The period of record-low federal health insurance premium increases has come to an end, as the Office of Management and Budget announced Oct. 2 that federal health insurance premiums would increase by an average of four percent for 2020.
Feds saw their lowest rate increase in two decades for 2019, with an anticipated average 1.3 percent bump that year. According to Laurie Bodenheimer, acting director of OPM’s Healthcare and Insurance Office, the actual average increase came out to about 0.42 percent, as employees generally moved to cheaper plans and lowered the overall total.
“Our increases are based on current enrollment, and so these percentages may change after open season as people change plans to seek lower premiums,” said Bodenheimer on an Oct. 2 call with reporters.
For 2020, the government will pay an average of 70 percent of healthcare costs for those on the plans, and their increase will average 3.2 percent, compared to enrollee’s 5.6 percent increase.
OPM officials attributed the higher increase on 2020 to the addition of the IRS’s Health Insurance Providers Fee, which was waived for 2019.
“Absent the fee this year, I think we’d be in that ballpark again,” an OPM official who spoke on background said.
Not all FEHB carriers are subject to the fee, according to Bodenheimer, as several of the nationwide carriers are considered a voluntary employees’ beneficiary organization and are therefore exempt.
But the American Federation of Government Employees argues that the higher premium increase for enrollees when compared with the government increase indicates an attempt to shift costs to employees to save the government money. The union also decried a new Transportation Security Agency policy that will increase premiums for part-ime officers hired after Oct. 1.
“The Trump administration has failed to do its job of providing affordable health insurance to its workforce. Shifting more health-care costs onto federal workers and retirees will force growing numbers to choose between keeping their health insurance or paying for rent and other costs of daily living,” AFGE National President J. David Cox Sr. said.
“Earlier this year, TSA employees demonstrated their loyalty to this country by showing up for work unpaid for 35 consecutive days during the longest ever government shutdown — keeping the flying public safe while their own financial security was in jeopardy. And this is how this administration repays them — by cutting such a critical component of their meager compensation.”
FEHB will offer a total of 279 health plan options, with 18 of those options offered nationwide to all employees. The actual number of options available to each individual employee varies by geographic location.
Two of those nationwide plans are new for 2020, as OPM was able to award a contract that had been vacant for several decades to fill its statutorily authorized indemnity plan category.
“[Indemnity] is a term that describes a health plan more common in the past, where you could go to any provider — be it hospital, doctor, whatever — typically the plan would reimburse you directly and then you would pay the provider,” said Bodenheimer.
“It is an outdated term, but because it is in our statute it is one that we are required to use.”
The plan is effectively the same as a fee for service plan today, and the significance of the new indemnity plans has more to do with the fact that there are a limited number of nationwide statutorily authorized slots available in the federal government, and contracting the indemnity plan fills a slot that is otherwise difficult to offer.
For 2020, over 80 percent of carriers will also be offering transparency tools to enable enrollees to get a better picture of what their plan covers and the related costs. OPM has required that all FEHB plans offer such tools by 2021.
Two plans dropped out of the FEHB program for 2020, impacting approximately 6,300 enrollees. Those plans are required to notify their enrollees that they will not be covered for 2020, and feds that do not actively choose a new plan for next year will be automatically enrolled in the lowest-cost, nationwide fee for service plan that has no fee, which would be the GEHA Elevate plan in 2020.
For U.S. Postal Service employees, the premium increases will be on average slightly higher than those for other federal employees, with an average 4.4 percent higher premium cost. Enrollee premium costs will increase by 6.5 percent while the government share will increase by 3.6 percent.
Vision and dental plans under the Federal Employees Dental and Vision Program will also see an average increase in 2020 at 1.5 percent and 5.6 percent respectively.
“Many of [the dental plans] last year experienced an increased utilization of services subsequent to adding the TRICARE dental retiree enrollees into FEDVIP,” said Bodenheimer. “FEDVIP last year increased enrollment by over one million enrollments.”
According to Bodenheimer, approximately five to six percent of FEHB enrollees choose to change plans each year, though they “wish it was higher” because employees may be missing out on savings or better coverage by exploring their options.
To encourage feds to explore their options, OPM enhanced its plan comparison tool for 2020 to include a medical account display for its high-deductible plans and consumer-driven health plans, which will be available in the first week in November.
Open season for 2020 plans runs from Nov. 11 to Dec. 9, 2019.