NARFE Calls FEHB Premiums Increase ‘Relatively Modest’

By on September 29, 2016 in Pay & Benefits with 0 Comments

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The Office of Personnel Management has announced another large increase in health insurance premiums for 2017.

Rates for active and retired federal workers will jump 4.4 percent in 2017, the average enrollee’s share will soar 6.2 percent, and the federal government’s contribution to health premiums will grow by 3.7 percent, according to the National Active and Retired Federal Employees Association.

NARFE President Richard G. Thissen called the increase in enrollee costs “relatively modest.”

The announcement comes after an average 83 percent rise in the Federal Long Term Care Insurance Program, which resulted in angry protests from current enrollees but no action by Congress or OPM.

Retirees are still waiting for an expected increase in Medicare Part B premiums that is expected to eat up most or all of federal retirees’ modest 0.2 to 0.3 percent COLA depending on the CPI published in October. Employees are expecting to receive a 1.6 percent pay raise, their largest since 2009.

The increases come as inflation is running at a 1.1 percent annual rate.

Last year, OPM announced that the average premium would rise 6.4 percent in 2016, and while this year’s expected increase is smaller, it remains larger than the 3 percent average increase in premiums for private sector employer-sponsored family health coverage in 2016, according to the Kaiser Family Foundation.

NARFE has no plans for opposing this year’s premium increases, but it is advocating changing the formula for setting retirees’ COLA to the CPI-E (Experimental Price Index for the Elderly) and addressing “the growing disparity in premiums between those who pay their Medicare Part B premiums from their Social Security benefit and those who do not, including many Civil Service Retirement System retirees.”

According to NARFE, FEHBP premiums have increased a total of 27.8 percentage points over the previous six years.

OPM is encouraging both employees and retirees to consider switching to High Deductible plans that offer catastrophic risk protection with higher deductibles, health savings/reimbursable accounts and lower premiums, and HMOs over traditional Fee-For-Service plans.

All of these options may reduce premiums but each involve trade-offs that might cost families more money depending on their future health status.

Open Season, when it is possible to make changes to health insurance coverage for 2017, will be held from November 14 through December 12, 2016.

© 2016 Michael Wald. All rights reserved. This article may not be reproduced without express written consent from Michael Wald.


About the Author

Michael Wald is an independent economics analyst and writer based in the Atlanta area. He specializes in topics related to business, labor, and human resources. Prior to his retirement from the U.S. Department of Labor, he served as the agency’s Southeast Regional Director of Public Affairs and Southeast Regional Economist.