Three straight double-digit increases compound to at least 33.1%. A federal family paying $250 every two weeks for FEHB Self and Family before this run began is now paying at least $332.75. That's roughly $2,150 more a year, and it's the floor, since it assumes each hike was only 10%. Enrollees in plans with bigger jumps are paying far more, and at least one carrier's premiums are set to more than double. A $250 biweekly premium that doubles adds $6,500 a year.
So open season matters this year. If you do nothing, you're re-enrolled in the same plan at the new price. The plan that was cheapest for you two years ago may not be now.
By the Numbers
- 33.1%: the minimum compound increase from three straight 10% hikes (1.10 × 1.10 × 1.10)
- ~$2,150 a year: added cost for a family premium that began at $250 biweekly and rose 10% annually
- ~$1,510 a year: the same hit after the pretax break, assuming a 22% federal bracket plus 7.65% FICA (state taxes ignored)
- $6,500 a year: added cost if a $250 biweekly premium doubles to $500
- 72% / 75%: the government's share of the weighted-average premium, and the cap on its share of any single plan's premium
- 26: biweekly pay periods over which active employees pay premiums. Retirees pay in 12 monthly installments.
These dollar figures are illustrations built from the arithmetic, not any plan's published rates. OPM's premium tables list the real numbers for every plan and option.
How it works
The Federal Employees Health Benefits Program is governed by Chapter 89 of Title 5, U.S. Code, and run by the Office of Personnel Management. OPM contracts with private carriers: national plans, employee organization plans, regional HMOs. Each carrier negotiates its rates with OPM in the spring and summer. OPM typically announces the results in the fall, just ahead of open season.
Under 5 U.S.C. § 8906, the premium is split between you and the government. The government contribution is set at 72% of the weighted-average premium across the largest plans in the program, but it can't exceed 75% of the total premium for any one plan. Two things follow:
- The government pays a formula amount, not a fixed percentage of your plan. If your plan's premium climbs faster than the program average, the extra falls disproportionately on you until the 75% cap kicks in.
- You always pay at least 25% of your own plan's total premium. Above that floor, your share depends on how your plan's price compares with the average.
That's how a program-wide trend can hide very different outcomes. A plan with a modest increase might cost you a few dollars more per paycheck. A steep one can swing hundreds.
Active employees pay through payroll deduction, and premium conversion makes those payments pretax. The money escapes federal income tax and FICA, and usually state income tax too. Retirees pay out of their annuity each month and generally don't get the pretax treatment, so a retiree's premium dollar costs more to spend. For a FERS retiree whose COLA is capped below inflation, premium growth bites harder still.
Open season typically runs from mid-November to mid-December. During it you can switch plans, change options (such as standard to basic, or to a high-deductible plan), change your enrollment type (Self Only, Self Plus One, Self and Family), or enroll if you aren't covered. New rates and benefits take effect in January. Outside open season, you generally need a qualifying life event, such as marriage, birth, or loss of other coverage, to make changes.
A worked example
Take Dana, a GS-12 with a spouse and two kids on Self and Family. Say she was paying $250 biweekly before this run of increases. The numbers are hypothetical, but the math is real.
Step 1: Compound three years at the minimum.
- Year one at +10%: $275.00
- Year two: $302.50
- Year three: $332.75
Step 2: Annualize.
- Before: $250 × 26 = $6,500
- Now: $332.75 × 26 = $8,651.50
- Increase: $2,151.50 a year
Step 3: Adjust for the pretax break. Dana is in the 22% bracket and pays 7.65% FICA. Pretax deductions shield her from both, so the take-home hit is about $2,151.50 × (1 − 0.22 − 0.0765) = roughly $1,510 a year. Still real money, but less than the sticker figure.
Step 4: Compare a rival plan. Say she finds a plan with a comparable network at $290 biweekly. Staying put costs $332.75. Switching costs $290. That's $42.75 less per pay period, or $1,111.50 a year, before she checks deductibles, her doctors' participation, and prescription tiers.
Step 5: Check the downside. If the cheaper plan has a $1,500 higher deductible and her family tends to hit it, the savings evaporate. Premium is only one line of the bill.
Now take Dana's colleague Marcus, whose plan's premium doubled from $250 to $500 biweekly. His increase is $6,500 a year, or about $4,570 after tax. He can't write that off as a nuisance. It's a reason to shop.
Who is affected, and by how much
Active employees on Self and Family. They pay the biggest dollar premiums, so any given percentage hits them hardest. A 10% rise on a $250 biweekly premium is $650 a year. A 20% rise is $1,300.
Self Only enrollees. Smaller dollars, same percentages. A premium of $90 biweekly rising 10% adds $234 a year.
Retirees. They pay monthly and without the pretax break, so every dollar of increase comes straight out of pocket. On a FERS annuity, the COLA formula may not keep pace. CSRS annuitants get the full COLA, which softens the blow more.
Enrollees in the plan that more than doubles. Their premiums are set to more than double next year, according to GovExec. For them the question isn't whether to compare. It's which alternative to pick.
Enrollees in plans with small increases. Some carriers will come in well below the program trend. If you're in one, your best move may be to stay, but verify. A plan can be cheap on premium and expensive on benefits.
Postal employees and retirees. They're now in the Postal Service Health Benefits Program, which has its own premium table. Check PSHB rates rather than assuming FEHB numbers apply.
Military retirees with a federal civilian job. They can choose between FEHB and TRICE for the military side, but the coordination rules differ. Look at both before dropping either.
How to estimate your own
Start with the biweekly figure on your pay stub, or your monthly figure if you're retired. Multiply by 26 (or 12). Then pull the new premium for your plan and option from OPM's premium tables and run the same math. The difference is your annual increase.
To see whether a plan's price is worth what you'd get, use the FEHB value guide. It lets you plug in your premium, expected usage, and plan features to see total expected cost, not just the sticker price. Run at least three candidates: your current plan, the cheapest plan with doctors you'd actually keep, and a high-deductible option if you're healthy enough to consider an HSA.
FAQ
What happens if I do nothing during open season? You stay in your current plan and option at the new premium. You don't have to file anything.
Can I switch plans after open season ends? Generally not, unless you have a qualifying life event such as marriage, birth, adoption, or loss of other coverage. The window to act is typically 60 days from the event.
Does the government cover more as premiums go up? Its dollar contribution rises with the weighted-average premium, up to the 75% cap on any single plan. But if your plan rises faster than the average, you absorb the difference.
Is the cheapest premium always the best choice? No. Compare the deductible, out-of-pocket maximum, copays, prescription tiers, and whether your doctors are in network. A $1,100 savings on premium can vanish in one bad year of claims.
Will I lose coverage in retirement if I switch plans now? No. But you must have been continuously enrolled in FEHB for the five years before retiring to carry coverage into retirement. Switching plans doesn't break that clock, as long as you stay enrolled in some FEHB plan.
Bottom line
"Double-digit increase" sounds abstract until you compound it. Three years at 10% is 33%. For a family premium that began at $250 biweekly, that's about $2,150 a year, or $6,500 if your plan doubles. Increases vary widely by carrier, so your plan's number matters more than the headline. Pull your plan's new premium, compare at least two alternatives on total cost, and decide before open season closes in mid-December.