Premiums in the Federal Employees Health Benefits Program will rise an average of about 4 percent for 2014, the third straight year of increases in that range, the Office of Personnel Management announced Tuesday.
“There are no significant benefit changes for 2014,” Jonathan Foley, OPM’s director of planning and policy analysis, said in a briefing with reporters. “Our negotiations [with insurance companies] were focused on keeping premiums as low as possible and providing choices for enrollees.”
The annual open season for federal employees and retirees to change coverage or for employees to initially enroll will run from Nov. 11 through Dec. 9. In the Washington area, there will be 28 available plans.
Premiums in the largest plan, the Blue Cross-Blue Shield standard option, will fall below that average, increasing by 2.2 percent for self-only coverage and 2.4 percent for self-and-family coverage. About three-fifths of enrollees are in that option or another Blue Cross offering.
About 8.2 million people are covered by FEHBP insurance, about half of them enrollees and the rest family members. The government pays an average of 70 percent of the total premium cost.
The overall average increase for 2014 will be 3.7 percent, but because of the way the cost-sharing formula works, the average enrollee share will increase by 4.4 percent while the government share will rise by 3.3 percent. The U.S. Postal Service pays more toward premiums for its employees because of bargaining provisions that do not apply in other agencies.
Officials said that several factors helped keep costs down, including continued emphasis on wellness programs and an emphasis on generic rather than brand-name prescription drugs. For 2014, plans must increase their benefits for health screenings and counseling for alcohol and tobacco use and must offer health risk assessments.
Another factor is competition: There will be 256 participating plans, 10 more than in 2013, although the large majority are regional plans. Health insurance companies “see this as a valuable market and they’re coming in and that helps keep prices down,” said John O’Brien, OPM director of health care and insurance.
Unlike in some prior years, there will be no significant increase in out of pocket costs such as deductibles, officials said.
They said the three straight years of overall premium increases below 4 percent — which followed a run of average increases above 7 percent in the prior three years — is the longest such stretch dating at least to the 1980s. The increase is below industry estimates for average increases in other large employer plans in 2014 and is in line with the expected rise in a government plan the FEHBP often is benchmarked against, the California state employee health program, they said.
However, National Treasury Employees Union President Colleen M. Kelley said in a statement that “any increase in premiums places an undue burden on federal employees given the freeze on federal pay, unpaid furloughs and now the threat of a government shutdown.”
“With everything else hanging over their heads, federal employees and retirees simply can’t afford this increase in their health insurance premiums,” American Federation of Government Employees President J. David Cox Sr. said in a statement.
The OPM officials said they are “very sensitive” to those factors in their negotiations with health carriers.
The open season also will be the opportunity for enrolling or changing coverage under the separate Federal Dental and Vision Insurance Program, for which the enrollee pays the entire cost. Three new dental plans and one new vision plan are being added, bringing the total number of plans to 10 and four, respectively; dental plan premiums are increasing by about 1 percent on average while vision plan premiums are falling by about the same percentage.
During open season employees also can make elections for 2014 in flexible spending accounts, allowing them to set aside up to $2,500 to pay certain uninsured health-care costs and up to $5,000 for dependent care costs.
While federal employees could voluntarily leave the FEHBP and join the exchange program set to start in 2014 under the Affordable Care Act, or Obamacare, there would be little incentive for them to do that, officials said. Those who did so would lose the employer contribution toward premiums.
The exception is that members of Congress and their personal staffs must leave the FEHBP and get their health coverage through the exchanges. However, OPM has determined that they will be able to keep an equivalent government contribution toward premiums.