Retirement & Financial Planning Report

Adding a self plus one option to the FEHB program likely would benefit many older employees and retirees who currently carry family coverage but have only one covered family member, according to a Congressional Budget Office analysis.

CBO produced its analysis of language in the recent budget agreement covering 2014 and 2015 that authorizes a third coverage option in FEHB, which CBO assumed would become available in 2015. Although precise terms of eligibility and premium rates are yet to be determined, self plus one would fall between the existing two options in terms of premium cost.

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The idea of adding that type of option has been under consideration for many years, raised by those who argue that family coverage enrollees with just one eligible family member—often, only a spouse since eligibility for children’s coverage generally ends when they turn 26—are subsidizing those with multiple eligible family members.

Adding self plus one was formally proposed by the White House in its budget for fiscal 2014, although the idea laid dormant until mid-December when the budget agreement was reached. It was included in that agreement in part because CBO estimated that it would save the government $3 billion over 10 years due to lower government contributions toward FEHB benefits by enrollees who would switch from family coverage to self plus one coverage.

Said CBO’s analysis: “CBO expects that federal retirees would be more likely than active federal employees to switch to “self plus one” policies. As a result, the average cost of FEHB policies for federal retirees would be lower than under current law, and the average cost of FEHB policies for active federal employees would be higher than under current law.”

However, CBO added that the family option “would become more costly than under current law because the average number of people covered by policies of that type would rise.”