Why in 2025 FEHB program participants will see the largest premium increase in more than a decade for their insurance premiums?
Participants in the Federal Employees Health Benefits (FEHB) program will face the largest annual increase in the cost of health insurance in a decade.
Starting in January, federal employees and annuitants enrolled in the FEHB program will pay an average of 13.5 percent more for their health insurance premiums, according to figures released Wednesday by the Office of Personnel Management.
The significant premium increases under FEHB's 2025 plan follow increases of 7.7% in 2024 and 8.7% in 2023.OPM said the increases reflect changes in the market over the past year and are generally consistent with other programs in the commercial market.
"The increase in premiums is driven by increases in provider and supplier prices, increased utilization of certain prescription drugs and mental health costs," OPM said. "Industry-wide cost pressures affect FEHB and PSHB rates similarly."
In dollars, in 2025, FEHB participants will start paying an average of $26.10 more toward their weekly medical premiums.
Based on participant and state shares of insurance costs, FEHB participants' medical premiums would increase by an average of 11.2% when weighed against the state's contribution, which increases by 10.1%.
Under the law, the allocation of the share of FEHB premium contributions between the enrollee and the state is determined. The State covers approximately 75% of an enrollee's FEHB premiums, but this is capped at 72% of the weighted average of the previous year's premiums.
FEHB premium rates change each year, but inevitably increase to some degree. The percentage increase in FEHB premiums is an average, meaning that some plan options will have lower costs and others will have higher costs.
In contrast, premium increases for new participants in the Postal Service Health Benefits (PSHB) program will be slightly lower than for the FEHB program. Postal Service program participants will pay 11.1 percent more in health care premiums. When averaged with the government's share of the cost, which is a 5.1% increase, the total premium increase for PSHB would be 6.9%.
"The increase in premiums for the postal program is lower than the increase in premiums for the FEHB program due to greater integration into Medicare under the Postal Service Reform Act, differences in the cost of plans offered under each program, and demographic factors," OPM said.
Next year, PSHB members will pay an average of $20 more for their weekly health care premiums.
Compared to FEHB and PSHB, CalPERS, which buys health insurance for California public employees, announced an average premium increase of 10.79% for 2025. After the federal government, CalPERS is the second largest purchaser of public insurance in the United States.
The National Treasury Employees Union is calling for a 7.4% pay raise for federal employees next year to offset rising insurance costs. In August, President Joe Biden formally scheduled a 2% pay raise for federal employees in 2025.
NTEU national president Doreen Greenwald said the increase in insurance premiums would "stretch workers' paychecks to the point where they can't afford it."
"While employees have options for cheaper plans, we know they are often provided at the expense of reduced benefits," Greenwald said. "Federal employees should not have to sacrifice health insurance because they can't handle higher payments."
Open season options
OPM's announcement, as usual, came a few weeks before the start of open enrollment season. This is the time of year when FEHB members can look at and consider making changes to their health care plans for 2025. This year's open season will run from Nov. 11 through Dec. 9.
Although the open enrollment period is held every year, this fall's open enrollment season will look very different. Along with the FEHB program, OPM is launching a brand new Postal Service Health Benefits (PSHB) program that will provide health insurance to about 2 million Postal Service employees, annuitants and their families.
Like FEHB enrollees, new postal enrollees will be able to make changes to their health care options during the open season for the 2025 plan.
"All current postal employees, annuitants and their family members enrolled in the FEHB plan will be transferred to the equivalent PSHB plan prior to the open season," OPM said. "During the open season, participants can choose the plan to which they were assigned or select a different plan."
In 2025, FEHB members will have 64 plans and a total of 130 health insurance options offered by 42 carriers.
PSHB members, on the other hand, will have 69 plan options offered by 30 health care companies. This includes seven fee-for-service companies and 23 health maintenance organizations (HMOs) available through PSHB.
However, some plan options are designed for specific geographic areas or agencies. Not every FEHB or PSHB participant will have access to all plan options. Participants can use the FEHB plan comparison tool on the OPM website to compare all the different plan options.
More information about FEHB, PSHB coverage
OPM also announced a number of changes to benefits and options that will be available to federal employees, annuitants, and their families in 2025.
OPM announced Wednesday morning that FEHB enrollees will have more options for "comprehensive" in vitro fertilization coverage next year. Both Blue Cross Blue Shield and GEHA will offer a $25,000 benefit for IVF coverage, on top of OPM's basic requirements for infertility treatment coverage.
OPM also announced changes to coverage for obesity, maternity and mental health drugs. Carriers will be required to cover at least one GLP-1 obesity drug and at least two oral obesity drugs.
In addition, "carriers should offer comprehensive behavioral therapy, including appropriate diet and exercise, for those prescribed obesity medications," OPM said.
In addition, OPM reported that FEHB plans will reimburse behavioral health services offered in primary care settings, in part in response to concerns about the COVID-19 pandemic, youth mental health, and the opioid epidemic.
This will encourage "greater coordination between behavioral health providers and other providers in the health care system, and [will] allow behavioral health services to be paid on par with comparable physical health services," OPM said.
In support of maternal health, OPM reported that all 64 FEHB plans will cover mental health treatment for postpartum depression. Many, but not all, plans will additionally cover certified midwives, birth center deliveries, home visits by nurses, and doula services.
All PSHB benefits will be the same as FEHB benefits, with the exception of prescription drug benefits. Health carriers participating in the PSHB program are required to offer Medicare group waiver plans (EGWPs) to Postal Service annuitants and their family members. Some carriers will additionally offer Medicare Advantage EGWPs with prescription drug coverage, OPM said.
It is important to note that Medicare-eligible postal annuitants and their family members must be enrolled in Medicare Part B to be eligible for PSHB benefits, with some limited exceptions. OPM said it expects more than 80 percent of Medicare-eligible postal annuitants to enroll in Part B by September 30, when the special enrollment period ends.
2025 vision and dental options
In contrast to the large premium increases for the FEHB and PSHB programs, the average premium increase for the Federal Employees Dental and Vision Insurance Program (FEDVIP) in 2025 will be relatively small.
Premiums for FEDVIP dental plans will increase by an average of 2.97% and vision plans by 0.87%, OPM said.
Participants in the FEHB and PSHB programs will be able to choose from seven dental providers offering 14 nationwide plan options for 2025. Next year, 10 nationwide vision plans from five different carriers will also be available.
In 2023, OPM expanded FEDVIP eligibility to postal employees and annuitants, as well as temporary, part-time, and seasonal federal employees.
Those interested in establishing or continuing a flexible spending account must re-enroll in the Federal Flexible Spending Account Program (FSAFEDS) as usual. This program allows FEHB participants to set aside pre-tax dollars for health care expenses for themselves and their dependents.
FEHB and PSHB members can make changes to their health care choices during this year's open season from November 11 to December 9. The 2025 plan will officially take effect Jan. 1. OPM offers additional information and resources on its website for FEHB and Postal members.