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Proposed FEHBP reform seeks to pro-rate retiree premiums

President Bush's recent 2008 budget presentation includes proposed reforms to the Federal Employees Health Benefits Program (FEHBP). According to the president, the reforms would save money for the federal government through lower payments to health plans and enrollees. One of those proposed reforms to the FEHBP affects the government's contribution to retiree health care premiums.

The president's budget presentation states that the reform proposal " ... would provide greater equity to long-term employees." The following excerpt from the presentation offers these details:

At present, the government pays approximately 72 percent of the cost of health care premiums for all employees regardless of their length of service and for annuitants who worked for the federal government at least five years immediately prior to their retirement. The proposal would pro-rate the government contribution for those employees who retire with less than 10 years of service by decreasing the amount of the government share to: 90 percent of the government share for employees with nine or more but less than 10 years of service; 80 percent for those with eight or more but less than 10 years of service and so on. The proposal would affect about 500 to 600 retirees each year.