Larry Humphreys, a retired Federal Emergency Administration Company employee in Moultrie, Georgia, says he and his spouse received’t be touring a lot subsequent 12 months after their month-to-month medical health insurance premium cost will increase greater than 40%, to $938.
Humphreys, 68, feels betrayed by the Federal Staff Well being Advantages Program. “As federal employees we sacrificed good salaries in the private sector because we thought the benefits from government would be better now, in retirement,” he stated.
Because the nation’s largest employer-sponsored medical health insurance program, the FEHB Program covers greater than 8.2 million federal authorities workers and retirees, and it was as soon as celebrated as a nationwide mannequin for controlling prices whereas giving enrollees many well being plan choices.
However subsequent 12 months, common enrollee premium funds within the system are set to leap greater than 12%, on high of a 13.5% hike in 2025. The 2-year improve is increased than what many non-public employers and their staff are experiencing.
The FEHB price hikes are much like these for plans offered on the Reasonably priced Care Act exchanges — excluding the federal government subsidies most enrollees get, a serious level of competition on Capitol Hill. The premiums insurers cost for Obamacare plans are rising 26% on common for 2026, following a 4% improve this 12 months.
What’s making the most recent hike in FEHB premium funds even more durable to abdomen for tens of millions of federal workers is its timing: The 2026 improve was introduced in October, when many federal staff have been on unpaid furlough in the course of the 43-day authorities shutdown.
In contrast to most non-public employers, the FEHB Program provides its enrollees quite a few well being plans to select from. That permits some individuals to decrease their month-to-month premium funds by switching to plans with increased deductibles or copayments. However annually solely about 5% of enrollees change plans, in line with the Workplace of Personnel Administration, which oversees this system.
Humphreys, who has stayed with the identical well being plan for many years regardless of steadily increased costs, stated it’s troublesome figuring out which plan is finest based mostly on their well being situations. He has glaucoma and diabetes, and his spouse, Julianne, has confronted coronary heart points.
Their FEHB plan covers prices for his or her care not coated by Medicare, which generally pays 80% of their well being payments.
“There’s a fear that if you do something and change plans and it’s wrong, you could be in a bad spot,” he stated.
Open enrollment for federal workers and retirees runs by way of Dec. 8.
Among the many components inflicting premiums to extend, in line with OPM, are an ageing federal workforce with extra power situations, in addition to prescription drug use, together with expensive GLP-1 medicines for weight reduction.
About 42% of federal workers are over the age of fifty, in contrast with 33% within the common workforce, OPM says. About 7% of federal workers are below the age of 30, in contrast with about 20% of staff total.
OPM officers stated the Trump administration’s insurance policies geared toward reducing drug prices and centered on prevention of pricey medical situations will hopefully assist it management premiums sooner or later.
“None of these initiatives of course will happen overnight – turning a $79 billion ship takes slow and steady progress,” Shane Stevens, OPM’s affiliate director for well being care and insurance coverage, stated in a information launch. “But, we are committed to improving the quality of life and quality of care for our members while also ensuring that healthcare remains accessible and affordable for those who work (or have worked) for the American people.”
OPM didn’t reply to requests for remark.
John Holahan, a well being coverage fellow on the nonpartisan City Institute, stated OPM’s clarification ignored a key motive for rising premiums: hospital consolidation. Whereas the FEHB Program is a group of well being plans, in lots of markets — together with the Washington, D.C., space — these insurers should negotiate with a handful of highly effective well being programs which have purchased up different hospitals and medical doctors. That market energy permits them to drive costs increased on FEHB plans, he stated.
Jacqueline D. Bowens, president and CEO of the D.C. Hospital Affiliation, stated in a press release that “the costs borne by patients are not determined solely by the care they receive, but by how insurance companies choose to price, reimburse, and restrict access to that care.”
Holahan stated it’s stunning that FEHB premiums are rising even quicker than these of different, smaller employers. However he’s not stunned federal workers don’t change plans extra usually, even when it might be of their monetary curiosity.
“It’s that people find the health care world so complicated,” he stated. Holahan, a famous well being economist, stated he, too, finds it daunting to modify Medicare well being plans.
Mike Lindquist, a scientific evaluation officer for the Nationwide Institutes of Well being, stated he’s not pleased with the rise in his premium funds the previous two years. “It’s tough, as it’s a big expense.”
Lindquist, 43, who lives in Brunswick, Maryland, has been on the identical Blue Cross and Blue Defend plan by way of the FEHB Program the previous few years regardless that he evaluates his choices every fall.
“By not switching, you don’t have to worry about choosing a new plan that might not take your practitioners,” he stated.
Jonathan Foley, a well being marketing consultant who labored as a senior adviser at OPM in the course of the Biden administration, stated premium will increase will probably be a hardship for a lot of enrollees. Whereas the FEHB Program affords 200 well being plans in whole, with about 10 to twenty in every geographic market, enrollment is concentrated in only a handful of Blue Cross and Blue Defend plans.
“This concentration reduces competition and gives outsize influence” to price will increase by Blue Cross and Blue Defend, Foley stated in an e-mail.
He stated the FEHB Program additionally faces increased prices as a result of it requires its well being plans to cowl GLP-1 medicines, corresponding to Wegovy and Ozempic. Nationally, fewer than half of enormous employers provide this profit, in line with the Peterson Heart on Healthcare and KFF. KFF is a well being data nonprofit that features KFF Well being Information.
One other value strain has been extra members utilizing behavioral well being advantages to deal with despair and nervousness for the reason that begin of the covid pandemic, Foley stated.
The Trump administration’s federal workforce reductions even have contributed to value will increase, Foley stated. OPM has misplaced a couple of third of its workers prior to now 12 months, leaving fewer staff to supervise the FEHB Program and negotiate with dozens of well being insurers, he stated.
“The workforce reductions and the unpredictable nature of policymaking in the Trump administration has created considerable uncertainty among health insurance carriers,” Foley stated. “The response of actuaries to increased uncertainty is to raise rates.”
A Authorities Accountability Workplace report this 12 months discovered that current OPM staffing vacancies led to a suspension of fraud danger assessments within the FEHB Program.
John Hatton, employees vp for coverage and packages at an advocacy group known as the Nationwide Lively and Retired Federal Staff Affiliation, stated increased costs imply it’s crucial for FEHB members to buy and evaluate plans for subsequent 12 months. “The program was designed to promote competition to mitigate and drive down costs,” he stated.
Hatton stated OPM surveys present the principle causes individuals don’t change plans is they’re overwhelmed by their choices and anxious about making a mistake. Switching to a plan with even a barely increased deductible, he stated, may save individuals a couple of hundred {dollars} a month on premiums.
However Humphreys, the Georgia retiree, stated he likes that his present plan comes with low out-of-pocket prices for him and his spouse. They owed little cash when his spouse suffered a kidney stone an infection and sepsis, which put her within the hospital for 12 days.
That reassurance will quickly come at a better value: Their FEHB and Medicare premiums will take up greater than half of his pension test subsequent 12 months after accounting for taxes.
“I can take a lower-premium plan, but it’s a gamble I am not willing to take,” he stated.
