With some 4.1 million enrollees and a similar number of covered family members, the federal health program is the largest employer-sponsored health insurance program in the country. Almost all federal employees are eligible, as are federal retirees if they were covered for at least the five years before retirement and they remain enrolled continuously.
For 2021, the program will offer 276 plans, three fewer than currently, 254 of which are available only regionally, the rest nationally. Enrollees in the Washington area will have the choice of 20 regional plans in addition to the national plans.
The government pays about 70 percent of premiums on average for retirees as well as for most federal employees. The exception is that the U.S. Postal Service pays more toward premiums for its employees under union contracts.
Because of the way the premium-sharing formula operates, the average increase for enrollees of 4.9 percent exceeds the 3 percent average increase in the government share. The enrollee average increase was 5.6 percent for 2020 and was in the 6 to 7 percent range in recent prior years, with the exception of a 1.5 percent rise for 2019.
Those figures are based on current enrollment patterns; during the annual open season for electing coverage for the following year—this year, Nov. 9 to Dec.14—enrollees typically shift overall to lower-premium plans.
The main drivers of increases continue to be prescription drug costs, overall health-care usage rates and higher costs of deploying new medical equipment and techniques, Laurie Bodenheimer, OPM acting director for healthcare and insurance, said in a conference call with reporters.
“Covid did have a significant impact, but not the way perhaps that many people think,” she said.
She said that in the March to May period, health-care claims fell as many enrollees deferred some care such as elective surgery, but before and after that time “utilization and costs were higher than in prior years.”
“So covid did have an impact on reducing the premium increase, or said differently, but for covid the premium increase would likely have been a fair amount higher,” she said.
Bodenheimer said that while there will be no new major benefit program-wide for 2021, several cost-control initiatives will continue. Those include reducing prescription drug costs overall; limiting prescriptions of opioids and supporting treatment and recovery for those addicted; helping enrollees avoid surprise billing from using out of network providers; providing financial incentives for retirees to also enroll in Medicare; and encouraging telehealth.
“Perhaps a side effect of the pandemic is that both enrollees and providers have significantly increased their use of telehealth services and have become comfortable with that and so I would expect that trend to continue,” Bodenheimer said.
Carriers also must waive cost-sharing and prior authorization requirements for diagnostic and antibody testing, she said, and “once an FDA-approved vaccine becomes available for covid-19 all (federal health plan) carriers must rapidly cover it without any cost sharing within 15 business days.”
In addition to changing plans, during the open season enrollees may change between levels of coverage within plans that offer more than one, and may change among self-only, self-plus-one and self-and-family coverage. Employees not currently enrolled can join the program but retirees generally may not newly enroll.
Retirees pay the same total amount for their coverage but on a monthly basis rather than every other week.
The National Active and Retired Federal Employees Association said that because a pay raise of only 1 percent in January is under consideration in Congress for federal employees, many “are facing the very real prospect of lower take-home pay next year with this health insurance increase.”
For retirees, NARFE president Ken Thomas added in a statement, the inflation adjustment of 1.3 percent in January, announced Tuesday, similarly “falls far short of what’s needed to cover the increase in FEHB premiums and other health care expenses.”
Both NARFE and the National Treasury Employees Union, which made similar comments, said that enrollees should use the coming open season to evaluate which plan best meets their health needs and finances.
The open season also allows new enrollments or changes in existing coverage under the Federal Dental and Vision Insurance Program, which is adding two dental plans and one vision plan to bring the total to 12 and five. The government pays no share of those premiums, which are remaining flat for the pre-existing plans.
Also during the open season employees may elect pretax flexible spending accounts for health care and or dependent care expenses for 2021. Retirees are not eligible for those accounts.
While coverage under the two insurance programs continues if an enrollee makes no change, a new enrollment is required every year in the flexible spending account program.