Everything You Need to Know About the 2023 Federal Employee Health Benefits Premiums

Health insurance is a critical aspect of personal and family responsibility. Such benefits fall under the Federal Employee Health Benefits Program for federal employees.

Under this program, the Office of Personnel Management (OPM) contracts with various private health insurance carriers to provide coverage to federal employees, retirees, and their families.

Each year, the OPM announces the proposed premiums for the FEHB program. And with rising healthcare costs, this has been received with much debate in recent years as the rates continually rise.

To this effect, the Office of Personnel Management (OPM) has just released the proposed premiums for Federal Employee Health Benefits (FEHB) for 2023. And beyond keeping up with the upward trend, the rise is higher than it has been in over ten years.

So, if you’re an FEHB enrollee, you might need to assess your healthcare plan selections and determine what meets your needs best at the lowest cost.

In this article, you’ll find the proposed FEHB premiums for 2023 and insight into what it means to you and your family.

Overview of the Proposed Premiums for 2023

On average, FEHB enrollees, including retirees, can expect to pay 8.7% higher premiums for the year 2023. This is the highest percentage increase since 2011 when rates increased by 9.6%.

Here’s how the proposed average premiums for each type of health plan offered under FEHB will change in comparison to premiums in 2022:

  • Self Only (+8.2%)
  • Self Plus One (+8.7%)
  • Self and Family (+9.2%)

As you can see, the proposed premium hikes vary depending on the type of plan selected.

Understandably, you may feel hard done by such a sudden hike. However, it’s also important to note that the government’s contribution to your plan will rise by 6.6%.

Factors Contributing to the Rising FEHB Premiums

Before going into why premiums are rising yearly, it’s crucial to understand how the OPM calculates the premiums for FEHB.

The OPM uses a standard method to calculate the rates. The FEHB Premium Setting Process process is as follows:

  • The OPM calculates an estimate of the total cost of health care for FEHB enrollees in the coming year.
  • They then add a 2% cushion to account for any unforeseen costs.
  • From there, they determine the government’s share (75%) and the enrollee’s share (25%).
  • Finally, they spread out these costs throughout the year to generate monthly premiums.

Now that you understand how premiums are calculated let’s look at why they’re rising each year.

There are two primary factors that contribute to the rising cost of health care and, as a result, higher FEHB premiums.

The first is the general increase in medical inflation. This refers to the average rise in prices for goods and services within the healthcare industry. In other words, it costs more for hospitals, doctors, and pharmaceutical companies to provide care and medication than last year.

The second factor is an increase in utilization. This measures how often enrollees are using their health benefits. When more people use their insurance, it results in higher premiums for everyone.

In addition, the end of the “Affordable Care Act” health insurance tax credit has caused an increase in after-tax premiums for many enrollees.

How Will This Impact My Family?

The premium hikes will affect enrollees in different ways depending on their unique situation.

For some, the increase might be manageable. However, the added cost could considerably impact those already struggling to make ends meet.

The most significant way this will impact your family is through the higher monthly premiums you’ll need to pay if you want to maintain the same level of health insurance coverage.

For example, if you’re currently paying $100 per month for your health insurance and the proposed premium hike is 8.7%, you can expect to pay $108.70 next year. While this may not seem like a lot, it can add up over time – especially if you have multiple family members on your plan.

In addition to the monthly premium hikes, you can expect your deductibles and out-of-pocket costs to increase. This is because most health plans under FEHB are based on a cost-sharing model, meaning enrollees share the costs of their care with their insurance carrier.

So, if your deductible is $1,000 and it increases by 8.7%, you’ll be responsible for paying $1,087 next year before your insurance coverage kicks in. The same goes for things like coinsurance and copayments.

Of course, this will all depend on the specific health plan you have selected. Some plans may see higher increases than others. That’s why it’s vital that you review your options and make a selection that best meets your needs.

How to Mitigate the Impact of Rising FEHB Premiums

If you’re worried about how the proposed premium hike might affect your budget, there are a few things you can do.

1. Review Your Current Healthcare Plan

First, look at your current health plan and see if alternative options might better suit your needs. For example, the FEHB offers various plans, and another type might be more affordable for you.

You can compare plans and rates on the OPM website. When making your selection, consider things like monthly premiums, deductibles, out-of-pocket costs, and coverage levels.

You should also consider whether or not you need to make any changes to your current health insurance coverage. For example, if you have a high-deductible health plan (HDHP), consider switching to a plan with lower deductibles and out-of-pocket costs.

On the other hand, if you have a health savings account (HSA), stick with your HDHP since it offers the best tax advantages.

Keep in mind that you can only change your health plan during the Open Season. This is the period from November 11th through December 10th when enrollees can change their health plans for the following year. So if you’re unhappy with your current plan or think you can find a better deal elsewhere, this is your chance to switch.

2. Enroll in a Health Savings Account

Another great option is to enroll in a health savings account (HSA). This is a special type of account that allows you to set aside money pre-tax to use for qualifying medical expenses. The funds in your HSA can be used to pay for deductibles, copayments, and coinsurance.

Not only does this help you cover out-of-pocket costs, but it can also save you money on taxes. This is because your HSA contributions are tax-deductible, and the money grows tax-free. So, enrolling in an HSA is a great way to offset some of the costs if you have a high-deductible health plan.

3. Apply for a Premium Subsidy If You’re Eligible

You can also see if you’re eligible for a premium subsidy. If your income is below a certain level, you may qualify for help with paying your monthly premiums.

To see if you’re eligible, visit the premium subsidy website. You’ll need to provide some information about your income and family size. If you qualify, you’ll be able to enroll in a health plan with reduced premiums.

Keep in mind that the premium subsidies are only available during the Open Season. So, if you think you qualify, apply during this period.

4. Look for Ways to Cut Costs Elsewhere

If you’re struggling to pay your monthly premiums, you may need to look for ways to cut costs elsewhere in your budget. This might mean making some lifestyle changes, such as eating out less often or cutting back on unnecessary expenses.

In addition, consider getting a side hustle to bring in some extra income. There are various ways to make money from home these days, and with a little effort, you can quickly boost your income.

Final Thoughts

The proposed premium hike for 2023 is undoubtedly a cause for concern. However, there are things you can do to mitigate the impact on your budget. First, review your health plan options, enroll in a health savings account, and apply for a premium subsidy if you think you might be eligible. You may also need to adjust your lifestyle to free up some extra cash.

But remember, the proposed premium hike is just that – a proposal. The final rates may be lower. So, there’s no need to panic just yet.

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