In 2025, FEHB enrollees will see their health insurance premiums increase the most in more than a decade

Federal Employees Health Benefits (FEHB) enrollees will soon see the biggest increase in health insurance costs in at least a decade.

Federal workers and retirees enrolled in FEHB will pay an average of 13.5% more in health insurance premiums starting in January, according to data released Wednesday by the Office of Personnel Management.

The significant premium increase for the FEHB plan for 2025 follows a 7.7% increase in 2024 and an 8.7% increase in 2023. OPM said the increase reflects changes in the marketplace over the past year and is generally consistent with other plans in the commercial marketplace.

“The premium increases are due to the effects of provider and supplier price increases, increased use of some prescription drugs, and behavioral health spending,” OPM said. “Industry-wide cost pressures are impacting FEHB and PSHB rates similarly.”

FEHB enrollees will start paying an average of $26.10 more toward their biweekly health insurance premiums starting in 2025.

When both enrollee and government cost shares of insurance are included, FEHB health insurance premiums for enrollees will increase by an average of 11.2%, compared with the government premium, which increases by 10.1%.

The breakdown of an enrollee’s FEHB contributions versus the government is set out in law. The government covers about 75% of an enrollee’s FEHB contribution, but that number is capped at 72% of the prior year’s weighted average contributions.

FEHB premium rates change every year, but they inevitably increase by some amount. The percentage increases in FEHB premiums are average, meaning some plan options will have smaller cost increases, while others will have larger ones.

In contrast, premium increases for new Postal Service Health Benefits (PSHB) enrollees will be slightly lower than for FEHB. Postal Service Health Benefits enrollees will pay an 11.1% increase in health care premiums. Averaging out the government’s share of the cost, which increases by 5.1%, the overall premium increase for PSHB is 6.9%.

“The premium increase under the Postal Service program is lower than the FEHB premium increase due to the increased integration with Medicare required by the Postal Service Reform Act, differences in the cost profiles of plans offered under each program, and demographic factors,” OPM said.

PSHB enrollees will pay an average of $20 more for their fortnightly health care premiums next year.

Compared to FEHB and PSHB, CalPERS, which buys health insurance for California state government employees, announced an average premium increase of 10.79% for 2025. After the federal government, CalPERS is the second-largest public purchaser of insurance in the U.S.

Open Season Options

As usual, the OPM announcement comes a few weeks before the Open Season begins. It’s the time of year when FEHB participants can review and consider making changes to their health care options for the 2025 plan year. This year, the Open Season will run from November 11 to December 9.

While Open Enrollment is held every year, this year’s Open Season will look very different. In addition to FEHB, OPM is launching an all-new Postal Service Health Benefits (PSHB) program to provide health insurance to approximately 2 million postal workers, retirees, and their dependents.

Like FEHB enrollees, new postal program participants will be able to make changes to their health care options during the application period for plan year 2025.

“All current Postal employees, retirees and their dependents enrolled in an FEHB plan will be assigned to an equivalent PSHB plan prior to Open Season,” OPM said. “During Open Season, enrollees may elect to remain in the plan to which they were assigned or select a different plan.”

FEHB participants will be able to choose from 64 plans offered by 42 insurers in 2025 and a total of 130 plan options.

PSHB participants will have 69 plan options from 30 health care providers to choose from. This includes seven fee-for-service providers and 23 health maintenance organizations (HMOs) available through PSHB.

However, some plan options are specific to certain geographic regions or agencies. Not every FEHB or PSHB participant will have access to every plan option. Participants can use the FEHB Plan Comparison Tool on the OPM website to compare all of the different plan options.

FEHB, PSHB coverage details

OPM also announced a number of changes to the benefits and options that federal employees, retirees and their dependents will have access to in 2025.

Interestingly, OPM announced Wednesday morning that FEHB enrollees will see more options for “comprehensive” coverage for IVF next year. Both Blue Cross Blue Shield and GEHA will offer a $25,000 benefit to help cover IVF costs for enrollees, in addition to OPM’s basic requirements for infertility treatment coverage.

OPM also released changes to coverage for obesity medications, maternal health treatments, and mental health treatments. Carriers will be required to cover at least one GLP-1 obesity medication, as well as at least two oral obesity drug options.

In addition, “carriers must offer comprehensive behavioral therapy, including appropriate diet and exercise, for individuals taking prescribed anti-obesity medications,” OPM said.

Additionally, OPM announced that FEHB plans will reimburse for mental health services provided in primary care settings, in part in response to challenges created by the COVID-19 pandemic, youth mental health issues and the opioid epidemic.

As OPM stated, this will encourage “greater coordination between behavioral health providers and other providers in the health care system and (enable) behavioral health services to be paid for on a par with comparable physical health services.”

In support of maternal health, OPM said all 64 FEHB plans will cover mental health treatment for postpartum depression. Many, but not all, plans will additionally cover the costs of certified nurse midwives, birthing center deliveries, home visits by nurses and doulas.

All PSHB benefits will be consistent with those in the FEHB, except for prescription drug benefits. Health insurers in the PSHB program are required to offer Medicare Employer Group Waiver Plans (EGWP) to postal retirees and their dependents. Some insurers will additionally offer Medicare Advantage EGWP with prescription drug coverage, OPM said.

Importantly, Medicare-eligible postal retirees and their dependents must enroll in Medicare Part B to access PSHB benefits, with a few limited exceptions. OPM said it expects more than 80% of Medicare-eligible postal retirees to enroll in Part B by Sept. 30, when the special enrollment period ends.

Vision and Dental Options for 2025

Unlike the large premium increases for FEHB and PSHB, the average premium increases for the Federal Employees Dental and Vision Insurance Program (FEDVIP) in 2025 will be relatively small.

As reported by OPM, premiums for FEDVIP dental insurance will increase by an average of 2.97%, and for vision insurance by 0.87%.

FEHB and PSHB participants will be able to choose from seven dental carriers offering 14 nationwide plan options through 2025. Next year, 10 nationwide vision plans will also be available from five different carriers.

In 2023, OPM expanded FEDVIP enrollment eligibility to include postal workers and retirees, as well as temporary, part-time, and seasonal federal employees.

Individuals interested in establishing or continuing a Flexible Spending Account must, through the process, re-enroll in the Federal Flexible Spending Account Program (FSAFEDS). This program allows FEHB participants to set aside money before taxes to pay for health care costs for themselves or their dependents.

FEHB and PSHB enrollees can make changes to their health care choices during Open Season between November 11 and December 9 of this year. The 2025 planning year officially begins January 1. OPM offers more information and resources on its website for both FEHB and Postal enrollees.

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