Health Premiums Will Put Bigger Dent in Wallets in '06
By Stephen Barr
Sunday, September 18, 2005; C02
There are all those football games on TV, the kids' soccer games, trips to the grocery store, yardwork and all the other stuff that can devour weekends.
So take a look at the calendar, circle a date between Nov. 14 and Dec. 12, and set aside time to review health care options in the 2006 federal employee and retiree program.
Most enrollees in the Federal Employees Health Benefits Program will see their premiums increase from 2.5 percent to 15 percent next year, the government announced last week. Analysts at the Office of Personnel Management, which administers the program, think more enrollees are shopping for cheaper choices and moving into standard and basic options.
During the November-December open season, federal employees also will be able to sign up for flexible spending accounts so that pretax dollars can be used to pay for child care, dependent care and medical, dental and vision expenses not covered by their health insurance.
For next year, employees may set aside up to $5,000 in health care flexible spending accounts and in dependent care accounts. Money in the accounts that is not spent by March 15, 2007, will be forfeited.
And there probably will be one more homework assignment involving benefits: for enhanced dental and vision coverage. OPM plans to set up the program next year, and officials said they plan to release information soon so employees and retirees will have a sense of the program.
The government will not pick up any of the cost of the new dental-vision program, but congressional aides predict affordable, competitive premiums will be offered.
For next year, the Federal Employees Health Benefits Program will offer 279 options. Under the program's formula for calculating premiums, enrollees will see a 10 percent increase in their share of costs and the government, as employer, will contribute 5.2 percent more.
The enrollees' cost increase is higher than in the past two years, when less than a percentage point separated the enrollee contribution and the government's contribution to premiums.
Employee groups, such as the National Active and Retired Federal Employees Association, are questioning why employees are shouldering more of the rate increase than the government. Association President Charles L. Fallis said he wants to work with congressional oversight committees and OPM on the issue.
Linda M. Springer , OPM director, said the government pays 72 percent, on average, of premium costs but ended up paying a higher share this year because a significant number of employees shifted to lower-cost plans.
OPM rebalances the enrollee-government contribution rates at the start of each year, she said, "and most years it is not significant, but this year it was."
Springer noted that OPM pointed out the increased enrollee share for 2006 as part of its premium announcement, and she denied a charge by the American Federation of Government Employees that OPM manipulated the formula to shift costs onto employees and retirees.
"We laid all of the cards on the table," she said.
As longtime enrollees know, premiums for the popular health benefits plans go up and down almost every year.
For 2006, Blue Cross's standard option will increase in cost by 14.5 percent for individual coverage and 14.8 percent for family coverage.
Another large plan, the Mail Handlers Benefit Plan, increased its premiums substantially this year. For 2006, the cost of the standard option is rising by 2.4 percent for individuals and by 8 percent for families.
In the Washington area, the Aetna "Open Access" plan will increase the employee share of premiums by 21.8 percent for individuals and by 19.9 percent for families. MD IPA is raising its premiums by 9 percent for individuals and families.
Federal employees and retirees will be receiving increases in pay and pensions at the start of next year, which should help offset higher premiums.
Civil service and military personnel appear on track to receive a 3.1 percent pay raise next year.
Retirees may see a similar increase in their 2006 cost-of-living adjustment. The index used to calculate the retiree COLA is up 3.5 percent, although another month remains in the counting period. The COLA will be announced in mid-October, in time to help plan spending for health care.