Washington, D.C. - Through tough negotiations and a commitment to the "federal team," U.S. Office of Personnel Management (OPM) Director Kay Coles James has announced a significantly lower than national average insurance premium increase for the 2004 Federal Employees Health Benefits Program (FEHBP), a program that covers over eight million employees, retirees and their families. OPM also announced that for the first time in five years, there is an increase in the number of plan choices available to federal employees, including HMOs.

"Even with nationwide reports citing health insurance premium increases ranging as high as 18 percent, OPM has been able to keep its average premium increase at 10.6 percent, making many choices in the consumer and market-driven FEHB among the most reasonably priced in the nation." said OPM Director Kay Coles James. "Fundamentally, federal employees are intelligent health care consumers and can make informed choices among the plans for themselves and their families."

According to OPM experts, negotiations were geared to keeping premium increases as low as possible while at the same time incurring little if any decrease in health care benefits. OPM utilized a strategy enacted by Director James based on five points: 1) preserve benefits 2) preserve choice 3) keep rates as low as possible 4) assure that plans will be financially viable 5) optimize coordination of benefits.

Director James also announced that for the first time in five years the number of health plan choices has increased, rising by 17 to 205 options which will be available to program enrollees next year.

Eleven fee-for-service choices are available to any enrollee worldwide, and many enrollees can choose a local HMO. In the Washington, DC area, there are 17 choices from which to choose.

There are also two new Health Maintenance Organization/Consumer Driven products available in the coming year. The new consumer-driven offerings for this year give consumers additional choices that allow them to manage their own health care needs and their health care dollars. Underwritten by Humana and Aetna, they take advantage of these carriers' long experience in the HMO market and feature strong provider networks and delivery experience.

Humana's benefit plan encourages preventive care and a self-directed annual $500 per person allowance for other care. A deductible of $1,500 self and $3,000 family applies when the annual self-directed allowance is exhausted. Regular HMO benefits apply after the deductible.

Aetna's benefit plan features preventive care with a $300 per person allowance and a $1,000 self and $2,000 family fund for other covered care. Unused portions of the fund can be rolled over up to a $4,000/$8,000 fund balance. A $1,000/$2,000 deductible applies when the fund is exhausted. Cost-sharing benefits apply after the deductible is met.

Last year, the APWU Benefit Plan introduced the first consumer-driven option for FEHB enrollees.

"I believe it is vital to maintain a comprehensive benefits package for federal employees and retirees," said James. "We had two primary objectives throughout these negotiations: to continue to offer a program that provides a wide range of choice and to do so at a reasonable cost. In addition, I encouraged federal agencies and departments to pay the full FEHB premium for their employees called to active duty in the Reserve and National Guard so they can continue coverage for themselves and their families. The response was overwhelmingly positive. Our carriers also responded to a request to help our members to be prepared by making additional supplies of medications available for emergencies as well as call-up situations."

The new health benefits premiums go into effect in January 2004. FEHBP enrollees who have self-only coverage will pay roughly $5 more biweekly, while those with family coverage will pay $11.95 more biweekly.

"I believe the FEHB program is a model of efficiency and effectiveness," said James.

"It has important features, including choice of health plans and competitive benefit packages, as well as no pre-existing condition limitations or waiting periods," said James. "In sharp contrast with trends in the private sector, the FEHB plans continue to cover all eligible retirees and their spouses. And very importantly, especially given that $6 billion in FEHB prescription drug costs go through Pharmacy Benefits Managers, OPM notified the carriers earlier this year that OPM will be expanding its oversight role to ensure that the OPM Inspector General can perform independent audits of PBMs. This gives OPM an additional tool in our overall effort to ensure that we are purchasing quality health care at the right price."

During the FEHBP open season, which runs from November 10 through December 8, eligible federal employees and retirees can stay with their current health plan or select a new one.

Enrollees are encouraged to use the FEHBP web site www.opm.gov/insure to review Open Season information and to select the health plan that best meets their needs. Federal enrollees are encouraged to review the Open Season guide and health plan brochures on the web site.

Our mission is to ensure the Federal Government has an effective civilian workforce. OPM supports U.S. agencies with personnel services and policy leadership including staffing tools, guidance on labor-management relations and programs to improve work force performance.

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