3.8 Percent Average Health Insurance Increase in 2012

How much will your health insurance cost you in 2012? Check out the new rates and take a close look at your options before this year’s open season.

The new rates for health insurance are now out. The Office of Personnel Management has issued a press release celebrating the relatively small increase in premiums for 2012. The average premium for the 8 million people enrolled in the Federal Employees Health Benefits program (FEHBP) will increase by 3.8 percent for non-postal employees and all annuitants in 2012.

The average increase last year was about 7.3% so the smaller increase is good news of sorts. Health insurance costs nationwide are expected to increase about 5.4% in 2012 so the increase for the federal workforce is less than many Americans will be paying next year.

No mention was included in the press release of the continuing pay freeze for the federal workforce. While many current federal employees will receive a pay increase such as a within-grade increase or a promotion, for many the extra money they have to pay for the health insurance next year will just be an additional expense.

But, one bit of good news for federal retirees: It appears that there will be a cost of living adjustment in your retirement pay for 2012. We don’t know the final amount of the increase but it appears that it will be in the area of 3.5% for many retirees. (See First COLA in Three Years for Federal Retirees)

The increase in health insurance rates will mean that, on average, those participating in the FEHB with self only coverage will pay $2.32 more per bi-weekly pay period; those with family coverage will pay $6.18 more. Premiums for Health Maintenance Organizations will increase an average 6.7 percent, while Fee-for-Service plans will see an average increase of 3.2 percent according to OPM.

Last year, part of the reason for the increase in rates was the change in benefits that would provide more coverage for some in the federal workforce. Last year, there was added coverage for dependents up to age 26 and no pre-existing condition limitations or waiting periods. For 2012, according to OPM: “There are no significant benefit changes…. Negotiations were geared to keep premium increases as low as possible without increasing the out-of-pocket cost, such as for deductibles, co-pays, and coinsurance.”

In some insurance plans, there will actually be a small deduction in the amount that an employee pays for the insurance. For example, in the Mail Handlers Benefit Standard Plan for a family, there is a decrease of $22.47 per month and a decrease of $11.03 per month for the self-only plan. These plans are still more expensive than other options but may provide enhanced benefits for some consumers. There is also a decrease in two of the Blue Cross plans (enrollment codes 104 and 105) of $1.76 for the self-only plan and a reduction of $1.56 per month for the standard family plan.

At the other end of the spectrum on the fee-for-service plans, there is an increase of $38.23 in  the Mail Handlers Consumer Option self-only plan and an increase of $38.23 for an employee for the Mail Handlers Consumer Option family plan.

The “Open Season” to select your health insurance, dental, vision insurance and flexible spending accounts will be from November 14, 2011 to December 12, 2011. You will want to review the new rates and the coverage of each plan before making a decision on your insurance plans for next year.

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