FEHBP unlikely to mirror private sector health insurance trends

Private sector employers are adjusting health insurance plans to comply with the recent reform law and requiring higher employee contributions to premiums, but federal workers should expect minimal changes to their benefits next year, according to observers.

A Sept. 2 report from the Kaiser Family Foundation found, on average, employees nationally paid 19 percent of premiums, or $899, for single coverage and 30 percent, or $3,997, for family coverage in 2010. Employees with family plans paid $482 more in premiums than in 2009, an increase of 14 percent. According to a recent National Business Group on Health report, 63 percent of large employers plan to increase employee percentage contributions to premium costs in 2011, while 46 percent will raise out-of-pocket maximums and 44 percent will boost in-network deductibles.

According to Walton Francis, author of Consumer's Checkbook Guide to Health Plans for Federal Employees and Annuitants, the substantial increases in employee contributions to health premiums in the private sector indicate most large employers are putting less into health plans than the federal government. The private sector has been cutting back in recent years, but federal health plans could be a better deal next year in comparison, he said.

Federal employees' health insurance premiums increased an average of 8.8 percent, or $9.21 per pay period, in 2010, following a 7.9 percent increase in 2009. The two premium hikes were the largest since 2005.

Daniel Adcock, legislative director at the National Active and Retired Federal Employees Association, said employers increasingly are requiring higher cost sharing through co-payments and deductibles, a trend that has affected federal employee and retiree health plans incrementally.

"As costs go up and employers looking to reduce cost, they're contributing a lower percentage of the premiums and workers and employees are contributing more," Adcock said. But he added specific federal trends won't be clear until the Office of Personnel Management publishes 2011 plan rates for the Federal Employees Health Benefits Program this fall. Open season, the period when federal employees can switch their enrollments, will run from Nov. 8 to Dec. 13.

According to the National Business Group on Health report, 53 percent of employers are making changes to their plans to accommodate health reform regulations. For example, 70 percent must remove lifetime dollar limits on benefits. The report also found more employers will offer consumer-directed health care plans, such as high-deductible options with health savings accounts.

Most plans under the FEHBP already meet the new requirements, Francis said. For example, there are very few options with lifetime dollar limits, and plans already cover preventive care. The only notable change is the inclusion of dependent children up to age 26 on parents' plans, Francis said, though he expects few people will be affected and thus cost increases will be minimal. Under health care reform, insurance companies now are required to cover the unmarried adult children of FEHBP enrollees until they turn 26. Lawmakers in May introduced legislation that would bring coverage into effect before Jan. 1, 2011, but those attempts have stalled.

According to Francis, federal workers could see two changes to FEBHP options when rates and plan brochures are available. OPM has been encouraging plans to pay for premiums under Medicare Part B, which covers medically necessary services and some preventive care, so that more people will use it, he said. He added enrollees in the Blue Cross options likely will have minimal premium increases, which will give some stability FEHBP's largest plan.