Feds with Benefits: How annuitants can manage their FEHB premiums

Originally published Feds with Benefits: How annuitants can manage their FEHB premiums on March 4, 2025 15:43 by https://federalnewsnetwork.com/feds-with-benefits/2025/03/feds-with-benefits-how-annuitants-can-manage-their-fehb-premiums/ at Federal News Network

I encourage you to continue submitting your Federal Employee Health Benefit (FEHB) questions and I’ll include answers, like the one below, in future columns.

Question: I am VERY DISAPPOINTED to learn that our health benefits went up about $80/month. That is about $1,000 a year! Retirees cannot afford this type of increase. What alternatives do we have? This is ridiculous.

Federal annuitants typically face higher healthcare costs in retirement for the following reasons:

• They’re no longer paying their FEHB premium pre-tax through payroll deductions, which can make the same plan cost 33% more compared to what they’d paid as an active employee.
• They lose access to flexible spending accounts (FSAs), which allow active employees to set aside pre-tax contributions for qualifying medical expenses.
• They enroll in Medicare Part B, which costs $185 per month and can come with an Income-Related Adjustment Amount (IRMAA) surcharge. For annuitants in the first income tier — individuals making more than $106,000 or couples earning more than $212,000 — that adds up to an additional $74 per person, per month.

Managing healthcare expenses in retirement can be challenging, but there are still strategies annuitants can use to help reduce costs.

FEHB plan choice – premiums & out-of-pocket costs

The most effective way to pay less for your healthcare is to switch to a cheaper plan. This will help you save on both premium and out-of-pocket costs.

FEHB premiums have been steadily increasing, with the average enrollee share rising sharply by 13.5% in 2025 — nearly double the 7.7% increase in 2024.

However, premium changes vary by plan. Among the 144 FEHB plans available in both 2024 and 2025:

• Premiums decreased in 28 plans.
• Premiums stayed the same in 5 plans.
• Premiums increased below the average of 13.5% in 69 plans, and above the average in 42 plans.

How has your premium changed? You can check on the last page of your FEHB plan’s official brochure or by using the Office of Personnel Management or Checkbook plan comparison tools. Even if you’re satisfied with your coverage, it’s important to consider whether another plan has better value.

When considering plan choice, you also must factor in out-of-pocket costs, which are going up, too. This year, BCBS Basic increased the member cost share for specialist visits, inpatient hospital, outpatient hospital and brand-name prescription drugs. To keep track of how your plan changes from one year to the next, go to Section 2 of the official FEHB plan brochure, which lists important benefit changes.

FEHB enrollment type

Two-person families can enroll as either self-plus-one or self & family. While self-plus-one is cheaper most of the time, this year there are 46 FEHB plans where self & family costs less. Since plan benefits remain the same regardless of enrollment type, compare both options to determine which one is less expensive.

Medicare Part D

This year, all Part D plans cap annual out-of-pocket prescription drug costs at $2,000. Additionally, to be approved by OPM, Part D plans offered by FEHB carriers must provide as good or better prescription drug coverage than what’s available in the FEHB plan.

Here’s an example of potential savings: Wegovy, a GLP-1 weight loss drug, costs $771.75 out-of-pocket for a 28-day supply (0.25mg injectable) at a CVS pharmacy in Washington, D.C with Blue Cross Basic prescription drug coverage. With Part D coverage from Blue Cross, the cost drops to just $45 — a savings of $726.75.

Annuitants with just Part A, or with Parts A & B, can enroll in Part D if their FEHB plan offers it; this year, 20 do. If yours is one of them and you’re Medicare-eligible, your plan will auto-enroll you if you haven’t declined Part D coverage in the past. You can then decide whether to keep it or un-enroll.

Medicare advantage plans from FEHB carriers

Medicare Advantage (MA) plans provide significant value for federal annuitants enrolled in Part B because many include Part B premium reimbursement and offer $0 out-of-pocket costs for approved healthcare services from providers who accept both the plan and Medicare, excluding prescription drugs.

For instance, a couple in the Washington, D.C. area enrolled as self-plus-one with average healthcare expenses and a primary policyholder aged 70 could save more than $9,000 in estimated yearly costs switching from BCBS Standard to the Medicare Advantage plan offered by Aetna Advantage.

Before enrolling, check whether your current doctors are in-network to ensure continued access to your preferred providers.

Commercial Medicare Advantage

Annuitants enrolled in Part B have the option to suspend their FEHB coverage and enroll in a commercial MA plan. The primary advantage of doing so would be no longer having to pay the FEHB premium, but there are several important factors to consider before making this decision.

Unlike those offered by FEHB carriers, commercial MA plans may not always be premium-free, may not waive out-of-pocket healthcare costs in the same way as many FEHB plans do, and may not include Part B premium reimbursement. Additionally, provider networks can vary significantly, so it’s essential to carefully review whether your preferred doctors are included in the MA plan’s network before making the switch.

Key takeaways

While some costs, such as FEHB and Medicare Part B premiums, are beyond your control, federal annuitants have the ability to switch health plans each Open Season — one of the most effective ways to manage healthcare expenses. FEHB plans vary significantly in both premiums and out-of-pocket costs, as well as how quickly they’re rising.

Annuitants enrolled in Part B who are looking to save money should evaluate whether a Medicare Advantage plan — either through an FEHB carrier or the commercial market — could better meet their healthcare needs and offer cost savings. Finally, Part D is an option that could help you save money on prescription drug costs.

I encourage you to send in any FEHB questions you have, and I look forward to answering them with actionable advice that might help save you money or help you better understand  how FEHB works.

Kevin Moss is a senior editor with the Guide to Health Plans for Federal Employees provided by Consumers’ Checkbook. Watch more of his free advice and check here if the Guide is available for free from your agency. You can also purchase the Guide and save 20% with promo code FEDNEWS.

Copyright
© 2025 Federal News Network. All rights reserved. This website is not intended for users located within the European Economic Area.

Originally published Feds with Benefits: How annuitants can manage their FEHB premiums on March 4, 2025 15:43 by https://federalnewsnetwork.com/feds-with-benefits/2025/03/feds-with-benefits-how-annuitants-can-manage-their-fehb-premiums/ at Federal News Network

Originally published Federal News Network