A $25-per-paycheck premium saving on an FEHB plan is worth $650 a year. One heavier deductible, a pricier specialty-drug tier or a single hospital admission can wipe that out by February. Most FEHB plans are raising premiums for 2027, according to Federal News Network, and some are trimming benefits at the doctor's office and the pharmacy. The plan that was cheapest last year may not be the cheapest one you actually use.
Do nothing during open season and you keep your current plan, with its new premium and its new benefit design. That's the default. For a lot of enrollees, it's the costly one.
By the Numbers
- $650: what a $25-per-pay-period premium difference adds up to over 26 pay periods.
- $19,500: that same $650 a year over a 30-year retirement, before any premium growth.
- 72% / 75%: the government's share of the weighted-average premium, and the cap on its share of any single plan's premium (5 U.S.C. § 8906).
- 25%: the least you can pay of any plan's total premium. Plenty of enrollees pay more.
- Nov. 9 – Dec. 14, 2026: open season, running from the second Monday in November to the second Monday in December.
- 26 vs. 12: employees pay premiums over 26 pay periods; annuitants pay over 12 monthly payments.
How FEHB premiums and cost-sharing actually work
FEHB is governed by Chapter 89 of Title 5, U.S. Code, and OPM runs it under 5 CFR Part 890. OPM negotiates every year with each carrier. Plans submit rates and benefit designs, OPM haggles, and final premiums are typically announced in the fall, ahead of open season.
Your share comes from a formula in 5 U.S.C. § 8906. The government pays 72 percent of the weighted-average premium across the program, but never more than 75 percent of any one plan's premium. Two things follow.
Cheap plans get capped. If a plan's premium is low enough that 72 percent of the average would exceed 75 percent of its price, the government pays 75 percent and you pay the other 25. On those plans, each extra dollar of premium costs you about a quarter.
Pricey plans pass on more. Above the cap, the government's dollar contribution is roughly fixed by the program average, not by your plan's price. When an above-average plan raises its rate faster than the program does, you absorb most or all of the difference. That's why a "5 percent increase" can mean very different things on two paychecks.
Premium is only one line. The rest:
- Deductible: what you pay before the plan pays on most services.
- Copays and coinsurance: flat dollar amounts or percentages after the deductible.
- Catastrophic limit: the annual out-of-pocket maximum. It varies a lot between plans.
- Pharmacy tiers: generics, preferred brands, non-preferred and specialty each carry different cost-sharing. Specialty is where plan changes sting most.
- Network rules: a cheaper plan with a narrower network can cost more if your doctors aren't in it.
Employees typically pay through premium conversion, a Section 125 arrangement that takes premiums out before federal income tax and FICA. Retirees generally don't get that treatment, so a dollar of premium costs them more in take-home terms.
One scope note: postal employees and retirees moved to the separate Postal Service Health Benefits program in 2025. This piece covers FEHB.
A worked example
Marcus is a FERS employee on Self Plus One. These figures are illustrative, not any specific plan's 2027 rates.
Step 1: Current plan. His share is $210 per pay period, or $5,460 a year (26 × $210).
Step 2: The increase. Say the plan raises his share 6 percent. That's $327.60 a year, bringing him to $222.60 per pay period, or $5,787.60 annually.
Step 3: The alternative. A competing plan costs him $185 per pay period, or $4,810. The premium saving is $977.60.
Step 4: Premium conversion. Premiums come out pre-tax, so the saving isn't $977.60 in his pocket. At a 22 percent federal bracket plus 7.65 percent FICA (29.65 percent combined), the take-home value is about $688.
Step 5: Expected care costs. Marcus's household has a few specialist visits and one maintenance prescription. Under his current plan he expects about $1,200 in out-of-pocket costs. The cheaper plan has a higher deductible and steeper pharmacy tiers, so he expects about $2,400.
Step 6: Compare. The cheaper plan saves him about $688 in take-home pay but costs $1,200 more at the counter. Staying put comes out ahead by roughly $512. If he pays those out-of-pocket costs with HSA or FSA dollars, the math tightens, since those are pre-tax too.
Flip the usage and the answer flips. A healthy single enrollee who expects $300 in care costs would likely take the cheaper plan and pocket the saving.
Who is affected, and by how much
Active employees on Self and Family. They carry the biggest dollar exposure. Family premiums are the largest line, so every percentage point of increase costs more. At a $350 per-paycheck share, one point is $91 a year.
Employees on Self Only. Smaller dollars, same principle. The bigger question is whether you actually use the plan. If you rarely see a doctor, a high-deductible plan or a consumer-driven option, ideally paired with an HSA, is worth a look.
Retirees. Premiums come out of your annuity over 12 payments, usually without premium conversion. And your COLA may not keep up. A FERS COLA is held to 2 percent when inflation runs between 2 and 3 percent, and to CPI minus 1 point above 3 percent. If premiums outpace that, the gap comes straight out of spending money.
Retirees with Medicare A and B. Check each plan brochure for how it coordinates with Medicare. Some plans reduce or waive cost-sharing for people with both parts, and some offer Part B premium reimbursement. That can swing the comparison hard.
Heavy pharmacy users. Specialty drug tiers and formulary changes are where benefit cuts bite fastest. A one-tier shift on a single monthly medication can cost more per year than a premium saving.
How to estimate your own
You need four numbers for each plan you're considering: your annual premium share, the deductible, your expected copays and coinsurance, and the catastrophic limit. Start by pulling last year's explanation-of-benefits statements to see what you actually spent. Then run each candidate plan against that same usage.
The FEHB value guide walks through that comparison so you can see premium and out-of-pocket costs side by side. In the plan brochure, go to the "Summary of Benefits" and the "Changes for 2027" section near the front. Every carrier has to list what's different from last year. That's where tier shifts, new prior-authorization rules and changed copays show up.
OPM also posts a plan comparison tool on its healthcare site. Use it to filter by tier and option, then verify the final numbers in the brochure itself.
Two checks people skip. Confirm your doctors and hospital are in-network for the specific plan option, not just the carrier. And look up your key prescriptions in the 2027 formulary.
FAQ
What happens if I don't make a change during open season? You stay in your current plan, and you pay its 2027 premium under its 2027 benefit design. Nothing needs to be filed to keep coverage.
Can I switch plans after open season ends? Generally only if you have a qualifying life event, such as marriage, birth or adoption of a child, loss of other coverage, or a move out of your plan's service area. Otherwise you wait for the next open season.
Is the cheapest premium ever the right choice? Sometimes. It's usually right for people who use little care, particularly if they can pair it with an HSA. It's often wrong for anyone with regular prescriptions, ongoing specialist care or a planned procedure.
Can I change my tier of coverage? Yes. Open season lets you move among Self Only, Self Plus One, and Self and Family, as long as you have eligible family members for the tier you choose.
Bottom line
FEHB isn't a plan you pick once. Premium formulas and benefit designs shift every year, and the default is to absorb whatever your carrier decided. A $25-per-paycheck difference in premium is $650 a year, and over a retirement it can top $19,500. That's worth an evening with the brochures. Check the tier changes, price your own usage, and decide before the December deadline.