2009 Health Insurance Rates: How Much Will Your Rate Change?

You may know that the “average” rate increase for the Federal Employees Health Benefits Plan is going up 8%. That may not be relevant to your plan. Here is more information on how much of a change there may be in your health benefits costs next year.

Readers of the FedSmith site have been asking questions about the health benefits premiums they will be paying in 2009.

According to OPM, federal employees in the FEHBP will pay, on average about 8% more for their health coverage next year. The reality is that the average increase in cost may not be that important as some are going up much more and some will be going up less than the 8%. There are about 269 different options available and there is a wide range of price changes.

Here is the good news: About 20% of those in the FEHBP will have an increase of less than 5%. For those federal employees and retirees who pay attention to these things, you will note that the average GS federal pay increase for next year will be 3.9%. (This is just an average just as the 8% rise in health benefits premiums is just an average.) Federal retirees who qualify for the full COLA increase will probably be getting a bump of about 6% in January although the final increase is not yet known.

In effect, the percentage increase in your health insurance benefit premium is likely to exceed the percentage increase in your raise of COLA.

The open enrollment season for changing your health benefits plan starts November 10th – December 8th.

A word of caution when looking at the premium rates for your health insurance plan. Each person has a different situation. You will want to learn more about the details of a health plan before you enroll. The least expensive plan or the most expensive plan may not be the best one for your particular situation so consider all of the factors including your own health situation and the benefits a particular plan would provide you.

As far as the rates go for federal employees, excluding the rates for Postal Service employees which are different, the plan with the biggest dollar increase next year is the Blue Cross standard family plan which will go up $42.12 to a total of $356.59 per month while the “standard self” plan will rise $17.40 for a total monthly employee payment of $152.06.

The Blue Cross plans are among the most popular plans. For 2009, the rate for the Blue Cross basic family plan will go up $17.87 per month to a total of $216.48. The “basic self” Blue Cross plan will go up $7.65 to a total of $92.44 per month.

The Mail Handlers Standard Family plan also went up quite a bit. It will have a monthly increase in the employee premium of $37.89 (rising to $278.76) while the standard plan for an individual will go up $16.53 per month to a total of $129.70.

For those who may be wondering if there are any decreases in federal health plans next year, the answer is “yes.” The SAMBA “high family” option is going down $50.40 per month to a total of $529.88 for the employee portion of expenses while the “high self” option will decrease by $23.01 to a total employee monthly payment of $212.10.

Here is the OPM chart outlining the 2009 non-Postal rates.

We always get questions about why it is so much more expensive for a family plan than the cost of health insurance for one person. The person asking the question is usually asking the question because the “family” in this case is two people with no children or children who are no longer covered. The answer is simple. The government “family plan” covers everyone in the family. In effect, a couple covered by a family plan is paying higher premiums to cover other families that may have three children and two parents. It’s a great deal for the larger family but not so good for the smaller family.

Some readers also ask why the cost of health insurance is the same for smokers and non-smokers based on the assumption that smokers are going to have more claims and more health problems. There is plenty of evidence to support that contention. The political reality is that OPM probably does not want to open up Pandora’s Box. There is little doubt that once the question of different rates for a different lifestyle is raised, advocates for a wide variety of lifestyle choices will emerge and a royal battle would ensue for different interest groups seeking better rates.

One other significant change the some readers will see in their health plan next year. There is a change, highlighted by the National Association of Retired Federal Employees (NARFE), regarding the cost of prescription drugs. There is an 85% increase in the co-payment cost of mail order prescription drugs which will rise from $35 to $65 under the Blue Cross Blue Shield mail order program.

There are obviously a number of other health benefits plans available to federal employees. You can check out the health benefits plan rates for all of these plans to see which plan is the most desirable for you and your family.

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 newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47