Is the Federal Employees Health Benefits Program (FEHBP) a good deal?
Is the premium increase another hit to the shallow pockets of staffers and retirees?
Can feds save money by shopping around?
Yes, yes and yes.
For Walt Francis, an independent health economist who studies FEHBP, Wednesday’s announcement about the program was “almost a ho-um” moment.
No dramatic changes were announced, and that’s a good thing in Francis’s view. He said FEHBP “remains a solid program” that offers enrollees “spectacular savings opportunities.” Francis is the chief author of Checkbook’s annual Guide to Health Plans for Federal Employees & Annuitants.
Health-insurance premiums paid by federal employees and retirees will increase by 6.1 percent in 2018. The overall average premium increase of 4 percent, which includes the share paid by the government and enrollees, “certainly is not out of line” with other health-insurance programs, Francis said. Four percent, however, is about twice the general inflation rate.
Among some of the most popular plans, the increases were less than average and in a few cases, premiums dropped.
“Everybody would rather have a bigger pay increase and a lower premium increase,” he said, adding, “it’s harder for retirees.”
But while the health-insurance program might be a good value, the premium increase represents another hit on federal employees and retirees. Feds on the payroll expect a 1.9 percent pay raise in January, but that could be undercut by the increase in out-of-pocket payments toward retirement, with no increase in benefits, advocated by President Trump and congressional Republicans.
The premium hikes “far eclipse any increase in wages or Social Security payments next year,” said American Federation of Government Employees President J. David Cox Sr. “These rate hikes mean less take-home pay for current and retired federal workers and another year of difficult decisions by many families on how to pay their bills.”
The Office of Personnel Management (OPM) said the premium hike would amount to $9.04 on average per biweekly pay period, while the average pay raise would be $60.50.
Retirees with fixed incomes and greater health problems are particularly concerned. Their annuities and Social Security payments probably will increase by about the same percentage as the employee pay raise.
“This is another year in which the federal community is reminded of the all-too-familiar cycle of low or no pay raises, small or nonexistent cost-of-living adjustments (COLAs) and rising medical bills. Like most Americans, federal employees and retirees are middle-class taxpayers, continuing to feel the pinch on their wallets every day. Years of no or low COLAs and pay raises that lag behind the private sector have created a financial burden on the federal community, increasing the need for meaningful reform,” said Richard G. Thissen, president of the National Active and Retired Federal Employees Association (NARFE).
“The latest rise in FEHB premiums demands that Congress pursue a new formula to calculate COLAs, one that accurately reflects the health-care costs of our nation’s seniors. … This simple solution, rooted in common sense, is just one step in the right direction to help account for the rising cost of FEHB, and all health-care premiums.”
Individuals can shop around and choose health-insurance plans during the Open Season that runs from Nov. 13 through Dec. 11. FEHBP is the nation’s largest employer-sponsored health-insurance program, covering 8.3 million people. While the government pays about 70 percent of health-insurance premiums, on average, its share of the premiums, which is determined by a statutory formula, will increase by about 3.2 percent.
The nearly two-thirds of enrollees covered by a Blue Cross/Blue Shield plan will pay $7.17 more per biweekly pay period next year than last year for self-only coverage; $17.04 more for self plus one other person and $17.72 for self and family coverage, according to OPM. For enrollees with other health-insurance companies, their premiums in those categories will increase by an average of $5.57, $12.55 and $12.17.
The 6.1 percent increase for 2018 is a little lower than the average 6.67 percent hike of the previous 10 years. The high was 11.6 percent in 2010; the low, 3.5 percent in 2012.
OPM said it “encouraged all insurance carriers to thoroughly evaluate their health plan options to find ways to improve affordability, reduce costs, and improve the quality of care and the health of the enrolled population. Negotiations were geared to keep premium increases as low as possible while minimizing changes in out-of-pocket costs, such as for deductibles, co-pays, and coinsurance.”
Average premiums for vision plan coverage will drop by 0.48 percent, while the cost of dental plans will rise by 1.26 percent.
“Open Season is important because these health benefits can help federal employees care for themselves and their families,” OPM Acting Director Kathleen McGettigan said in a statement. “I urge federal employees and retirees to carefully review their health-care needs and to choose wisely among the plans and enrollment options available to them during this enrollment period.”