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News Release

FOR IMMEDIATE RELEASE
Thursday, September 15, 2005
Contact: Michael Orenstein
Tel: 202-606-2402

OPM Announces Smallest Average FEHB Premium Increase in Nine Years

6.6 percent average premium hike continues downward trend of increases

OPM urges agencies to accept belated enrollments from employees affected by Hurricane Katrina

Washington, D.C. -- The U.S. Office of Personnel Management today announced an average premium increase of 6.6 percent in the 2006 Federal Employees Health Benefits Program.

The single-digit average increase for the nation's largest employer-sponsored health program, which covers approximately 8 million current and retired federal employees, as well as their dependents, is the smallest in nine years and continues a trend of four consecutive years of declining average premium hikes.

The average increase also compares favorably with industry projections for large, employer-sponsored health programs. For example, CalPERS, an employer-sponsored health system that covers California's 1.4 million public employees, retirees, and their families, has reported an average increase of 8.9 percent next year.

On average, the federal government pays 72 percent of total FEHB premiums, while enrollees pay 28 percent. The program expects to pay premiums totaling $31 billion in fiscal '05, which ends September 30, 2005.

While the 2006 total average premium increase is 6.6 percent, 80 percent of FEHB enrollees are currently covered by plans in which premiums will rise between 2.5 percent and 15 percent.

In 2006, individuals with self-only coverage in the FEHB Program will see an average bi-weekly premium increase of $5.30; the average bi-weekly premium increase for self and family coverage will be $12.79.

Self-only coverage through one of 11 national fee-for-service plans can be purchased for as little as $33.28 every two weeks; self and family coverage with one of the national fee-for-service plans can be obtained at a cost of $75.62 every two weeks.

"Over the past several years, we have introduced initiatives that give enrollees additional health-care options to meet the insurance needs of their families and keep the program affordable," said OPM Director Linda M. Springer. "Through our efforts to control costs and improve benefits choices, we are maintaining a high-quality health-care program that provides excellent benefits at a reasonable cost."

Contributing to the overall containment of FEHB premium increases in 2006 are efforts to provide incentives for the purchase of prescription medicines through pharmacy benefits programs and the use of high-quality, lower-cost generic drugs.

Further demonstrating the health and vitality of the FEHB Program is the upward trend in participating plans. In 2006, there will be 279 plan choices, an increase from 249 this year and 205 in 2004.

An Open Season will be held governmentwide from November 14 through December 12, 2005. During this period, current and retired federal employees can review printed and online materials to compare the coverage and costs of health plans and make changes based on their personal needs. Health plan brochures will be available at agencies for review by employees; employees and retirees can view the information online at www.opm.gov/insure/health/index.asp.

To assist federal employees who have been victimized by Hurricane Katrina, OPM will work with agencies to accept their FEHB enrollments submitted after the official end of the Open Season. OPM, as the administrator of the federal civil service retirement system, will give the same consideration to federal annuitants and survivor annuitants affected by Katrina.

The success of the FEHB Program since its debut in 1960 is attributable to a consistent emphasis on creating a competitive cost and benefits environment.  With this focus, FEHB consumers are presented with multiple health-care options, at the greatest value.

For instance, OPM last year introduced into the FEHB Program High Deductible Health Plans (HDHP) and Health Savings Accounts (HSA). These products were made available through the Medicare Prescription Drug, Improvement and Modernization Act, which was signed into law by President Bush in 2003. Individuals enrolled in an HDHP are able to use the product to save money for future medical needs. In 2006, the FEHB Program will offer 21 HDHPs, up from 14 in 2005.

In 2003, consumer-driven health plans became available in the FEHB Program. Consumer-driven plans emphasize preventive-care and provide expanded health-care education information, giving enrollees additional means to manage their medical needs and health-care dollars.

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Our mission is to Recruit, Retain and Honor a World-Class Workforce to Serve the American People. OPM supports U.S. agencies with personnel services and policy leadership including staffing tools, guidance on labor-management relations and programs to improve work force performance.


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