Larry Humphries, a former Federal Emergency Management Agency employee in Moultrie, Georgia, says he and his wife won't be traveling much next year after their monthly health insurance payments rose more than 40%, to $938.
Humphreys, 68, feels betrayed by the federal employees' health insurance program. “As federal employees, we sacrificed good salaries in the private sector because we thought government benefits would be better now in retirement,” he said.
As the nation's largest employer-sponsored health insurance plan, FEC program covers more than 8.2 million federal government employees and retirees and was once celebrated as the nation's cost-control model while providing members with a variety of health plan options.
But the system's average premium payments will rise more than 12% next year, on top of a 13.5% increase in 2025. The two-year increase is higher than what many private employers and their employees are experiencing.
The FEHB rate hike is similar to rate hikes for plans sold on the Affordable Care Act exchanges, except for the government subsidies that most enrollees receive, which is a major point of contention on Capitol Hill. Premiums charged by insurers under Obamacare plans will rise by an average of 26% in 2026, following a 4% increase this year.
What makes the latest FEHB premium increase even more difficult for millions of federal employees is its timing: The 2026 increase was announced in October, while many federal employees were on unpaid leave during the 43-day government shutdown.
Unlike most private employers, FEHB offers its members a variety of health insurance plans to choose from. This allows some people to lower their monthly premiums by switching to plans with higher deductibles or copays. But every year only about 5% participants are changing plans, according to the Office of Human Resources, which oversees the program.
Humphreys, who has had the same health insurance plan for decades despite consistently high prices, said it's difficult to determine which plan is best based on his health. He has glaucoma and diabetes, and his wife Julianne has heart problems.
Their FEHB plan covers the costs of their care that are not covered by Medicare, which typically covers 80% of their medical bills.
“There's a fear that if you do something and change plans and it's wrong, you could end up in a bad position,” he said.
Open enrollment for federal employees and retirees runs through December 8th.
Factors driving premium increases include an aging federal workforce with more chronic health conditions and the use of prescription drugs, including expensive GLP-1 weight-loss drugs, according to OPM.
About 42% of federal employees are over age 50, compared with 33% of the overall workforce, according to OPM. About 7% of federal workers are under 30 years of age, compared with about 20% of workers overall.
OPM officials said the Trump administration's policies aimed at lowering drug costs and aimed at preventing costly diseases will hopefully help it control premiums in the future.
“None of these initiatives will happen overnight, of course—turning the $79 billion ship around requires slow and steady progress,” Shane Stevens, OPM Deputy Director for Health and Insurance, stated in the press release. “But we are committed to improving the quality of life and quality of care for our members, and ensuring that health care remains affordable and accessible to those who work (or have worked) for the American people.”
OPM did not respond to requests for comment.
John Holahan, a health policy fellow at the nonpartisan Urban Institute, said OPM's explanations miss a key reason for rising premiums: hospital consolidation. Although the FEHB program is a collection of health plans, in many markets, including Washington, D.C., these insurers must negotiate with a handful of powerful health systems that have bought up other hospitals and doctors. This market power allows them to raise prices for FEHB plans, he said.
Jacqueline D. Bowens, president and CEO of the District of Columbia Hospital Association, said in a statement that “the costs patients incur are determined not only by the care they receive, but also by how insurance companies choose to price, reimburse and limit access to that care.”
Holahan said it was surprising that FEHB premiums were rising even faster than those of other, smaller employers. But he's not surprised federal employees aren't changing plans more often, even though it might be in their financial best interests to do so.
“The fact is that people find the health care world so difficult,” he said. Holahan, a renowned health economist, said he, too, has difficulty changing the Medicare health plan.
Mike Lindquist, a researcher at the National Institutes of Health, said he is unhappy with the rise in his insurance premiums over the past two years. “It’s difficult because it’s a big expense.”
Lindquist, 43, who lives in Brunswick, Maryland, has been enrolled in the same Blue Cross and Blue Shield plan through the FEHB program for the past several years, although he evaluates his options each fall.
“By not switching, you won't have to worry about choosing a new plan that might not be right for your practitioners,” he said.
Jonathan Foley, a health care consultant who served as a senior adviser to OPM during the Biden administration, said rising premiums will be a problem for many enrollees. Although the FEHB program offers a total of 200 health plans, approximately 10 to 20 in each geographic market, participation is concentrated in only a few Blue Cross and Blue Shield plans.
“This concentration reduces competition and has enormous influence” on Blue Cross and Blue Shield rate increases, Foley said in an email.
He said the FEHB program also faces higher costs because it requires its health plans to cover GLP-1 drugs such as Wegovy and Ozempic. Nationally, less than half of large employers offer this benefit, the data shows. Peterson Center for Public Health and KFF. KFF is a nonprofit health information organization that includes KFF Health News.
Another cost pressure was that since the start of the Covid pandemic, more members were using the benefits of behavioral health to treat depression and anxiety, Foley said.
The Trump administration's reductions in the federal workforce also contributed to higher costs, Foley said. OPM lost about a third of its staff last year, leaving fewer workers to oversee the FEHB program and negotiate with dozens of health insurers, he said.
“Workforce declines and the unpredictable nature of Trump administration policies have created significant uncertainty among health insurance companies,” Foley said. “Actuaries’ response to increased uncertainty is to raise rates.”
A Government Accountability Office Report This year, it was revealed that recent vacancies on the OPM staff had led to the suspension of fraud risk assessments in the FEHB program.
John Hutton, vice president of policy and programs for an advocacy group called the National Association of Current and Retired Federal Employees, said higher prices mean it's critical for FEHB members to shop around and compare plans for next year. “The program was designed to encourage competition to mitigate and reduce costs,” he said.
Hutton said OPM surveys show the main reasons people don't change plans are because they're overwhelmed with options and afraid of making a mistake. Switching to a plan with even a slightly higher deductible can save people several hundred dollars a month in premiums, he said.
But Humphreys, a Georgia retiree, said he likes that his current plan has low out-of-pocket costs for him and his wife. They were slightly in debt when his wife contracted kidney stones and sepsis, which left her in hospital for 12 days.
That reassurance will soon come at a higher price: Their FEHB and Medicare contributions will account for more than half of his retirement check next year after taxes.
“I can choose a plan with lower premiums, but that’s a risk I’m not willing to take,” he said.
