- The Washington Times - Monday, August 9, 2004

After years of double-digit premium increases, the 9 million people covered by the nation’s biggest company health plan will get a break in 2005, analysts say.

Premiums for the Federal Employees Health Benefits (FEHB) program 2005 plan year won’t be announced until later this year, but some plan watchers think policyholders, and the public that pays the lion’s share of the premiums, may be pleasantly surprised when the new rates are announced.

Calpers, California Public Employees’ Retirement System, often acts as a bellwether for the larger federal program, and it had a mild increase for its 2005 plan.

Premiums for FEHB, the cradle-to-grave health plan covering everyone from ex-presidents to CIA agents, astronauts, and Congress, went up an average of 11.1 percent this year, at the same time that feds in the Washington-Baltimore area were getting a 4.42 percent pay raise.

Federal health premiums — like those of other group plans — are based on usage, costs and the rise in medical inflation, which is almost always much higher than the regular rate of inflation.

But even with the double-digit increases of the past, premiums in the FEHB plan have gone up much less in recent years than for many private-sector plans. In fact, some companies have scrapped their health plans. This has caused Democratic presidential candidate Sen. John Kerry of Massachusetts to propose adding uninsured workers and their families to the federal health program.

A lower-than-normal price increase, if it comes to pass, would be a blessing to lower-paid feds and to retirees who typically get by on inflation-indexed annuities that are about 55 percent of their final salary.

Depending on the regular federal pay fight between the White House and Congress, nonpostal federal workers stand to get a January raise of 3.5 percent (if Congress prevails) or 1.5 percent if the White House wins for the first time ever in a pay fight with Congress. Retirees, whose annuities are pegged to the cost of living over a preselected 12-month period (September through August), are due a January raise of at least 2.8 percent, with two months left to go in the cost-of-living adjustment countdown.

Open seasons

Brace yourself for a rash of important open seasons coming up. Failure to pay attention could cost you money. For example:

• Sept. 1-30 is a special 50th anniversary open season for the Federal Employees Group Life Insurance program. It will be a rare opportunity for feds to increase the face value of their policies. It also will pay younger, healthier workers to check outside sources where many can get less expensive coverage on individual plans.

• Oct. 15 through Dec. 31 is the next and maybe last regular open season for the federal Thrift Savings Plan. It’s the time to sign up for the 401(k) plan and change your contribution rates. Next year, the TSP may go to an every-day-is-open-season system.

• The open season for the Federal Employees Health Benefits plan will run from Nov. 8 through early December. This is the time to pick your 2005 health plan (based on premium and benefit changes). If you fail to act, then you will remain in your current plan that could be raising premiums and cutting benefits, or dropping your favorite doctors.

Mike Causey, senior editor at FederalNewsRadio.com, can be reached at 202/895-5132 or mcausey@federalnewsradio.com.

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