Should Federal Employees Continue to be in the FEHBP?

By • August 5, 2013 Comments

Healthcare is again in the national news headlines, as it has been almost continuously for the past several years.

Internal Revenue Service employees will play a big role in the new health insurance scheme now being rolled out but the union that represents many IRS employees does not want any part of being in the new system.  National Treasury Employees Union officials are urging members to write their congressional representatives in opposition to receiving coverage through President Obama’s health care law.

The head of the IRS also said Thursday he would rather keep his own insurance than get coverage under the system created by the new health care law

The new health care program is apparently unpopular with many Americans according to surveys. There is sentiment to put federal employees into the healthcare exchanges instead of the current system of health care coverage. As noted in a Forbes column: ”[E]ven more federal employees should be required to enroll in the exchanges, especially those at the White House and the Department of Health and Human Services who are writing thousands of pages of exchange regulations…It’s critical that those who design our laws get to experience them for themselves.”

Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, has introduced a bill that would do just that. The bill is short and to the point. HR 1780 reads: “To provide that the only health plans that the Federal Government may make available to the President, Vice President, Members of Congress, and Federal employees are those created under the Patient Protection and Affordable Care Act or offered through a health insurance exchange.”

“If the ObamaCare exchanges are good enough for the hardworking Americans and small businesses the law claims to help, then they should be good enough for the president, vice president, Congress and federal employees,” according to Congressman Camp’s office.

Federal employee retirees may also see changes and are more likely to see changes than current federal employees. In the annual “call letter” to insurance carriers for 2014, OPM wrote: ”OPM is encouraging proposals for pilot programs where participating carriers offer a sub-option for Medicare eligible annuitants as an alternate choice.”

In the latest kerfuffle, Congress was upset because the law required that those in Congress participate in the health care exchanges now being created. The law did not make any exceptions for Members of Congress and their better paid staff members to receive subsidies for health care.

The Office of Personnel Management is riding to their rescue. OPM will release regulatory details this week, but leaks to the press suggest Congress will receive extra payments based on the defined-contribution formula for the federal employee health benefits program which covers about 75% of the cost of the average insurance plan. For 2013, that means payments of about $4,900 for individuals and $10,000 for families.

It is not clear yet if OPM will issue checks, similar to “cashing out” fringe benefits and increasing wages or if the agency will cover 75% of the cost of the ObamaCare plan the worker chooses. The latter option could turn out to be more expensive than what the government now contributes via the current health care system for federal employees.

OPM does not appear to have authority to pay for insurance plans that lack the usual contracts under the federal employee health care program and the language in the Affordable Care Act is clear and does not cite higher contributions for those in legislative branch or a unilateral increase  in congressional pay in return for less overall compensation—one of which is apparently going to happen anyway.

No doubt, the actions taken on behalf of the political class and creating a two-tier exchange system will not surprise many Americans and just another example of how the government takes care of its interests.

Should federal employees continue to have a separate health insurance program or participate in the new insurance exchanges? To see the results of our survey on this topic, see FedSmith.com Users Overwhelmingly Reject Inclusion in New Health Care Program.

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About the Author (  |   )

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletter and a co-founder of two companies and several newsletters concerning federal human resources.

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