In order to avoid taking what amounts to a take-home pay cut next year, feds, postal workers and retirees are going to have to do some serious health insurance shopping starting in November.
Here’s the deal:
The President has proposed a 1.4 percent pay raise in January, 2011 for white collar (nonpostal) federal workers. There is an outside chance Congress may increase it, slightly. But don’t base your summer 2011 vacation plans on that.
That 1.4 percent amount, if it sticks, will probably be slightly larger in some places like Washington, San Francisco, New York and Los Angeles depending on how the locality pay adjustment works out.
This year, 2010, the pay raise was 1.5 percent, but after locality pay was factored in the largest concentration of federal workers, in the Washington-Baltimore area, got a total increase of 2.42 percent. The raise in Houston was 1.84 percent. In metro New York, San Francisco-Oakland-San Jose it was 2.10 percent. In Chicago the 2010 total raise was 2.01 percent. In Austin, St. Lake, Louisville, Las Vegas and other cities the raise was 1.77 percent. To see how your raise compares to increases in other cities, click here.
The bottom line is despite four congressional attempts to freeze it, the 2011 federal pay raise is still one. And while small, it will be a raise.
For retirees, however, it’s a very different story:
Thanks to minimal inflation, and months when living costs have actually declined producing deflation, federal retirees won’t be getting any cost of living adjustment in 2011. They also didn’t get a COLA this year. The last COLA they got, in 2009, was 5.8 percent.
But while the rate of inflation is steady or down, as measured by the Bureau of Labor Statistics Consumer Price Index, medical inflation isn’t. The cost of medical care, doctors, hospitals and prescription drugs, always outpaces the regular rate of inflation.
Already this year some health plans covering state and local government workers have announced double-digit premium increases for 2011. The same thing is happening with private sector plans, even in situations where employees had to take pay cuts in 2009 or 2010.
While nobody, including the government, yet knows how much FEHBP premiums are going up next year, most are going up. Maybe, probably, a lot.
This year premiums in the federal health plan went up an “average” of 7.4 percent. But averages are just that, averages.
The increase coming in your plan could be more. This in some plans, including those most popular with workers (and especially retirees) the increases were bigger.
This year the “average” increase in premiums for people with self-only coverage was $5.98 per pay period, or $155 total for the year. For family coverage the “average” increase was $12.87 per pay period. But…
Most people – workers, retirees and survivors – in the FEHBP are in one of the Blue Cross-Blue Shield plans. Premiums for its popular standard option went up 15 percent for self-only coverage and 12 percent for family coverage. The popular Mail Handlers Plan, a favorite of many people because of its low premiums, increased premiums 42 percent for 2010.
What To Do?
To avoid taking what will amount to a pay or pension cut next year, shop very, very carefully during the open enrollment period which starts Nov. 8 and runs through Dec. 13. That’s when you will pick your 2011 health plan.
Feds and retirees have dozens of plans – national fee-for-service and local HMOs – to choose from. And the also have the option of choosing a plan with a Health Savings Plan option. Premiums will be announced late August. You’ll have plenty of time to shop and, if necessary, make changes.
William S. Nye, Science Guy, holds patent number 7,254,904. MentalFloss reports it’s his “improved ballet shoe.”
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