Federal employees and retirees will see a 13.5% increase in FEHB premiums. USPS enrollees currently in FEHB will see average increase of 6.9%.
2025 FEHB Premium Increase: What Federal Employees and Retirees Need to Know
The Federal Employees Health Benefits program (FEHB) provides health coverage for millions of federal employees, retirees, and their family members. The recent announcement of the 2025 FEHB premium increase is one of the biggest average increases in recent memory, understandably leaving many enrollees concerned about how this will affect their finances and health benefits. 2025 will be the first year that USPS employees and retirees are not eligible for FEHB plans and instead are offered health insurance through the new US Postal Service Health Benefits program (PSHB).
What is the 2025 Premium Increase for FEHB and PSHB?
The average FEHB premium increase next year will be 13.5% for the participant’s portion. Employee and retirees pay about 30% of the total premium with the government covers the rest. The total average premium increase will actually be around 11.2% (according to OPM).
For USPS employees and retirees who were covered by an FEHB plan in 2024, their new premium for the new postal service health benefits will go up, on average, 6.9%. The overall average increase for the PSHB plans, however, will be 11.1%.
For comparison, in 2024, premiums went up from 2023 rates by 7.7%.
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How do the USPS health premiums compare to FEHB premiums?
The USPS health premiums for 2025 are more competitive compared to the FEHB premiums. This is due to the unique structure of the Postal Service Health Benefits (PSHB) program, which is designed to meet the specific needs of postal employees and required Medicare part B enrollment to participate if you’re 65 or older. The exact comparison will depend on the individual plans and coverage options available under each program, though.
Why is there a premium increase in 2025?
The premium increase in 2025 is driven by several factors. Rising healthcare costs, including the cost of medical services and prescription drugs, are primary contributors. Additionally, the Office of Personnel Management (OPM) has cited the need to maintain the financial stability of the FEHB program as another reason for the increase. The COVID-19 pandemic has also had a lasting impact on healthcare costs, further necessitating the adjustment in cost. The anticipated 2025 Federal Pay Raise of 2.0% will do little to offset the big spike in premiums for the federal employee – especially non-postal federal employees.
Knowledge is Confidence!
2025 FEDVIP Premium Increase
FEDVIP (Federal Employees Dental and Vision Insurance program) provides dental and vision health insurance for active and retired feds and their family members. USPS employees will remain eligible for this coverage, which is provided by benefeds. The average premium for dental plans will increase by 2.97% in 2025 and for vision insurance, the vision plans will increase 0.87% on average. (The 2024 increases were 1.4% for dental and 1.1% for vision plans.)
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How Will the Increase in Health Care Premiums Affect Federal Employees?
What Does the Premium Increase Mean for Current Federal Employees?
For federal employees, the premium increase means higher out-of-pocket costs for health insurance. This could lead to financial strain, especially for those on fixed incomes or with tight budgets. Employees may need to explore different FEHB plan options to find one that offers the best balance of coverage and cost. Additionally, the increase may prompt some employees to consider supplemental insurance options, such as Medicare if eligible. Medicare part D might be worth a second look for the upcoming year.
How will Federal Retirees be Impacted by the Premium Increase?
Retirees will also feel the impact of the largest FEHB premium increase in over a decade. Many retirees live on fixed incomes, making it challenging to absorb higher healthcare costs. Retirees may need to evaluate their current FEHB plan and consider switching to a more cost-effective option. Additionally, they should review their overall retirement budget to ensure they can manage the increased premiums without compromising their financial stability.
What Should FEHB Enrollees Do During the Open Season?
When is the federal benefits open season for 2025 FEHB and FEDVIP plans?
The open season for 2025 FEHB plans will occur this year from November 11 to December 9 2024. During this time, enrollees can review plan options, compare premiums and benefits, and make changes to their health coverage. It is essential to mark these dates on the calendar and take the time to thoroughly evaluate the available plans. Open Season provides enrollees a good opportunity to review their FEHB, FEDVIP, and Medicare needs and expenses.
Make sure you check out our free Open Season Webinars –
Federal Retirees Can Register Here
Current Employees Can Register Here.
How Can Federal Workers Compare Different FEHB Premium Rates?
Enrollees can compare different FEHB carriers and offerings using the FEHB plan comparison tool provided by Consumer’s Checkbook. This tool allows users to input their specific needs and preferences to see a side-by-side comparison of various plans. Factors such as premium rates, coverage options, and out-of-pocket costs can be compared to help enrollees make informed decisions.
Reach Out to Us!
If you have additional federal benefit questions, contact our team of CERTIFIED FINANCIAL PLANNER™ (CFP®) and Chartered Federal Employee Benefits Consultants (ChFEBC℠). At PlanWell, we are federal employee financial advisors with a focus on retirement planning. Learn more about our process designed for the career fed.
Preparing for federal retirement? Check out our scheduled federal retirement workshops. Sign up for our no-cost federal retirement webinars here! Make sure to plan ahead and reserve your seat for our FERS webinar, held every three weeks. Want to have PlanWell host a federal retirement seminar for your agency? Reach out, and we’ll collaborate with HR to arrange an on-site FERS seminar.
Want to fast-track your federal retirement plan? Skip the FERS webinar and start a one-on-one conversation with a ChFEBC today. You can schedule a one-on-one meeting here.
