Why are my Federal Employees Health Benefits (FEHB) premiums getting higher?
Increases in rates are caused by changes in medical inflation (health care services cost more), demographics (aging population), changes in benefits, technology, and utilization. The bottom line is that nothing in healthcare costs is declining, and health plans look for a balance between premiums and deductibles and copayments to cover the cost of paying benefits. Under federal law, health plan rates must “reasonably and equitably reflect the cost of the benefits provided.” OPM’s actuaries scrutinize each health plan’s proposed rates to determine whether the rates comply with this law.
In 2011, overall FEHB premiums will increase an average of 7.3%, less than the increase in 2010, and less than the increase in other major public and private health insurance programs. For most Self Only enrollees, this means an increase of about $5.53 per bi-weekly pay period. For most Self and Family enrollees, this means an increase of about $11.45 per bi-weekly pay period. FEHB Program rates and benefits are based on the cost of providing healthcare and not on any type of cost-of-living calculation. Recently, the cost of providing healthcare has risen faster than the other consumer prices on which the COLA is based.
We are employees and we feel the premium increases, too. We believe that health plan comparison shopping and smart decision making – using in-network doctors and asking for generic prescriptions – can help offset out-of-pocket expenses. Employees can also use the FSAFEDS program to help manage these expenses through pre-tax payroll deduction.
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