Key Takeaways:
- Federal employees enrolled in FEHB will face a significant 13.5% premium increase starting in 2025, the largest in over a decade. It’s crucial to prepare now.
- Use Open Season (November 11 – December 9, 2024) to adjust your healthcare options and minimize the financial impact before the increase hits.
What the 13.5% Premium Increase Means for You
Starting in 2025, federal employees enrolled in the Federal Employees Health Benefits (FEHB) program will see their premiums
- Also Read: Medicare and Federal Benefits: What Employees Need to Know as They Approach 65
- Also Read: Special Retirement Plans for Federal Workers—Here’s How FAA, LEO, and Other Employees Get a Better Deal
- Also Read: Federal Law Enforcement Retirement: Here’s How to Get the Most Out of Your Special Perks
If you’re like me, managing your paycheck is more than just balancing your daily expenses—rising healthcare premiums are a major part of the equation. Understanding this increase and how to prepare is key to ensuring you’re not caught off guard in the new year.
Why the Premiums Are Rising
So, why are we facing such a big jump? The 13.5% increase reflects industry-wide healthcare cost pressures that have been building up. Several factors contribute to this rise, including higher prices from healthcare providers, increased use of prescription medications, and a growing demand for behavioral health services.
The Office of Personnel Management (OPM) explained that these rising costs are not unique to federal employees; they’re part of broader trends seen across the healthcare industry. As a result, FEHB participants will see their share of premiums increase significantly in 2025, adding an average of $26.10 per biweekly pay period, depending on your plan.
Open Season: Your Opportunity to Prepare
The good news? You’ve got time to prepare. Open Season for federal employees runs from November 11 to December 9, 2024. This is your opportunity to review your current health plan, compare options, and make any necessary changes before the premium increase kicks in next year.
During Open Season, you can switch to a plan that better fits your needs, whether it’s one with lower premiums or different coverage options. Some federal employees may find that a high-deductible health plan (HDHP) paired with a Health Savings Account (HSA) offers better savings in the long run. Others might stick with their current plan but adjust how they use other tax-advantaged tools like Flexible Spending Accounts (FSAs).
How to Mitigate the Impact of the Premium Hike
With a 13.5% increase looming, here are a few ways to cushion the blow and make the most of Open Season:
-
Compare Plans Carefully: Take time to assess the available FEHB plans and consider switching to one with a lower premium or better benefits. While it’s tempting to stick with what you know, a little research can go a long way. Many plans will offer competitive benefits at lower costs, especially if you’re willing to switch.
-
Consider a High-Deductible Health Plan (HDHP): If you’re generally healthy and don’t anticipate many doctor visits, a high-deductible plan could help reduce your premiums. These plans often come with HSAs, which let you save for future medical expenses tax-free. This strategy can help offset the higher costs in other areas.
-
Maximize Tax-Advantaged Accounts: Both HSAs and FSAs are tools designed to help you pay for healthcare costs using pre-tax dollars. HSAs, in particular, can offer great long-term savings since the money rolls over from year to year and can even be invested. FSAs, meanwhile, are ideal for covering short-term, out-of-pocket expenses like co-pays and prescription costs.
-
Take Advantage of Preventive Care: Many plans within the FEHB program offer free or low-cost preventive services, such as annual check-ups, vaccinations, and screenings. Using these services not only helps you stay healthy but can also prevent costly health issues down the line.
-
Plan for Out-of-Pocket Costs: If you’re moving to a plan with a higher deductible, make sure to set aside funds for out-of-pocket costs. Having a buffer in place will prevent any surprise expenses from derailing your budget.
Why Postal Workers Should Pay Attention to PSHB
For those of you in the Postal Service, it’s important to know that the Postal Service Health Benefits (PSHB) program, which will replace FEHB for postal workers, is also seeing changes. Premiums for PSHB will rise by 11.1% in 2025. The slightly smaller increase compared to FEHB is due to Medicare integration for retirees, which helps manage costs.
If you’re a Postal Service employee or retiree, your health plan will automatically transition to PSHB unless you make a change during Open Season. Be sure to compare your PSHB options, as your needs may have shifted, especially with the expected premium changes.
Important Dates to Remember
The 2025 premium increase may seem daunting, but taking the right steps during Open Season can help. Here’s your timeline for making the necessary adjustments:
- November 11 to December 9, 2024: FEHB and PSHB Open Season. This is your chance to review your plan options and make changes.
- January 2025: New premium rates take effect. Your paycheck will start reflecting the higher FEHB or PSHB premiums.
It’s also worth noting that while the average increase is 13.5%, some plans may experience smaller hikes, while others could see even larger ones. Be sure to check your specific plan to see how much your premiums will change.
Secure Your Healthcare Plan for 2025
Facing a 13.5% increase in FEHB premiums isn’t ideal, but by planning ahead and making smart choices during Open Season, you can soften the financial impact. Review your options, weigh the pros and cons of different plans, and consider using tax-advantaged accounts to manage out-of-pocket costs. The key is to act now, not after the increase starts affecting your paycheck.
Take the time this Open Season to secure the best possible healthcare plan for you and your family. The decisions you make now will help you navigate 2025 without unnecessary financial stress.
