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Institute for Workplace Studies-----------------Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor--------------------Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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NOTE: Funding for this service ends on 31 March 2015. Postings will end on this date as well.

 

Congressional Research Service (CRS)

 

Federal Employees Health Benefits (FEHB) Program: An Overview

Kirstin B. Blom,Analyst in Health Care Financing

Ada S. Cornell, Information Research Specialist

February 25, 2015

https://fas.org/sgp/crs/misc/R43922.pdf

[full-text, 26 pages]

 

Summary

The Federal Employees Health Benefits (FEHB) Program provides health insurance to federal

employees, retirees, and their dependents. This report provides a general overview of FEHB. It

describes the structure of FEHB, including eligibility for the program and coverage options

available to enrollees, as well as premiums, benefits and cost sharing, and general financing of

FEHB. The report also describes the role of the Office of Personnel Management (OPM) in

administering the program.

 

Eligible individuals include federal employees, retirees, and their family members. As of calendar

year 2014, Members of Congress and certain congressional staff are no longer eligible to enroll in

plans offered under FEHB as employees but may be eligible to enroll in retirement. Coverage

options available to eligible individuals include individual or family coverage in an approved

health benefits plan. Beginning in calendar year 2016, individuals will have a third coverage

option: self plus one coverage for themselves and one eligible family member. Generally,

available health benefits plans fall into two broad categories: fee-for-service (FFS) or health

maintenance organizations (HMOs). FFS plans tend to be available nationwide, and HMOs tend

to be locally available. Premiums are shared between the federal government and the employee or

retiree. Benefits and cost sharing vary among FEHB plans, but all plans must cover basic services

such as hospital and physician care and may require cost sharing in the form of deductibles, copayments,

or coinsurance. FEHB financing includes government contributions to premiums,

contingency reserves in the U.S. Treasury to offset unexpected increases in costs, and

administrative expenses incurred by OPM.

 

The report also discusses how FEHB interacts with the United States Postal Service (USPS) and

with Medicare as well as the impact of the Patient Protection and Affordable Care Act (ACA; P.L.

111-148, as amended) on FEHB. Like most federal agencies, the USPS offers health insurance to

its employees through FEHB. However, collective bargaining rights and prefunding obligations

for retiree health costs make the USPS unique among federal agencies with regard to health

benefits. Most federal employees or retirees aged 65 or older are automatically entitled to

Medicare Part A (Hospital Insurance, or HI). They also may choose to enroll in Medicare Part B

(Supplementary Medical Insurance, or SMI) and Part D (prescription drug coverage). For

individuals covered under an FEHB plan, Medicare is the primary payer, meaning it pays for

benefits first, and FEHB is the secondary payer. The ACA established new requirements for

FEHB plans in some cases. In others, it had no meaningful effect. For example, the requirement

to provide coverage to children up to the age of 26 on their parent’s plan was a new requirement

for plans, but many plans were already meeting the requirement not to deny coverage based on

preexisting conditions.

 

For information on the current plan year, such as premiums and cost sharing in FEHB and the

most recent open season (the period each year during which individuals can enroll or change

health plans), see CRS Report IF10004, The Federal Employees Health Benefits (FEHB)

Program: 2014 Open Season.

 

Contents

Basics of the Federal Employees Health Benefits Program ............................................................ 1

Eligibility ................................................................................................................................... 1

Members of Congress and Certain Congressional Staff ...................................................... 2

Dependent Family Members ............................................................................................... 2

Retirees ................................................................................................................................ 3

Members of the Military ..................................................................................................... 3

Tribal Employees ................................................................................................................ 4

Temporary Continuation of Coverage ................................................................................. 4

Coverage Options ...................................................................................................................... 4

Health Plans ........................................................................................................................ 5

Health Plans Combined with Tax-Advantaged Accounts.................................................... 6

Enrollment Among FEHB Health Insurance Carriers ......................................................... 7

Other Programs: FSAFEDS and FEDVIP........................................................................... 8

Premiums ................................................................................................................................... 9

Payments to FFS Plans ...................................................................................................... 10

Payments to HMOs ........................................................................................................... 10

Benefits and Cost Sharing ....................................................................................................... 10

Benefits ............................................................................................................................. 11

Cost Sharing ...................................................................................................................... 11

Financing ................................................................................................................................. 11

Government Contributions to Premiums ........................................................................... 12

Contingency Reserves ....................................................................................................... 12

Administrative Costs ......................................................................................................... 12

How the USPS Interacts with the FEHB Program ......................................................................... 13

Premiums and Collective Bargaining ...................................................................................... 13

Paying for Retiree Health Care ................................................................................................ 13

FEHB Enrollees and Medicare ...................................................................................................... 14

Eligibility for Medicare ........................................................................................................... 14

Coordinating Medicare Benefits with FEHB .......................................................................... 15

Medicare Participation by FEHB Enrollees ............................................................................ 15

Impact of the Affordable Care Act ................................................................................................. 16

 

Figures

Figure 1. Top 10 FEHB Carriers, by Covered Policyholders, 2014 ................................................ 8

 

Tables

Table 1. FEHB Retirees Aged 65 and Older with Medicare Coverage .......................................... 16

 

Appendixes

Appendix. OPM’s Role in Administering FEHB ........................................................................... 18

 

Contacts

Author Contact Information........................................................................................................... 22

Acknowledgments ......................................................................................................................... 22

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