Participants in the Federal Employees Health Benefits (FEHB) Program looking for another year of record low premium increases will likely be disappointed in 2020.
Federal employees and retirees will pay, on average, 5.6% more toward their health premiums next year.
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The Office of Personnel Management on Wednesday announced premium rates for 2020 ahead of the upcoming open season, which will run from Nov. 11 through Dec. 9. Participants in the FEHB will have an opportunity to make changes to their health, dental and vision plans ahead of the upcoming benefit year, which begins Jan. 1.
The 2020 rates may come as a stark contrast to the previous year, when overall premiums went up 1.3% in 2019. It was the smallest overall rate increase since 1996 and the lowest premium hike for participants since 1995.
Rates were kept low, in part, because Congress waived the Affordable Care Act’s health insurance providers fee last year.
But this year that fee wasn’t suspended.
“We estimate that the fee has led to an increase of approximately 2% of our premium overall, which is in line with industry-wide estimates of 2.2%,” Laurie Bodenheimer, acting director of OPM healthcare and insurance, told reporters Wednesday morning.
Congress has twice suspended this fee in 2017 and in 2019, which OPM said largely contributed to last year’s historically low premium rate increases. If Congress had chosen to waive the providers fee again for 2020, the agency estimates premium increases would have been lower.
In addition, spending on specialty drugs and pharmaceuticals is on the rise, which is also contributing to higher healthcare insurance costs, OPM said.
Overall, FEHB premiums will go up an average of 4% next year. The government will contribute 3.2% more toward participants’ health premiums in 2020.
Participants will pay, on average, more than 4% more toward their premiums in 2020 compared to the previous year’s bump. The 2020 rates still, however, fall short of past premium hikes in 2016 and 2017, for example.
(Source: Office of Personnel Management)
A formula set under law determines the share the government and the enrollee pays toward FEHB premiums each year. Government pays about 75% of a participant’s premium up to a certain cap. The cap equals 72% of the weighted average of the previous year’s premiums.
Specifically, non-postal FEHB enrollees will pay in 2020:
The number of FEHB participants have slowly crept upward in recent years, according to OPM. About 749,000 FEHB participants are enrolled in a self-plus-one plan to date, up slightly from the 710,000 people enrolled in a plan in 2018, 643,000 in 2017 and 542,000 during in 2016.
OPM said it still sees an opportunity for more participants enrolled in a family plan to make the switch to self-plus-one, though it acknowledged some plans could be more expensive than traditional family plans.
“Many of our self-plus-one enrollments tend to be people over 40, as opposed to what may happen in the private sector,” Bodenheimer said. “They more than likely have higher pharmacy utilization and higher medical spend overall.”
According to OPM, the 2020 increases are comparable with projected and reported premium hikes from other large public and private sector employers, which range from 4.5-to-6.5%.
The latest premium rates are projections based on the previous year’s enrollment and could change as participants change plans to find less expensive options, Bodenheimer said.
The Federal Employees Dental and Vision Insurance Program (FEDVIP) will also see increases. Average premiums for dental plans will go up 5.6%, while vision plans will see a 1.5% average increase.
“A number of our dental carriers are subject to the healthcare insurance providers fee,” Bodenheimer said. “Many of them increase in utilization of services subsequent to adding the TRICARE dental retiree program enrollees into FEDVIP.”
FEDVIP saw a surge of participants, about 1 million more of them last year, due to changes in the TRICARE dental program, Bodenheimer said.
Wednesday’s premium rate announcement quickly drew the ire of federal employee unions.
“The Trump administration has failed to do its job of providing affordable health insurance to its workforce,” American Federation of Government Employees National President J. David Cox said in a statement. “Shifting more health-care costs onto federal workers and retirees will force growing numbers to choose between keeping their health insurance or paying for rent and other costs of daily living.”
Some FEHB enrollees will see smaller premium hikes, while others will notice much larger increases depending on the type of their current plan. Some local plans, for example, are expected to go up between 7.9-and-14% percent in 2020.’
The popular Blue Cross and Blue Shield nationwide benefit plans will see varying increases in 2020.
“These spikes in health insurance premiums are going to hurt the paychecks of the federal workforce,” Tony Reardon, president of the National Treasury Employees Union, said in a statement. “Federal employees are dismayed that they will have to absorb this cost increase while many of them are still recovering from a 35-day government shutdown and fearing yet another potential shutdown next month.”
Participants in the FEHB will have a few more plan options this year.
The FEHBP will offer 279 health plan options in 2020, 14 more than the previous year, OPM said. Not all participants, of course, will have access to all plan options, because some plans are only available to federal employees and retirees in certain geographic areas.
Two plans are leaving the program in 2020, a change that will impact about 6,300 participants, OPM said.
“The carrier must notify the enrollee that they’re ending participation,” Bodenheimer said. “The enrollee has the option to choose any plan that they want that’s available to them in their geographic area. If for whatever reason they make no choice, we will automatically enroll them in the lowest cost nationwide fee-for-service plan that has no fee.”
The FEHBP added 18 new plan options for the upcoming benefit season and include two new plans under OPM’s indemnity benefit plan contract, which hasn’t been utilized in nearly 30 years.
OPM has selected the Government Employees Health Association (GEHA) as the exclusive carrier for these plans. They’re national, “fee-for-service” plans that all FEHB participants will be able to access.
In addition, FEHB carriers are increasingly adding more tools to help participants better understand the costs and benefits of each health plan. More than 80% of FEHB plans offer some form of transparency tool for enrollees. All carriers have until next year to add these tools under OPM guidelines, Bodenheimer said.
Many carriers have also expanded mental health and substance abuse disorder benefits in 2020. Telehealth services for mental health and other substance abuse disorders are growing as well, Bodenheimer said.
OPM data shows a declining trend in opioid usage among FEHB participants, Bodenheimer said. Both the total number of opioid prescriptions and the quantity dispensed per prescription are down.
“Increasingly carriers are promoting and offering evidence-based pain management through coverage of and access to non-pharmacological therapies and non-opioid medications or devices used to treat pain,” she said. “Carriers have also put in place many processes and programs to reduce and prevent opioid misuse.”
OPM has added a few new features to its plan comparison tool this year, which FEHB participants can find here. The site will be updated with information for 2020 starting the first full week of November.
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