Feds Will Pay 4.9% More Toward Health Care Premiums Next Year

Federal employees and retirees will spend an average of 4.9% more on their health insurance premiums in 2021, a sizeable increase that nonetheless is an improvement from last year’s price hike.

The government’s share of Federal Employees Health Benefits Program premiums will increase by an average of 3% next year and agencies will cover around 70% of each enrollee’s total premium costs, the Office of Personnel Management announced Wednesday. The increase in employee contributions is an improvement over last year, when the average increase was 5.6%, but remains sharply higher than the 1.5% increase in 2019.

On average, non-postal federal employees will spend an additional $7.89 per paycheck in insurance premiums next year. That comes out to $4.67 more on average for feds enrolled in “self-only” plans, while family plans will cost an average of $10.94 more per paycheck, and workers on “self plus one” plans will pay an additional $10.90 in 2021.

Employees of the U.S. Postal Service will pay an average of $7.96 per pay period in 2021, although the exact amount will vary based on the individual insurance carrier and plan.

Laurie Bodenheimer, OPM’s acting director of health care and insurance, said much of the premium increase in 2021 is driven by recent increases in health care spending. Last year, Congress repealed the Health Insurance Provider’s Fee, which OPM had waived for 2019 but reinstated for last year.

“For this plan year going into 2021, COVID-19 did have a significant impact, but not in the way many people might think,” Bodenheimer said. “There was a period from mid-March until the end of May where a lot of people deferred certain routine care, perhaps anything that wasn’t absolutely necessary. So elective surgeries were deferred or delayed related to the COVID-19 pandemic, but before COVID and again beginning in June, health care utilization and costs have been higher than in prior years.”

OPM officials touted a revamped plan comparison tool to help employees to choose their plans, with increased functionality to help show retirees how plans interact with Medicare. And insurance carriers are working to provide greater transparency on which hospitals and other urgent care facilities—and their staff—are in network, as part of an effort to tamp down on surprise medical billing.

“No later than the 2022 calendar year, they will be expected to display the network contracting status of selected specialties of physicians, and groups or categories of services that provide urgent or emergent care service,” Bodenheimer said. “So the status of pathology, radiology and anesthesia will be on the plan’s website. These changes were enacted to help eliminate surprise billing and allow enrollees and consumers to determine if a provider is in network or out of network, to reduce instances of surprise billing.”

A new seven-year contract for the Federal Employees Dental and Vision Insurance Program brings new insurance carriers into the federal employee marketplace and an array of enhancements at no additional cost to workers, Bodenheimer said.

“All of the carriers who are part of the current FEDVIP contract will carry over into the new contract period, and those carriers did not increase overall premiums despite many changes and enhancements in the contract,” she said. “[As] part of this procurement, carriers were offered the opportunity to propose new benefits, and many took advantage of that with additional wellness-focused services, including benefits for pregnancy, children and persons with chronic conditions. And some dental plan options for 2021 will include up to three prophylaxes—or exams—per year for those with diabetes.”

Open season will run from Nov. 9 until Dec. 14. More information on the plan options and OPM's plan comparison tool are at the agency's website.