Federal workers: What’s new in FEHB for 2027 and how to cut costs

Health costs for federal employees are set to rise next year. Most FEHB plans have increased premiums for 2027, and some are also adjusting benefits in ways that could lead to higher out-of-pocket spending.

The upside is that tax-advantaged accounts can help offset a meaningful share of those increases, and higher contribution limits will create more room to save.

Here’s a breakdown of how to use those accounts and how to handle the changes in FEHB.

Premium increase

The average enrollee share of the premium will rise 10.9% next year, though that is only an average. Some premiums are falling: self-only enrollees in Kaiser Permanente High – Mid-Atlantic will pay 3.7% less. GEHA Standard is holding steady. Other plans are rising much faster than average; self-only enrollees in MHBP Standard will see a 63% increase.

You can verify your premium on the carrier’s website, on the final page of the FEHB plan brochure, or on the OPM Open Season site.

Government share of premium

The maximum government contribution will rise next year. It is based on the 72% program-wide weighted average premium by enrollment type. Federal employees and annuitants receive either that maximum contribution or 75% of the premium they pay, whichever is lower.

All 118 FEHB plans available in 2027 offer three enrollment types: self & family, self-plus-one, and self-only. The way you enroll affects the government’s share of your premium. Next year, the government will cover 75% of the premium for 64 plans under self & family coverage, 58 plans under self-plus-one, and 59 plans under self-only. Many local HMOs across the country will qualify for the 75% government contribution, along with these national plans:

• Aetna Advantage & Direct
• APWU Consumer Driven Option
• BCBS FEP Blue Focus
• Compass Rose Standard
• GEHA Elevate, HDHP, & Standard
• SAMBA Standard

At the same time, the maximum government contribution may still fall far short of covering 75% of the premium. For instance, the maximum government contribution for Aetna Open Access (JR) covers only 29.7% of the self & family premium, leaving enrollees responsible for the remaining 70.3%.

Available plans

FEHB will offer 14 fewer plans next year. The program had 132 plans this year and will have 118 next year. These exits will affect about 39,000 federal employees and annuitants, and if you are now enrolled in any of the following plans, you will be auto-enrolled in Compass Rose Standard if no changes are made during Open Season:

• Blue Care Network of Michigan High Option
• Health Net of California High Option (Northern CA)
• Health Net of California Basic, High, Standard Options (Southern CA)
• Independent Health HDHP & High Options
• UnitedHealthcare Choice Primary (AZ, NV, OR, WA)
• UnitedHealthcare Choice Plus Primary (AZ, NV, OR, WA)
• UnitedHealthcare HDHP (AL, AZ, AR, CO, FL, LA, MS, NV, NC, OR, TN, WA)

The largest number of FEHB members will be affected by the end of two nationwide MHBP plans: Value and Consumer Option. Federal employees and annuitants in either plan will be moved to MHBP Standard automatically.

A plan merger will also shift UnitedHealthcare members enrolled in Choice Plus or Choice Plus Advanced in several states (AL, AR, DC, FL, GA, IL, IA, KY, LA, MD, MS, MO, NC, PA, TN, TX, VA) into another UnitedHealthcare option, Choice Plus Primary.

Presbyterian, which offers three health plans in New Mexico (High, Standard, Wellness), has reduced its service area by 28 counties. Members who stay enrolled next year and live outside the current service area will need to travel into the remaining service area to receive full benefits; otherwise, they will have access only to emergency services.

Sharp Health Plan in the San Diego area has added a basic option, making it the only new plan in FEHB next year.

Health Alliance Plan in Michigan has also expanded its service area by adding 12 counties.

Benefit changes

Plan benefits may change next year, and those changes could have a bigger effect on your healthcare costs than a premium increase. Review the official plan brochure and read Section 2, “Changes for 2027,” to see what is changing in your plan.

