Federal Employees Will Pay 5.6% More Toward Health Insurance Premiums in 2020

Participants in the Federal Employees Health Benefits (FEHB) program will most likely be disappointed with the increase in health care premiums next year – Feds will pay about 5.6%. The rates just jumped 1.5% in 2019 while it had increased by 6.1% in 2018. There is an estimate of 8.2 million former and current federal employees together with family members presently enrolled in FEHBP.

Participants in the FEHB will have a chance to make the relevant changes to their health, dental, and vision plans for the upcoming year, which starts January 1. The 2020 changes may come as surprise to some since there was a historically low increase this year with premiums going up about 1.3%, the lowest hike since 1995.

The main reason why rates were kept low is that Congress waived the Affordable Health Care Act’s insurance fee, but this year the fee hasn’t been suspended. The fed has led to an increase of approximately 2% in premiums, which goes in line with the industry average increase of 2.2%. The fee has been suspended by Congress twice, back in 2017 and in 2019. If Congress had decided to waive the fee, the premiums will most likely be lower.

Additionally, drug and pharmaceutical expenses are on the rise, which has also contributed significantly to the rise of healthcare costs in 2020. Participants will be paying over 4% more toward their premiums in 2020 when compared to last year. Overall, the government will contribute 3.2% more toward premiums in 2020.

The number of FEHB participants has increased in recent years with over 749,000 participants currently enrolled from the 710,000 enrolled in 2018, 643,000 in 2017 and 542, 000 in 2016. The Federal Employees Dental and Vision Insurance Program (FEDVIP) will also see an increase. For example, dental plans premiums will go up 5.6% and vision plans will increase by 1.5%.

Some FEHB enrollees will experience significant hikes while others will notice a greater increase based on the type of plan they have. Several local plans will go up as much as 7.0%-14% next year. This is going to hurt the paychecks of feds – some of them still recovering from the government shutdown and afraid of another possible shutdown in October.

A few more options available in 2020

On a good note, the FEHBP will have 14 more health plan options for the upcoming year. However, two plans are leaving, which will impact 6,300 participants. Not all participants will have access to the new plans since some of the plans are meant for retirees in some specific areas.  The Office of Personnel Management (OPM) selected the Government Employees Health Association (GEHA) as the exclusive carrier for these plans. There are also new tools being added so that participants understand the costs of all health plans better. More than 80% of FEHB plans offer some tools that enrollees can add under OPM guidelines.  

Sources
  • https://www.govexec.com/pay-benefits/2019/10/feds-will-pay-56-more-toward-health-care-premiums-next-year/160316/

  • How to beat higher 2020 health premiums

  • https://fcw.com/articles/2019/10/02/opm-fehb-premiums-spike-russell.aspx

WRITTEN BY