How Much Do Federal Employees Pay for Health Insurance?
Understand how federal employee health insurance costs are determined. Learn about FEHB premiums, government contributions, and how to find your specific share.
Federal employees primarily access health insurance through the Federal Employees Health Benefits (FEHB) Program. This program offers a range of health coverage options. Understanding how contributions are determined and what these costs entail is important for employees managing their personal finances.
Understanding the Federal Employees Health Benefits Program
The Federal Employees Health Benefits (FEHB) Program is a voluntary health insurance initiative established by Congress in 1959. It serves as the primary health benefits program for most federal employees, retirees, and their eligible family members, making it one of the largest employer-sponsored health programs in the United States. Eligibility extends to most federal employees unless their position is specifically excluded by law or regulation. Eligible family members typically include spouses and children under the age of 26, with provisions for adult children with disabilities.
The program offers a diverse selection of health plans. These options generally fall into several categories, such as Fee-for-Service (FFS) plans, which often include Preferred Provider Organization (PPO) networks, and Health Maintenance Organizations (HMOs). High Deductible Health Plans (HDHPs) and Consumer-Driven Health Plans (CDHPs) are also available, often paired with health savings accounts (HSAs) or health reimbursement arrangements (HRAs). Employees also select an enrollment type: Self-Only, Self Plus One, or Self and Family.
A fundamental aspect of the FEHB Program is the shared cost structure between the federal government and the employee. Both parties contribute to the total premium for the chosen health plan. This arrangement aims to provide comprehensive coverage while distributing the financial responsibility. The specific amount each party pays depends on various factors, which determine the employee’s out-of-pocket premium share.
Factors Determining Your Health Insurance Contribution
Several variables directly influence a federal employee’s health insurance premium within the FEHB Program. The specific health plan an employee selects is one factor. Each plan has its own total premium, varying based on benefits, provider network, and cost structure. Selecting a plan with a higher total premium generally results in a larger employee contribution.
The chosen enrollment type also plays a substantial role in determining premium costs. The total premium for a Self-Only enrollment is considerably lower than for a Self Plus One or Self and Family enrollment. More comprehensive family coverage leads to a higher individual contribution.
The government’s contribution formula is a defining element of the FEHB cost-sharing model. By law, the government’s share is typically the lesser of two amounts: either 72% of the program-wide weighted average premium for all plans, or 75% of the total premium for the specific plan the employee selects. This formula ensures a consistent government contribution level relative to overall program costs. The remaining portion becomes the employee’s responsibility.
Federal employees generally benefit from “premium conversion,” a pre-tax arrangement. This allows their share of FEHB premiums to be deducted from their gross salary before federal income tax, Social Security, and Medicare taxes are calculated. This pre-tax deduction effectively reduces the employee’s taxable income, leading to a lower net cost for health insurance.
Calculating Your Federal Employee Health Insurance Premium
A federal employee’s health insurance premium is calculated by subtracting the government’s contribution from the total premium for the chosen plan and enrollment type, as determined by the Office of Personnel Management (OPM). The resulting amount is the employee’s share, typically withheld from their bi-weekly pay.
To illustrate, consider a hypothetical Self-Only enrollment. If the total bi-weekly premium for a specific health plan is $300, and the program-wide weighted average premium for Self-Only enrollments is $275, the government’s contribution would be the lesser of 75% of the plan’s premium ($225) or 72% of the weighted average premium ($198). The government would contribute $198. The employee’s bi-weekly share would be $300 minus $198, equaling $102.
For a Self Plus One enrollment with a total bi-weekly premium of $600, and a program-wide weighted average premium of $550, the government’s share would be the lesser of 75% of the plan’s premium ($450) or 72% of the weighted average ($396). The government would contribute $396, making the employee’s bi-weekly share $600 minus $396, or $204.
Total premium rates are established annually by OPM and vary across plans and regions. While the calculation methodology remains consistent, actual dollar amounts change each year, reflecting shifts in healthcare costs and utilization. The employee’s share is deducted from paychecks bi-weekly.
Accessing and Interpreting Your Premium Information
Federal employees can find current premium rates for all Federal Employees Health Benefits (FEHB) plans and enrollment types on the Office of Personnel Management (OPM) website. OPM provides detailed rates and plan comparison tools. During the annual Open Season (typically mid-November to mid-December), OPM publishes guides and brochures detailing the upcoming year’s rates and benefit changes. These resources help employees compare options before making enrollment decisions.
Once enrolled, health insurance premiums appear on a federal employee’s pay stub, also known as a Leave and Earnings Statement (LES). The deduction for FEHB premiums is typically listed under “FEHB” within the deductions section. This entry reflects the employee’s calculated share, withheld on a pre-tax basis due to premium conversion. Reviewing these statements regularly confirms deductions align with the chosen plan and enrollment type.
Open Season is the annual period when federal employees can change their FEHB enrollment without a qualifying life event. This includes enrolling, changing plans, or adjusting enrollment type. New rates are announced, prompting employees to evaluate their current plan. Outside of Open Season, changes are generally only permitted if an employee experiences a qualifying life event, such as marriage, birth of a child, or a change in family status.