FEHBP Premium Increase Huge Burden for Federal Annuitants

National Active and Retired Federal Employees Association (NARFE) President Margaret L. Baptiste today expressed concern that federal annuitants and workers will be burdened by the large premium increases announced in the federal employee/retiree health insurance program. “The overall average Federal Employees Health Benefits Program (FEHBP) premium increase of 8.8 percent for 2010 will be difficult for federal annuitants to shoulder in a year when no cost-of-living adjustment (COLA) is expected and when the federal employee pay raise is anticipated to be minimal,” Baptiste said.
Baptiste is also troubled that the share paid by employees and retirees in the program’s most popular plan (Blue Cross/Blue Shield Standard option) will jump by 12.4 percent for family plans and 15.1 percent for self-only coverage.
“A 12-percent increase in our program’s most popular plan is bad enough in a no-COLA year for retirees and when workers are expected to receive a nominal pay increase,” said Baptiste, “what’s worse is that this comes at a time when some in Congress effectively want to end the FEHBP and enroll federal workers in an exchange system.”
Last week, Sen. Charles E. Grassley, R-IA, introduced an amendment to the Senate Finance Committee’s health reform bill that would require members of Congress and federal workers to leave the FEHBP and join health exchanges. NARFE opposes this amendment.

FEHBP Premiums Could Have Been Lower

“We recognize that the 2010 rate hike was within the range of increases in other large group health insurance programs and that the Office of Personnel Management (OPM) is serious about reducing prescription drug costs. However, FEHBP premiums could have been lowered if it were not for OPM’s decision to reaffirm the previous administration’s policy of declining a payment available to other public and private employers who provide drug coverage as generous as Medicare’s,” Baptiste said. “Once again, this year, OPM and the Office of Management and Budget left $1 billion on the table -- a subsidy available to and accessed by private employers in the marketplace, which could be used to lower worker and annuitant premium costs,” she said.
The 2003 Medicare reform law provides such employers a payment as an incentive to retain their retiree drug coverage. A 2007 Government Accountability Office report found that premium growth in one of the largest FEHBP plans with many older enrollees could have been 3.5 to 4 percent lower in 2006 had the payment been accessed. And, it could have reduced overall FEHBP premiums for the year by more than 2 percent.

Medicare Part B Relief for Federal Annuitants

“While the FEHBP rate increase is bad news, we can take some comfort in the House’s approval on September 24 of NARFE-backed legislation (H.R. 3631) which would protect all federal annuitants – including retirees and survivors who are not eligible to receive Social Security – from the 2010 Medicare Part B premium increase,” Baptiste said. “NARFE worked tirelessly behind the scenes on this legislation for the past three months.”