Premiums to Rise 7.3 Percent in Federal Employees Health Program

Health insurance premiums for the program that covers federal employees and retirees will increase an average of 7.3 percent next year, according to the U.S. Office of Personnel Management.

The increase for the Federal Employee Health Benefits Program—the nation’s largest group plan that covers about 8 million people—is about the same as this year.

Like the private sector, the federal program also will expand coverage next year to meet mandates in the new health reform law. Those enhancements will boost premiums an average of 1.7 percent and are included in the overall 7.3 percent increase, the agency says. That is in line with increases that private sector employers are expecting as a result of the health reform law.

The requirements include extending coverage to employees’ adult children up to age 26 and full coverage of preventive care and services.

The average 7.3 percent premium increase for federal employees, though, is somewhat less than increases private sector employers are expecting. A Hewitt Associates Inc. analysis has projected an 8.8 percent average increase in 2011 based on a study of health plans sponsored by 325 large employers.

An Office of Personnel Management question-and-answer sheet says the federal program “uses private-market competition and consumer choice to provide comprehensive benefits at an affordable cost to enrollees and the government.” In addition, the agency said, “We use firm negotiations with health carriers to keep cost increases as reasonable as possible.”

Next year, just over 200 health plans will be offered to federal employees and retirees, about the same as this year. Many plans, though, operate only in specific geographic areas.

Federal employees, who can make their 2011 health plan selections between Nov. 8 and Dec. 13, on average pay 30 percent of the premium, while the federal government picks up the remaining 70 percent.  

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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