Participants in the Federal Employees Health Benefits Program (FEHBP) will pay more toward their premiums in 2021, though the increases aren’t quite as high as the previous year.
Federal employees and retirees will pay, on average, 4.9% more toward their health premiums next year.
The Office of Personnel Management on Wednesday announced annual premium rates for 2021 ahead of this year’s upcoming open season, which runs from Nov. 9 through Dec. 14. Participants in the FEHBP will have an opportunity to make changes to their health, dental and vision plans ahead of the upcoming benefit year, which begins Jan. 1.
Overall, FEHBP premiums will go up an average of 3.6% next year. The government will contribute 3% more toward participants’ health premiums in 2021.
There are many factors that impact OPM’s annual premium rate increases. In a typical year, things like prescription drug and pharmacy usage, chronic illnesses and advances in medical technology can sway health insurance costs in one direction or another.
But this year was “even more complicated than usual,” Laurie Bodenheimer, acting director of OPM healthcare and insurance, told reporters Wednesday morning.
“COVID did have a significant impact, but not in the way perhaps many people think,” she said. “There was a period of time from mid-March through the end of May where a lot of people deferred certain types of care, routine care, anything that wasn’t absolutely necessary. Elective surgeries were often deferred or delayed related to the COVID pandemic.”
Health care utilization and costs were on the rise before the pandemic hit earlier this year, and it has jumped up again since June.
“COVID did have an impact on reducing the premium increase,” Bodenheimer said. “Said differently, but for COVID, the premium increase would likely have been a fair amount higher.”
Though health care usage may have dropped off significantly, prescription drug usage stayed flat or rose in some cases during the height of the pandemic, OPM said, which adds another layer of complexity to the annual premium calculations.
“We try to anticipate what the trend will be for next year,” Bodenheimer said. “The pandemic is still in full force.”
Still, OPM said its premium increases for 2021 fall below projected and reported premium hikes from other large public and private sector employers, which range from 4% to 10%.
On average, federal employees will pay $7.89 more toward their health premiums per biweekly pay period next year.
Again, these are averages; individual health insurance plans will vary, meaning participants may pay more than the average premium increase, or they may pay less depending on the options they choose.
Bodenheimer described the premium rates OPM announced Wednesday as a “snapshot in time.”
“These numbers are based on premiums for next year, along with what plans people are enrolled in right now,” she said. “It’s well known that during the open season people do choose different plans and coverage based on benefits or premiums or whatever is important to them. The end result is often that the overall premium increase is less than what we’re announcing today.”
Specifically, non-postal FEHBP participants will pay in 2021:
Self-only coverage: $4.67 more per biweekly pay period,
Self-plus-one coverage: $10.90 more per biweekly pay period,
Family coverage: $10.94 more per biweekly pay period.
A formula set under law determines the shares the government and the enrollee pay toward FEHBP 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.
The upcoming year’s premium increases don’t quite match the hike most federal employees experienced last year, when participants paid, on average, 5.6% more for their health care in 2020.
But the 2021 premium increases aren’t nearly as low as they were for 2019, when participants paid 1.5% more toward their health insurance. It was the smallest overall rate increase since 1996 and the lowest premium hike for participants since 1995.
Still, federal employee unions and organizations were quick to criticize Wednesday’s premium announcement.
The National Active and Retired Federal Employees (NARFE) Association called the 4.9% premium bump a “modest increase.”
“It remains hard to swallow — particularly with the specter of a paltry 1% federal pay increase looming for 2021,” Ken Thomas, NARFE national president, said in a statement.
The National Treasury Employees Union said higher FEHB premiums were a blow to federal workers, especially considering the ongoing pandemic and the president’s payroll tax deferral.
“The average increase in health insurance premiums announced by OPM today means less take-home pay for federal workers, many of whom will also spend the first four months of 2021 paying double Social Security taxes because of the mandated deferral of those taxes this year,” Tony Reardon, NTEU national president, said Wednesday.
New dental and vision options available for 2021
Unlike previous years, OPM did not provide an average increase for premiums under the Federal Employees Dental and Vision Insurance Program (FEDVIP).
OPM is obligated by law to recompete the FEDVIP contract every seven years, and it recently added a few new options under a new award.
Under the new contract, which begins in January, FEDVIP participants will have access to 12 total dental insurance companies instead of the previous 10, as well as five vision insurance companies compared to the previous four.
All dental and vision insurance carriers will remain with the FEDVIP for 2021, so OPM doesn’t anticipate any major service disruptions with its new contract.
“The vast majority of current FEDVIP enrollees will experience little or no change in premiums, even with all of those enhancements,” Bodenheimer said.
Still, OPM is encouraging participants to check in with their current providers and review their rates. Participants can shop around and explore their dental and vision options on Benefeds.com. Plan brochures will be available Thursday.
More Medicare part B reimbursement options
Participants in the FEHBP will have 276 health plan choices, slightly fewer than last year’s total of 279 options. Not all participants, of course, will have access to all plan options, because some are only available to federal employees and retirees in certain geographic areas.
Of that total, participants have access to 18 fee-for-service plan choices that are open to all for 2021.
The FEHBP will offer six new plan options in 2021, which include the United Health Care Advantage plan. This is a brand new plan for the FEHBP, and it’s available to participants in the contiguous United States and the District of Columbia, OPM said.
In addition, federal retirees will notice a few more plans are offering partial Medicare part B reimbursement options. A total of 25 FEHB plans offer some type of reimbursement in 2021, up from last year’s total of 18, OPM said.
Participants should use OPM’s FEHB plan comparison tool, which has an updated look this year, to review which choices offer a Medicare part B incentive, Bodenheimer said.
More insight into ‘surprise bills,’ COVID-19 response
Beyond the new health, dental and vision options for next year, OPM is urging FEHB carriers to continue their efforts to make health care costs more transparent.
Carriers were on deadline as of this year to include more tools to make those costs known to their participants, Bodenheimer said. And by 2022, all carriers are expected to publicly post the network contracting status of certain specialty physicians, physician groups and urgent care services.
“These changes have been enacted to help eliminate surprise billing and will certainly help enrollees and consumers determine whether a provider is in network or out of network to aid in reducing episodes of surprise billing,” Bodenheimer said.
OPM is also continuing to monitor the impacts of the COVID-19 pandemic on the health care industry and the FEHBP.
FEHB carriers must waive cost-sharing and prior authorization requirements for any COVID-19 diagnostic or antibody testing, Bodenheimer said.
In addition, OPM has encouraged FEHB carriers to increase coverage for telehealth services, which have become more popular during the pandemic, Bodenheimer said.
“Increasing telehealth coverage under FEHB has been a focus for us for at least the past four years, and perhaps a side effect of the pandemic is that both enrollees and providers have significantly increased and have become comfortable with that,” she said.
Once an approved vaccine for COVID-19 becomes available, all FEHB carriers must cover it without any cost-sharing in less than 15 business days.