Examples include:

• MHBP Standard is raising the deductible and catastrophic limit, increasing members’ cost share for doctor visits, and shifting emergency care and inpatient hospital coverage from a fixed $200 copay to 10% coinsurance.
• Under BCBS Basic, the catastrophic limit and the copays for emergency room care, inpatient hospital care, maternity hospital stays, and inpatient mental health services are all increasing.
• For BCBS Standard, the deductible, catastrophic limits, and copays for inpatient hospital and inpatient mental health care are all increasing.

Another major change affecting all FEHB plans next year is prior authorization for GLP-1 weight-loss drugs. OPM now requires Intensive Behavioral Therapy both before and during treatment with a GLP-1 medication. More details about this requirement are available in the plan brochure and on the carrier website.

Ways to save: Consider high-deductible health plans

Employees looking for a less expensive option should consider High-Deductible Health Plans (HDHPs). These plans generally have lower premiums than popular PPO plans, and part of the premium is deposited into a health savings account (HSA) as a premium pass-through.

Employees can also make extra contributions to their HSA, and they should, because HSAs have three tax advantages:

1. Tax-free going in: Contributions made through payroll deduction or as a lump sum reduce taxable income. Depending on your tax bracket, that can save you about 30% on every dollar you contribute.
2. Tax-free growth: You can invest your HSA balance, and any interest or investment earnings grow tax-free.
3. Tax-free going out: Withdrawals are tax-free when used for qualified medical expenses.

Contribution limits, including both plan-funded HSA deposits and your own voluntary contributions, will increase next year to $4,500 for self-only enrollees and $9,000 for self-plus-one or self & family enrollees.

Ways to save: Flexible spending accounts

Every federal employee is likely to have predictable healthcare expenses next year, from copays to dental and vision care to prescription refills and over-the-counter pharmacy items. What if you could reduce your out-of-pocket healthcare costs for those expenses by about 30%?

You can. The FSAFeds program can do that, yet fewer than 20% of federal employees participate.

Here is how it works: Federal employees can contribute up to $3,500 to a healthcare FSA next year. The money comes out of your paycheck before taxes, lowering taxable income, so each dollar is sheltered from federal, state, and FICA payroll taxes. Depending on where you live, that can mean more than 30% in tax savings when you use the FSA to pay qualified healthcare expenses.

The main drawback is the “use it or lose it” rule, so careful budgeting matters. If you contribute more than you spend, you risk losing some money. Still, you do not have to be perfect. If you remain enrolled in FSAFeds, you may roll over up to $700 in unused funds into the next plan year, but any amount above that is forfeited. If you have never used an FSA, a low-risk starting point is to contribute just $700. Even if you spend none of it, you can roll over the full amount as long as you stay enrolled.

The FSAFeds program will also be easier to use next year. For the first time, it will include a debit card that can be used to pay qualified healthcare expenses. Previously, employees had to pay out of pocket and then wait for reimbursement.

In summary

Because most federal employees will not receive a raise next year, any premium increase will reduce take-home pay. Some FEHB premiums are climbing faster than others, and since this is a fixed expense, it is worth checking whether your current plan still offers good value or whether switching could save money. Do not focus on premiums alone, though; a plan with a lower premium may have higher out-of-pocket costs that erase the savings, so aim for a balance between the two.

If you are losing your FEHB plan, make an active choice during Open Season so you are enrolled in the best fit rather than the default option.

Fewer than 20% of federal employees use the FSA program, and that number should be much higher. It is a reliable way to save on healthcare costs, and the new debit card will make it even more convenient next year.

If you have questions about FEHB coverage, how Medicare works with FEHB, or any other healthcare topic you would like to understand better, you can submit them here.

Kevin Moss is a senior editor with Consumers’ Checkbook. Checkbook’s 2027 Guide to Health Plans for Federal Employees will be available by the first day of Open Season. Check here to see if your agency provides free access. The Guide is also available for purchase, and Federal News Network readers can save 20% by entering promo code FEDNEWS at checkout.

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