2025 FEHB Program Changes

OPM continues to encourage FEHB plans to adopt cost-saving coordination with Medicare that will be paid by the taxpayers who finance Medicare and thereby reduce FEHB costs. This is done by having FEHB plans establish Employer Group Waiver Plans (EGWPs, pronounced “egg-whips”) covering Medicare Parts A and B and D in what are called “Medicare Advantage” plans. Medicare Advantage is an insurance program modelled after the FEHB, and now attracts almost one-half of all Medicare enrollees. These EGWP options designed for FEHB plans offer essentially 100% coverage of hospital and medical expenses, plus close to 90% plus of drug expenses, and almost all of them pay most of the Part B and D premiums on behalf of annuitants. In effect, they largely eliminate the “why pay two sets of overlapping insurance premiums?” dilemma that until now faced all civilian federal annuitants. In our ratings these plans show up as saving annuitants hundreds or in some cases several thousand dollars compared to the plan offerings previously available. Next year there will be FEHB MA plans that eliminate almost all health care costs for both hospitals and physicians as well as most drug costs. All annuitants enrolled in Medicare Parts A and B will have access to these plan options.

Next year, there will be a $2,000 out-of-pocket maximum on annual drug costs paid by those who enroll in Part D. The reformed Part D benefit will be stronger than the current drug benefit in all FEHB plans, and since 75% of its costs are paid through Medicare, it will reduce FEHB costs for all annuitants who enroll in Part D. There is no Part D late enrollment penalty for these annuitants and OPM is encouraging annuitants to sign up for Part D. Most of these savings will accrue to those currently employed, and to their employing agencies, since all employees and annuitants are in the same cost pool, but all will realize some of the savings from new Part D enrollments in any plan. For 2025 there will be about two dozen plans with Medicare Advantage options that eliminate almost all health care costs for both hospitals and physicians and most drug costs, and another twenty that provide only the Part D drug benefit. FEHB plans that offer a Part D plan will auto-enroll plan members that have Medicare Part A only, or Medicare Parts A & B. Your plan will send you a letter informing you of auto-enrollment and you'll have 30 days to disenroll, if you wish.

These changes have greatly changed the calculus for the “to B or not to B” decision upon turning age 65, and now make Medicare Part B enrollment a far better buy than in years past.

There are other OPM-mandated reforms underway that apply primarily to federal employees rather than annuitants. Arguably the biggest of these is the addition of new fertility benefits. All plans in 2024 were required to cover the fertility drugs associated with IVF and artificial insemination procedures. Next year, GEHA High joins BCBS Standard in offering IVF coverage nationwide, and there are additional local plans that have expanded IVF coverage. Also, all carriers are encouraged to provide enhanced maternity benefits and federal employees will start seeing more FEHB plans covering nurse midwives, nurse home visits, and doulas.