New Health Benefit Offering Could Drive Some Feds Out of the Program

While some federal employees will probably see reduced health care costs as a result of a new offering in 2016, the costs for others might rise so dramatically they could leave the federal program altogether, according to an analysis by the Office of Personnel Management.

OPM issued a proposed rule for introducing self-plus-one coverage into the Federal Employees Health Benefits Program, which will be available to enrollees during the 2015 Open Season for 2016 enrollment. Currently, federal employees and retirees can choose between self-only and self-plus-family coverage. The new plan, which lawmakers approved in the 2013 budget deal, would provide enrollees with a third option to insure themselves and a spouse or one eligible child.

The human resources agency said it did not have enough information to assess the full impact of the new offering. Federal law requires agencies to release a “regulatory impact analysis” when a change could affect the economy by $100 million annually, and OPM said it could not rule out that possibility.

Therefore, OPM decided to lay out the possible effects and likely outcomes to result from the self-plus-one option. Enrollees who shift from self-plus-family to self-plus-one coverage will see reduced health care premiums, OPM said, meaning the government share will decrease as well. This would lead to a decrease in direct spending.

Premiums for those with multiple family members who retain family coverage would likely increase, however, meaning the government share could increase for those plans. OPM said it will “closely monitor” that impact, but predicted the savings from the self-plus-one category would offset the increased costs of family coverage. The overall effect would therefore be neutral.

OPM predicted the higher costs could propel some families to switch out of FEHBP in favor of less expensive coverage elsewhere.

While some feds would reduce their coverage from family to plus-one coverage, others would likely boost their individual coverage to self plus one, OPM said. Employees with spouses who currently receive insurance through a non-federal employer could opt to enroll in self plus one rather than pay for two separate premiums, for example. In that scenario, the couple would pay less overall for health care, while the government’s costs would increase and the spouse’s private-sector employer would see costs decrease.

The proposed rule has a 60-day comment period, and OPM was hopeful the public could clarify the effects of the new offering.

“We lack data with which to quantify rule-induced costs, transfers or public health benefits,” OPM wrote. “We therefore request comments on any of this proposed rule's impacts.”

OPM added that ultimately, adding self plus one will better align FEHBP with offerings in the private sector and will “serve to spread costs across different enrollment types.”

(Image via Michael Dechev/Shutterstock.com)