Employee Groups Decry Hikes in What Typical Feds Will Pay in Heath Care Premiums, and More

Within hours of the Office of Personnel Management’s announcement that federal workers and retirees' portion of health insurance premiums would go up by an average of 4.9% next year, federal employee groups accused the agency of not doing enough to mitigate cost increases.

Although OPM acting Director of Healthcare and Insurance Laurie Bodenheimer told reporters Wednesday that much of the cost increase resulted from increased use of health care services across the country and said premium increases in the private sector for next year range “between 4% and 10%,” employee groups said the new costs for plans in the Federal Employees Health Benefits Program threaten to swallow the “paltry” 1% across-the-board pay increase feds are slated to receive next year.

“This shameful rate hike continues a pattern of large increases and cost shifting onto employees throughout President Trump’s administration,” said Everett Kelley, national president of the American Federation of Government Employees. “Since President Trump has been in office, the average premium for current and retired federal employees has increased a whopping 18.1%. The president claims to be one of the best dealmakers on the planet, yet when it comes to negotiating these health insurance rates, he gives private health insurers whatever they ask for and sticks current and retired federal workers with the bulk of the bill.”

National Active and Retired Federal Employees Association National President Ken Thomas said he fears that with the increases to insurance premiums, federal employees could face what is effectively a pay cut in 2021.

“While this rate change is lower than last year’s, when enrollees’ premiums rose 5.6% on average, it remains hard to swallow—particularly with the specter of a paltry 1% federal pay increase looming for 2021,” Thomas said. “And unfortunately, 1% is currently the best-case scenario for feds, who are facing the very real prospect of lower take-home pay next year with this health insurance increase.”

Tony Reardon, national president of the National Treasury Employees Union, noted that the fact that 4.9% is the average increase means that many feds could face as much as a 10% increase in premiums if they stay in their current plan.

“Federal employees once again will suffer another financial setback net year with the news that they will pay even more for health insurance in 2021,” Reardon said. “As the largest employer-sponsored health insurance program in the country, OPM should use its leverage to control these spikes in premiums that are too often a shock to the paychecks of frontline workers.”

Elsewhere in federal employees’ paychecks, OPM is finalizing regulations this week to add new regions to the list of locality pay areas, effective in time for the first pay period of 2021. In a final rule set to be published in the Federal Register on Thursday, the agency established a new Des Moines-Ames-West Des Moines, Iowa, locality pay area and added Imperial County, Calif., to the existing Los Angeles-Long Beach locality pay area.

The Des Moines locality pay area will affect around 3,100 federal workers in that region, while Imperial County is home to around 1,860 General Schedule workers.

These changes will not mean that the paychecks of those workers will immediately see a windfall, however. President Trump’s proposed 1% across-the-board raise next year does not include any increases in locality pay, meaning the earliest that feds in Iowa or California see the impact of their new locality pay designation will likely be 2022.

“Locality pay rates now applicable in that area will not change automatically because locality pay percentages are established by executive order . . . and the president decides each year whether to adjust locality pay percentages,” OPM wrote. “When locality pay percentages are adjusted, past practice has been to allocate a percent of the total GS payroll for locality pay raises and to have the overall dollar cost for such pay raises be the same, regardless of the number of locality pay areas.”