Health insurance premiums to rise 11 percent

Federal employees' health insurance premiums will rise an average of 11.1 percent in 2003, the Office of Personnel Management announced Tuesday.

Government workers with self-only insurance coverage will pay an average of $4.45 more per pay period, or $116 a year. Workers with family coverage will pay an average of $10.21 more per pay period, or $265 a year.

The premium hike for 2003 is the third consecutive annual increase above 10 percent, but OPM Director Kay Coles James said the increase in the Federal Employees Health Benefits Program is one of the lowest in the nation. The California state employees' health insurance program is raising premiums by 20 percent to 25 percent, for example.

"Given the industry trends, our 11.1 percent increase is quite remarkable," James said.

The rising cost of prescription drugs, greater use of medical services, the cost of advanced technology and an aging workforce contributed to the increase.

Four new insurance plans are joining the FEHBP in 2003, while 11 are dropping out, bringing the total number of participating plans to 188, down from about 350 five years ago. The dropouts will force 27,461 enrollees to select new plans during FEHBP's open season.

During the open season, which runs from Nov. 11 to Dec. 9, federal employees and retirees will be able to change health insurance plans. Many plans have changed their benefits or premiums for 2003. The American Postal Workers Union, for example, is offering a new insurance option that gives enrollees a $1,000 credit to spend on medical services before they have to make any out-of-pocket payments.

James also announced that she had waived controversial cost accounting standards for FEHBP carriers. Blue Cross Blue Shield, which covers about 4 million federal employees, retirees and family members, threatened to pull out of the FEHBP if the company were forced to adopt the standards. Congress may remove a legislative waiver to the standards this year, but James' action protects the insurance carriers, basically eliminating the possibility that Blue Cross Blue Shield would pull out of the federal program.

OPM is also preparing to offer flexible spending accounts to federal employees beginning next summer. Money in the accounts could be used for health services not covered by standard insurance, such as certain dental and vision services.

OPM will post the 2003 premium rates on its Web site at www.opm.gov/insure/health.