FEHBP Family Options — continued

David Ermer–Uncategorized–

Readers may have noticed that according to press reports, that the average government contribution toward FEHBP coverage increased by 1.2% for 2019. The FEHBlog noted yesterday that the maximum government contribution increased by 0.3% for self plus one coverage and 0.7% for self and family coverage. The increase for self only coverage was 0.4%. So the maximum government contribution increase was under 1%. How then is the government contribution increasing by 1.2%? The government contribution toward FEHB coverage is 72% of the enrollment weighted average capped at 75% of the selected plan’s premium. Consequently, if a plan’s premium is below the maximum government contribution (and many are), the federal government picks up 75% of the any increase in the premium of an under the max plan. Those under the max plan increases account for the average 1.2% increase in the government contribution.

You also many wonder why the FEHBlog is so confident about the fact that before the introduction of the self plus one enrollment level for 2016, the average self and family contribution for FEHBP coverage was 2.3 to 2.4 times the self only contribution. The FEHBlog is confident because back in 2015 he was doing the math to figure out how FEHB plans stood in relation to the ACA’s zany Cadillac tax thresholds. The FEHBlog calculated that the ACA’s threshold for other than self and family coverage is 2.7 times its threshold for self only coverage. As a result, FEHB premiums for self only coverage tend to be bumping up against the Cadillac tax threshold while other than self only thresholds tend to be comfortably below the Cadillac tax threshold. And that my friends is what you get with an arbitrary law like the ACA’s Cadillac tax. 
In any event, FEHBP premium changes are looking better than other large employers according to today Kaiser survey.

Finally, while the FEHBlog believes that adding a self plus one tier to the FEHBP was unnecessary, he is a big fan of consumer choice so let’s see what happens over time.