FEHBP Dodges Risk Pool Bullet

It appears that your federal health plan just dodged a major bullet. Senior Correspondent Mike Causey says it could have boosted premiums big-time for older, le...

For most of its nearly 9 million participants, the Federal Employee Health Benefits Program is the industry-equivalent of gold while you are young, healthy and still working.

Once they retire, or are ravaged by age or bad health (check the back seat of your carpool or look around the office) the “golden” FEHBP turns to even more valuable platinum.


  • As people get older (like 55-plus) and when they retire, their health care costs tend to go up. A lot. But feds heading for senior Valhalla aboard the FEHBP pay the same premiums as their younger, healthier colleagues.
  • After retirement, the government continues to pay the lion’s share (slightly more than 70 percent) of the total FEHBP premium.
  • Unlike many private sector health plans, retirees cannot be denied coverage by any of the dozens of FEHBP plans available to them nationally (like Blue Cross or GEHA) or locally, through an HMO. They can’t be turned down because of age, health or pre-existing medical conditions. Or for ANY other reason.
  • Retirees (an increasingly large and expensive percentage of those covered by the FEHBP) have never been put into a separate risk pool, like many private plans, because they are older and use more expensive services more often.

Separate risk pools for active vs. retired feds would produce lower premiums for younger workers, and mean higher premiums for those in the heavy-user pool. That would be great news for a 30-year old yoga-practicing non-smoking vegan. But separate risk pools would be a nightmare when that individual got older and needed more health care. Which happens!

The who’s-in-the-risk pool factor was one of the wild cards in the President’s health care reform plan that worried groups representing feds and retirees. Most federal unions enthusiastically endorsed reform even though, like most of us, few understood what was in the massive, complicated fast-moving and fast-changing compromise that finally became law.

But the risk pool issue has apparently been settled.

The National Active and Retired Federal Employees says the OPM proposal, and assurances from OPM Director John Berry sound good.

NARFE President Margaret Baptiste said a new proposal (in the form of a “Call Letter” from the OPM) would test a sub-option that would pay some or all of the Medicare Part B premiums for eligible federal retirees. Equally important, it does NOT call for separate risk pools in the FEHBP with age-based/health-based premiums.

Baptiste said that if the Medicare sub-action program works, it could save some retirees money and help control costs to the FEHBP for both active workers and annuitants.

Baptiste said OPM’s “Call Letter” clarifies that the “sub-option” will not “open the door for separately rated annuitant plans, which we believe would result in retirees and survivors paying substantially higher premiums than other FEHBP enrollees. NARFE would oppose the creation of any FEHBP plan for annuitants with premiums based on their age and health costs.”

To read NARFE’s press release titled “NARFE Lauds OPM for Consultation on New Voluntary Annuitant FEHBP Option “, click here.

Are You Smarter Than A Boomer?

So what’s next, if anything, for Baby Boomers in and out of government? Is their experience appreciated, are they still desirable employees to Uncle Sam and when seeking a second career? Today at 10 a.m. on For Your Benefit, Susan Samakow talks about the boomers. She’s a certified Business & Life Coach and Trainer. She will join regulars Tammy Flanagan and Ann Vincent. You can listen live at www.federalnewsradio.com or in the DC area at WFED 1500 AM.

To reach me: mcausey@federalnewsradio.com

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