Health premiums for feds will increase 3.4 percent in 2013

This story has been updated.

Premiums for nonpostal enrollees in the Federal Employees Health Benefits Program will increase an average of 3.4 percent in 2013, the Office of Personnel Management announced Thursday. The average health care premium increase for U.S. Postal Service employees for 2013 will be 3.8 percent.

Of that increase, government contributions will rise 3.3 percent, while participants will pay 3.7 percent more in 2013. In dollars, that means FEHB enrollees with self-only coverage will pay on average $2.75 more per biweekly pay period and enrollees with family coverage will pay an average of $6.39 extra per pay period. Changes in the enrollee share of premiums vary from plan to plan. The government pays on average about 70 percent of health benefits premiums.

Increases in some of the plans, including the popular Blue Cross Blue Shield Standard option, are negligible. Individual participants in that plan, for example, will pay just 33 cents more per pay period in 2013 than in 2012, while those with family coverage will pay $1.66 more each pay period. The increases in other plans are higher; enrollees in the Compass Rose Health plan, for instance, will pay $10.08 more per pay period for self-only coverage and $28.82 more for family coverage.

Open season, during which federal workers can switch enrollments in health insurance plans, will begin Nov. 12 and run through Dec. 10. Enrollment changes take effect the first pay period in 2013.

The 2013 increase for nonpostal enrollees is lower than last year’s hike of 3.8 percent. While no one is ever happy about paying higher health care premiums, the 2013 rate may come as a relief to federal enrollees who experienced spikes of more than 7 percent in 2011 and 2010.

“While this increase is below the averages facing private sector workers, higher premiums are difficult to absorb in these tough economic times,” Colleen Kelley, president of the National Treasury Employees Union, said in a statement. Some employers and consultants are projecting overall premium rate increases for the health care system ranging from 4 percent to 6 percent. Kelley also said, “any increase is hard for federal employees given the freeze on federal pay.”

The average premium increases for dental plans will be less than 1 percent for 2013, according to OPM, and the average premiums for eye care plans will decrease less than 1 percent for next year. Health care flexible spending accounts are limited to $2,500 in 2013, down from $5,000, per Internal Revenue Service rules. More than 331,000 federal employees set aside money in flexible spending accounts.

Various factors typically affect health care premium rate increases, including an aging population, benefit changes and enrollees switching plans. OPM assesses annual increases in part by using a framework that assumes no one will change plans, though the agency knows there will be movement. “The premium experience was slightly different than we expected” in 2012, which partly accounted for the lower increase for 2013, John O’Brien, director of health care and insurance at OPM, said during a Thursday briefing on the new rates with reporters.

FEHB, which provides $45 billion in health care benefits to 8.2 million federal employees, retirees and their dependents, will offer 230 plan options to enrollees in 2013. OPM added five new health plans to the program.