Big News!

(The FEHBlog wrote this on Wednesday but it for some reason did not get onto the blog until Thursday.) The budget deal that House and Senate leadership reached yesterday will authorize OPM, when enacted into law probably next week, to create a self plus one coverage option for the FEHBP.  See the last line in this House Budget Committee summary. The change is made by Section 706 of the proposed legislation (p. 74).

Historically, OPM held the view that self plus one coverage would cost virtually the same as self and family coverage because of the relatively average small family size that the FEHBP experienced before Congress increased the dependent child eligibility age limit to 26 as part of the ACA.

OPM recently reevaluated this issue and proposed that Congress add a self plus one option to the FEHBP last Spring. The Congressional Budget Office finds that this change will create savings for the government. In a report issued today, CBO explains that

Section 706 would add a two-person “self plus one” coverage option for federal
employees and retirees under the Federal Employees Health Benefits (FEHB)
program. CBO estimates that option would be priced below the “self plus family”
option currently available. However, the “self plus family” option would become
more costly than under current law because the average number of people covered
by policies of that type would rise. CBO expects that federal retirees would be more
likely than active federal employees to switch to “self plus one” policies. As a
result, the average cost of FEHB policies for federal retirees would be lower than
under current law, and the average cost of FEHB policies for active federal
employees would be higher than under current law.

The provision would reduce direct spending because the government contribution
for health benefits for federal retirees is classified as direct spending. On the other
hand, implementing the provision would increase spending subject to appropriation,
assuming appropriation of the necessary funds, because the government
contribution for health benefits for active federal employees is classified as
discretionary spending

As it’s quite likely that this bill will become law, the change will go into effect for 2015.

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