What's Happening?
Federal employees and retirees are set to experience a significant increase in their health coverage costs in 2026, with premiums rising by an average of 12.3%. This marks the second consecutive year of double-digit increases, following a 3.8% rise just
four years ago. The Office of Personnel Management (OPM) attributes this increase to an aging federal workforce and higher prescription drug usage, including medications for weight loss. The government’s contribution to health insurance varies by plan, covering either 72% of the weighted average for all plans or 75% of the total premium, whichever is less. This means that for lower-cost plans, the government may cover the full 75%, but for higher-cost plans, the contribution could be significantly lower.
Why It's Important?
The increase in health coverage premiums is a critical issue for federal employees and retirees, as it directly impacts their financial planning and budget. With the government covering a smaller portion of high-premium plans, individuals may face substantial out-of-pocket expenses. This could lead to a reevaluation of current health plans during the upcoming Open Season, as employees seek more cost-effective options. The rising costs also reflect broader trends in healthcare, such as increased prescription drug usage and an aging population, which could have long-term implications for public policy and healthcare reform.
What's Next?
The 2026 Federal Employees Health Benefits (FEHB) Open Season, running from November 10 to December 8, will be a crucial period for federal employees to assess their health coverage options. With varying premium increases across different plans, employees are encouraged to compare benefits and costs to find the best value. The government’s contribution to premiums will play a significant role in these decisions, as employees look for plans where the government covers the maximum 75% of the premium. Additionally, the continued trend of rising healthcare costs may prompt discussions on policy changes to address the financial burden on federal employees.
