from plan to plan. The most popular plan, the Blue Cross and Blue Shield Standard Option, will see a $1.91 increase -- or 2.2 percent -- for self-only enrollees per paycheck; those with family coverage will contribute $4.84 more than in 2013. FEHBP will offer 256 health plans in 2014, 26 more than it offered in 2013.

Premiums in the Federal Employees Dental and Vision Insurance Program will have more favorable numbers for feds, with dental coverage rates increasing by less than 1 percent and vision premiums decreasing by 1.3 percent. 

The recent string of relatively low premium increases for FEHBP enrollees has resulted from positive market trends, as well as the 2010 Patient Protection and Affordable Care Act, OPM said. ACA -- or Obamacare -- has created more competition that drives down prices, according to OPM officials.

In a letter sent to FEHBP carriers in March to kick off negotiations for 2014 benefits and rates, OPM highlighted prescription drug costs, wellness programs and preventative care as areas that should be addressed for any carrier looking to submit a plan in FEHBP. These provisions have also helped to control costs, OPM said.

While benefits will largely remain the same in 2014, the 2010 health care reform law has led OPM to require more preventative treatments in each FEHBP plan. Such measures include screening and counseling on alcohol misuse, tobacco use intervention for children and adolescents, and Hepatitis C screening.

In the three years prior to 2012, premiums went up by more than 7 percent annually. OPM acknowledged the size of the increases this year will likely serve as little consolation to federal employees, who have had their pay frozen for three consecutive years.

“We’re very sensitive to it,” said John O’Brien, OPM’s director for health care and insurance, at a press briefing Tuesday. “It’s not something we can dance around other than that’s why we worked so hard to keep the premiums down.”

Colleen M. Kelley, president of the National Treasury Employees Union, said the premium hike is another in a long line of hits the federal workforce has taken in recent years.

“Higher health premiums are yet another financial hardship for federal employees and retirees in these tough economic times,” Kelley said. “Any increase in premiums places an undue burden on federal employees given the freeze on federal pay, unpaid furloughs and now the threat of a government shutdown.”

Jon Foley, director of planning and policy analysis for OPM, said FEHBP offers a wide variety of plans, including less expensive options that  can help to “mitigate the impact” of the rate hike. O’Brien added the average increase may end up lower than the 3.7 percent figure -- which assumes all enrollees keep their current insurance plan -- as some participants switch to cheaper options, while very few choose more expensive packages. Typically, about 95 percent of enrollees keep their plan each year.

Open season -- the period in which federal employees can enroll, alter their plan, and add or remove dependents -- will be held from Nov. 11 through Dec. 9.

FEHBP provides $47 billion in health care benefits for about 8.2 million federal employees, retirees and dependents.