Pay & Benefits

2021 federal health insurance rates get a moderate increase

Health insurance plans under the Federal Employee Health Benefits Program will see an average 3.6 percent cost increase in 2021, a rate that is lower than the 2020 plan cost increase but more than double the record low rise in 2019.

That cost increase is likely to be split into an average 3 percent uptick for the government’s share of the price and a 4.9 percent increase for employees, though such numbers are not set in stone.

“These numbers are based on premiums for next year along with what plans people are enrolled with right now. It’s well known that during the open season people do choose different plans and coverage, based on benefits or premiums or whatever is important to them, and the end result is often that the overall premium increase is less than what we’re announcing today,” said Laurie Bodenheimer, acting director for healthcare and insurance at OPM, said in an Oct. 14 press call.

“OPM encourages everyone to ensure that they have the right health, dental, vision coverage for themselves and their families, and we would be remiss not to encourage people to consider the money that can be saved on out of pocket medical and dependent care expenses for the year through the FSAFEDS program.”

The cost increase comes in a year when feds still face uncertainty about a potential pay raise in 2021, as Congress did not address the raise in its late-September continuing appropriations bill, and President Donald Trump said in February of this year that he planned to enact a one percent increase. Congress could still mandate a different pay raise in funding legislation that must pass by Dec. 11 of this year.

Retired feds also saw a smaller increase in Social Security cost of living adjustments for 2021 than the year before, and that disparity along with smaller pay bumps has caused federal employee groups to criticize the increasing healthcare costs in relation to those income increases.

“The average increase in health insurance premiums announced by OPM today means less take-home pay for federal workers, many of whom will also spend the first four months of 2021 paying double Social Security taxes because of the mandated deferral of those taxes this year. Retiree budgets will also be stretched by this jump in premiums during a time when health concerns have dramatically increased for older Americans and others who are more vulnerable to the coronavirus,” National Treasury Employees Union National President Tony Reardon said in a statement.

But according to Bodenheimer, the healthcare cost increase could have been far higher, as most large private companies estimated that their costs would increase by four to 10 percent and the COVID pandemic may have had the unexpected outcome of reducing costs, due to many people cancelling or delaying medical appointments and procedures during the pandemic.

For 2021, there will be 276 plan choices available, with 18 of those plans open to all employees, no matter their location. Borchures for those plans will be available on the OPM site in early November.

The 2021 open season will also feature an updated plan comparison tool on the OPM website.

“We have enhanced our plan comparison tool this year with a new look and feel, and with a couple of new features, which includes medical account displays for high deductible health plans and consumer-driven health plans — otherwise known as HDHPs and CDHPs — which can help enrollees shop for their healthcare coverage,” Bodenheimer said.

Insurance providers have also been instructed to improve their transparency tools, both to help employees make informed decisions when selecting a plan and to cut back on surprise billing.

“Beginning in 2021, all plans are required to offer robust cost and quality transparency tools, and this is the culmination of a two-year effort to have carriers meet that goal,” said Bodenheimer.

“We asked carriers that no later than calendar year 2022 — so about 15 months from now — they will be expected to display the network contracting status of selected specialties of physicians, physician groups or categories of services that provide emergent or urgent care services in a hospital setting. These changes have been enacted to help eliminate surprise billing and will certainly help enrollees and consumers to determine whether a provider is in-network or out-of-network to aid in reducing episodes of surprise billing. We understand that people who need urgent care aren’t often thinking about whether their provider is in network, but we would encourage enrollees as part of their planning to look at the hospital that they would most frequently, possibly, utilize based on the physicians that they see.”

Federal employees will see more dental and visions plans available in 2021 — a total of 12 dental and 5 vision options — under a new seven year contract for the Federal Employees Dental and Vision Insurance Program.

“All of the carriers who are part of the current FEDVIP contract will carry over into the new contract period, and those carriers from the prior contract period — or the current one that’s ending in a few months — they did not increase their overall premiums, despite many changes and enhancements to this new FEDVIP contract. The result is the vast majority of current FEDVIP enrollees will experience little or no change in premiums, even with all of those enhancements,” said Bodenheimer.

“However, FEDVIP members should not assume that their rating region and premium rates are the same in 2021.”

Federal annuitants are also especially encouraged to evaluate their FEHB plan choices, as seven new plan options offer reimbursement for Medicare Part B, in addition to the existing 18 plans that do so.

“There are FEHB plan choices that offer some type of Medicare Part B incentive, either through copay, coinsurance or deductible waivers or Part B premium reimbursements. Our plan comparison tool makes this information more readily available to enrollees and identifies those plan choices that offer a Medicare Part B incentive,” said Bodenheimer.

“There are several plans that do offer close to full reimbursement of Part B premiums. I would encourage people to look at the plan comparison tool with that as filters.”

Feds are also encouraged to take part in the FSAFEDS program, which allows employees to set aside pre-tax earnings for later use in medical payments. In 2021, feds will be allowed to carry over $550 in unused amounts into the next year.

Open season for 2021 FEHB coverage will run from Nov. 9 to Dec. 14 this year.

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