Winners and Losers Under New Health Insurance Premium Options

Health insurance premiums for 2016 may go up about 7% for 2016. But, for those in new self plus one option, costs may decrease about 6% according to a government estimate.

Will you sign up for the new self plus one option available to federal employees and retirees in the Federal Employees Health Benefits Program (FEHB)? As might be expected with a new program of this magnitude, some federal employees and retirees will incur greater costs while others will see their expenses go down.

Some FEHB members have argued for decades in comments on the FedSmith site and in the press generally that family health insurance premium costs unfairly subsidize FEHB members with larger families. At the same time, those FEHB members with larger families argue that the system should not change as health insurance premiums would go up substantially if households with only two people are covered under a different tier within the FEHB.

We do not yet know the new health insurance premium rates for 2016. But as explained below, the government projects costs may go down about 6% for those switching from family plans to the new self plus one option and go up an average of 7% for those currently in family plans.

Federal employees have known for some time that the option is coming and will be effective starting in January 2016. But, as is usually the case with complex changes in a program that impacts a large number of people, there are ripples and regulations that will impact many readers.

Any change to this program will not be automatic. In order to enroll, it will be necessary to take action to implement the change. As noted by the Office of Personnel Management (OPM) in a new rule that has just been published in the Federal Register:

“Just as is the case under the current two-tier system, enrollees must inform their agency, either through an electronic or paper copy of the Standard Form 2809, when they increase or decrease coverage. Agencies are responsible for submitting this information to carriers. This requirement will be no different for self plus one.

Open season will be held this Fall and it is during this time period that those interested can sign up for the self plus one program. “Enrollees who have been looking forward to this change will now be able to select a self plus one enrollment type during the 2015 Open Season for effective dates in January of 2016” according to the new OPM rule. Open season starts on November 9, 2015 and ends on December 14, 2015. There will also be a limited enrollment period in January 2016. We will provide more information on this limited enrollment period in another article.

The 2016 health insurance rates are likely to be available early in October before the start of the open season.

The new option is likely to impact the cost of health insurance premiums. While the 2016 rates are not yet available, OPM estimates that the cost for family coverage will increase by about 7%.

Current family plan enrollees who switch to that new option, called self plus one, will save 6%, on average, compared with current rates. This is just an estimate and there are likely to be more changes in any event after the new system has been in place for a year and insurance companies and OPM are able to determine how the self plus one option has actually impacted costs for all concerned.

Agency human resources offices can anticipate a significant amount of movement this year in the health insurance program compared with most years. OPM estimates:

  • 33% of active employees with existing self and family will shift to self plus one coverage.
  • Only 20% of annuitants with existing self and family coverage will retain that coverage (80% will shift to self plus one).

Of interest to some readers is the question of what “family members” will qualify for the “plus one” coverage. As noted in the new rule:

“Family member eligibility…includes spouses and children up to age 26…[F]amily member eligibility guidelines remain the same as in place under the two tier system. Domestic partners, cohabitating (unmarried) couples, and siblings are not considered eligible family members under the law at this time.”

As new information becomes available, we will advise readers in articles on the site and in our blog posts about the changes.

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Federal Register Self Plus One Final Rule

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