Feds Will Pay 3.8% More Toward Health Care Premiums Next Year
Cost growth during 2021 stems largely from specialty drugs, treatments for chronic illnesses and the COVID-19 pandemic, insurers said, although federal workers will be impacted less than employees of other large organizations.
Federal employees and retirees will spend an average of 3.8% more on their health insurance premiums in 2021, marking the second straight year of declining cost increases.
The government’s share of Federal Employees Health Benefits Program premiums will increase by an average of 1.9% next year, bringing the overall increase in premiums to 2.4%, the Office of Personnel Management announced Wednesday. The increase in employee contributions marks the second straight year of declining cost growth—employees saw an average increase of 4.9% in 2021 and 5.6% in 2020—but remains higher than 2019’s 1.5% cost increase.
On average, non-postal federal workers enrolled in “self-only” plans will pay $3.17 more per bi-weekly pay period, while feds in “self plus one” insurance plans will pay $7.61 more per pay period. Federal employees who are enrolled in family coverage will pay an average of $10.09 more per pay period next year.
For the Federal Employees Dental and Vision Insurance program, OPM said that next year the average premium increase for dental plans will be 0.81%, while vision plan premiums will increase by an average of 0.95%.
The FEHBP’s annual open season period, in which federal employees can choose from a variety of insurance carriers and coverage plans, depending on their region, will run from Nov. 8 until Dec. 13, OPM said.
Insurance carriers told OPM that the primary drivers of the 2022 rate increase are the costs of specialty drugs and treatments for chronic illness, as well as medical technology and increasing costs related to the COVID-19 pandemic and mental health services. Offsetting some of those costs was the fact that enrollees used fewer medical services in the early months of the pandemic, OPM said.
In a fact sheet announcing this year's open season, OPM said that the coronavirus pandemic accounted for $1 billion in costs, including testing and treatment, or about 2% of all insurance claims in 2020. Data for 2021 will not be available until June of next year.
The agency noted that the average cost increase for federal workers remains lower than the increases seen by workers at other large employers. The average premium increase at CalPERS, the state of California’s insurance purchaser for public workers, will be 4.8% overall next year, including employee and employer contributions, while PricewaterhouseCoopers’ Health Research Institute has projected a 6.5% increase in medical costs next year.
OPM said it has worked with insurers this year to improve coverage of medical foods and iatrogenic infertility, and it continues to work on improving telehealth, mental health and substance abuse treatment offerings.
“Quality health insurance has never been more important, and OPM is ensuring all eligible enrollees have the information they need to make informed decisions about their coverage,” said OPM Director Kiran Ahuja, in a statement. “The global pandemic underscores the responsibility an employer has to provide their workforce with quality, affordable and dependable health care options. As the largest employer in the United States, the federal government is proud to lead by example with a wide choice of health insurance plans from the FEHB and FEDVIP that deliver the quality coverage every employee deserves.”
More information on FEHBP plan options and OPM’s plan comparison tool is available at the agency’s website.