On average, participants in the Federal Employee Health Benefit Program will pay 4.4 percent more on their premiums in 2017.
The Office of Personnel Management announced the rate changes Wednesday morning ahead of the 2016 open season, which runs Nov. 14 through Dec. 12.
The increase is slightly lower than what federal employees and annuitants saw this past year, when FEHBP increases went up 6.4 percent, the largest rate change in recent memory.
“We are at the low end of what is being experienced around the country,” John O’Brien, OPM director of health care and insurance, said during a press conference with reporters. “Probably the two principle factors that we would highlight are pharmacy, and that’s mostly because our program is so sensitive to pharmacy costs. We are unusual because 25 percent of our overall spend is in pharmacy, so any change in pharmacy has a significant impact on us. And the federal workforce [has] aged slightly, so a slightly older workforce than we had a year will also add some costs as well.”
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Federal employees on average will contribute 6.2 percent more to their premiums this year, while the government share will increase 3.7 percent.
“This is a function of the contribution formula, where by for folks who are opting into higher plans when they pay it, they pay more of the costs than if they were in some of the lower cost options,” O’Brien said. “The changes in the enrollee share will vary by plan to plan.”
OPM said participants will pay on average per enrollment option:
Premiums will also rise 1.9 percent for federal employees enrolled in the FEHBP dental plan, while vision premiums will increase by 6.3 percent for 2017.
“That is mostly driven by a single plan that had been having basically flat premiums for a number of years and has adjusted its premiums after,” O’Brien said of the bump in vision plan premiums.
Though the 2017 premium increases are not as high as 2016’s announcement, many federal employee unions and organizations say 4.4 percent is unacceptable.
“While the increase in FEHBP premiums for 2017 are relatively modest, they add to already skyrocketing costs incurred by federal retirees,” Richard Thissen, president of the National Active and Retired Federal Employees association said in a statement. “Hundreds of thousands of federal employees and retirees are facing an average increase of 83 percent in their Federal Long Term Care Insurance Program premiums. And many federal retirees also likely will face a disproportionate increase in their Medicare Part B premiums — of up to 22 percent or more — in 2017. This perfect storm of rising health insurance costs will not only decrease federal retirees’ purchasing power, it will impact their quality of life.”
Both the American Federation of Government Employees, as well as the National Treasury Employees Union, had a similar stance.
“FEHBP benefits play an essential role for federal employees and retirees but its ever-rising costs are troubling,” NTEU National President Tony Reardon said. “We stand ready to work with a new president and the next Congress on various reforms.”
Retirees make up roughly half of the 4.2 million participants in FEHBP, OPM said.
For the first time, all FEHB plans are required to cover applied behavior analysis (ABA) benefits for children on the autism spectrum, a change that OPM announced during its annual carrier conference in March.
Beyond that change, there are no other significant changes to the FEHB program.
Last year’s open season was a busy one, as OPM enrolled 540,000 people into its new Self Plus One program.
Many federal employees and retirees complained of long wait times on the OPM hotline and website.
“We would expect it to not be quite as intense. It was pretty intense leading up to that to get ready for all the changes that needed to happen across the government in terms of making the systems respond to Self Plus One,” O’Brien said. “In general, the volumes that were able to be handled, we seemed to get through that all right. … We’re hoping to be more successful than we were last year.”
The agency said it also hopes more federal employees and their families take a look at their options and consider the Self Plus One program.
“In our estimates, we thought that there were roughly a million people who could opt for Self Plus One, so there are still a number of folks out there who would be slightly better off if they enrolled for Self Plus One,” O’Brien said.
Other FEHBP participants also complained that the Self Plus One option wasn’t as inexpensive as they might have thought.
“We tend to skew older, and some of our people between retirement from federal service and for eligibility for Medicare, those are expensive folks,” O’Brien said. And the family size in general wasn’t that huge. It wasn’t like the average family size was six, and then we added the Self Plus One option. The family size was actually slightly over three. So the Self Plus One reflects the cost of that population, and it’s just dramatically lower than the cost of Family.”
|Feb 26, 2021||Close||Change||YTD*|
Closing price updated at approx 6pm ET each business day. More at tsp.gov
* YTD data is updated on the last day of the month.