September 27, 2011
Tim Kauffman
[email protected]

Federal Health Care Rates Increase as Wages Stay Frozen

Categories: Benefits, Retirees

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WASHINGTON – Health care premiums under the Federal Employees Health Benefits Program will increase an average of 3.8 percent in January – a significant hike for federal employees and retirees who are enduring frozen wages and cost-of-living adjustments, the head of the largest federal employee union said today.

“This rate hike is going to hit federal employees and retirees at a time when they can least afford it,” American Federation of Government Employees National President John Gage said. “On top of that, they’re being asked to pay more for fewer options and no new benefits.”

Six health plans will be pulling out of the FEHBP entirely, while another two will be terminating one of their plan options. One of the plans pulling out is the popular Anthem Blue Cross in California, which has more than 11,000 enrollees.

No new health plans are being added in 2012, and no significant benefit changes are being offered, the Office of Personnel Management said in announcing the rate hike today.

The overall average premium hike masks larger increases that employees and retirees in some plans will face. For instance, enrollee premiums under the Blue Cross and Blue Shield Association’s basic option – the second most popular plan – will increase 7.5 percent in 2012, on par with this year’s overall premium increase.

One bright spot is that, compared to last year, the government is taking on a slightly larger share of premiums for the most popular plan: the Blue Cross standard option, which covers about 44 percent of all enrollees. For 2012, the government will pay 68.5 percent of the premiums for individuals in the Blue Cross standard plan, up from 67.7 percent, and 67.6 percent of the premium for families, up from 67.0 percent.

“Over the last decade, the share of FEHBP premiums paid by the government has been falling, so this shift in direction is a good first step. But we need to get back to the 72 percent threshold so that all federal employees will be able to afford to participate in this program,” Gage said.

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