Participants in the Federal Employees Health Benefits (FEHB) program will again see a sizable increase in insurance costs in 2024, although not as much as in the previous year.
Starting in January, federal employees and retirees will pay an average of 7.7 percent more for their health insurance premiums, according to Office of Personnel Management data released Wednesday.
The announcement of the new premium rates came ahead of the scheduled start of the open enrollment season, which this year will run from Nov. 13 through Dec. 11. During the open season, FEHB members can make changes to their medical, dental and vision plans for the upcoming benefit year, which begins Jan. 1.
OPM argues that the FEHB program is a market-based program based on choice and competition, and that the 2024 premium rate increases are generally consistent with rates in the commercial market.
By comparison, CalPERS, which buys health insurance for California's public employees, announced an even larger increase in premium rates for 2024 - an average increase of 10.77%. CalPERS is the second-largest purchaser of public insurance in the country, behind only the federal government.
OPM offers more information on premium rates for FEHB participants on its website.
It should be noted that the 7.7% increase is an average, so of course some participants may end up paying a little more or a little less in premiums, depending on their plans and enrollments.
Specifically, in 2024, non-postal FEHB program participants will pay an average of:
- Self-insurance: $8.05 more per two-week pay period.
- Self-insurance plus one: $16.73 more for a two-week payment period.
- Family coverage: $21.16 more per two-week pay period.
Overall, premiums for nonpostal employees and annuitants enrolled in FEHB would increase by 5.8% when the average cost-sharing increase for both participants and the government is taken into account. In 2024, the government would contribute 5 percent more to FEHB.
The announcement came after President Joe Biden formally scheduled a 5.2 percent pay raise for most civilian federal employees in 2024.
A statutory formula determines the allocation of participant and government contributions to FEHB premiums. The government covers about 75% of the FEHB participant's premiums, but only up to a certain limit. This limit is 72% of the weighted average of the previous year's premiums.
FEHB premium rates change every year, but they inevitably increase to one degree or another. The upcoming 7.7% increase in 2024 is slightly lower than the 8.7% jump that FEHB members saw in 2023.
However, the premium increases in 2024 are still significantly higher than the 2019 rates, when participants paid just 1.5% more for health insurance. This was the smallest rate increase since 1996 and the lowest premium increase for participants since 1995.
"While enrollees may find some relief that the 2024 raises are more modest than last year's cost increases are unlikely to be applauded," William Shackelford, national president of the National Association of Retired Federal Employees (NARFE), said in a statement. "Every worker or retiree's situation is different, and program participants should be open to benchmarking. One of the most valuable features of the FEHB program is the wide range of plan options."
Doreen Greenwald, national president of the National Treasury Employees Union (NTEU), also pointed out that OPM's announcement was ill-timed.
"Federal employees, like all Americans, are constantly facing rising health insurance costs, but today's announcement is especially hard to stomach on the eve of a potentially catastrophic government shutdown," Greenwald said in a statement.
If the government shutdown ends, FEHB program participants will be able to participate in the open season as usual, OPM said. Health insurance coverage under the FEHB program also continues during the shutdown, but premium payments may be suspended until the shutdown ends. Upon termination, participants will be required to pay the premiums assessed during the work suspension.
Participants have 158 options for the 2024 plan
In 2024, FEHB enrollees will have a total of 158 plan options offered by 68 health plans. This is much less than the 271 plan options this year.
The 42% decrease in plan options is primarily due to the withdrawal of health carrier Humana from the FEHB program. Humana will exit the program within the next two years.
"We are also disappointed that the number of plan options is down from last year, but we encourage our members to do their research and choose the plan that best meets the needs of themselves and their families," Greenwald said.
While there are a total of 158 options, not every participant will have access to all plan options - some are only for federal employees and retirees in certain geographic areas.
Among these 158 options, there are 18 fee-for-service plans that are available nationwide.
Participants can use the FEHB plan comparison tool on OPM's website to compare all the different plan options.
Coverage and eligibility changes will occur in 2024
Beginning in 2024, military and Active Guard Reserve members will also be eligible to open a Dependent Care Flexible Spending Account (DCFSA). These accounts allow members to make pre-tax contributions for certain dependent care services such as preschool, summer day camps, before and after school programs, child or adult day care.
DOD estimates that the expansion of the OPM program will result in about 400,000 servicemembers becoming eligible for the benefit.
The expansion of the program is a direct result of a sweeping executive order that Biden signed in June aimed at increasing hiring of military spouses and veterans by agencies.
In addition, OPM said FEHB carriers will begin offering expanded obesity drug coverage, low-cost or free telemedicine options for mental health and substance use disorder services, and expanded gender-affirming care for transgender and gender diverse people.
Coverage and service options for prenatal and postpartum care such as childbirth education classes, group prenatal care, home health care during pregnancy and postpartum, and management of high-risk pregnancies will also be expanded.
And FEHB enrollees will get more coverage for infertility-related procedures. Starting in 2024, OPM requires all FEHB carriers to cover at least two forms of in vitro fertilization and related drugs, and at least three cycles of in vitro fertilization (IVF)-related drugs per year.
Rates for dental and medical care for the next year
Under the Federal Employees Dental and Vision Insurance Program (FEDVIP), the average increase in premium rates in 2024 will be relatively small.
Premiums for FEDVIP dental plans will increase by an average of 1.4 percent and vision plans by 1.1 percent, OPM said.
There are a total of 23 dental plans, including 14 nationwide options from seven carriers.
In 2024, participants will also be able to choose from 10 nationwide vision plans from five different carriers.
FEDVIP currently has about 5.4 million members and about 7.3 million covered members.
But in July, OPM expanded FEDVIP eligibility to tens of thousands of temporary, part-time, seasonal and U.S. Postal Service (USPS) employees. It remains unclear how many feds who become eligible for FEDVIP will actually enroll in the program and what impact their participation will have on the program.
"There may be significant pent-up demand for services, at least initially, because these individuals likely did not have dental or vision insurance," OPM said in a final rule published earlier this year.
Participants can get more information about FEDVIP plans ahead of the open season at Benefeds.com.
As usual, FEHB participants will also have to re-enroll in the Federal Flexible Spending Account Program (FSAFEDS) to set aside pre-tax funds for medical expenses for themselves and their dependents.