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Federal Employees Health Benefits Program


The Federal Employees Health Benefits (FEHB) Program is a system of "managed competition" through which employee health benefits are provided to civilian government employees and annuitants of the United States government. The government contributes 72% of the weighted average premium of all plans, not to exceed 75% of the premium for any one plan (calculated separately for individual and family coverage).

The FEHB program allows some insurance companies, employee associations, and labor unions to market health insurance plans to governmental employees. The program is administered by the United States Office of Personnel Management (OPM).

The program was created in 1960. Employer sponsorship of health insurance in the United States became prevalent during World War II, as one of the few ways by which employers could escape wage and price control limitations on employee wages. The government originally proposed a system that would revolve around a dominant government-directed plan, but unions and employee associations, which had sponsored their own plans, protested. Reflecting the political pressure thus created, the Congress modified the Executive Branch proposal and all existing plans were "grandfathered" into the program. Thus, through what was essentially a historical accident and a political compromise, a system of competition among health plans driven by consumer choices was created.

Choices among health plans are available to employees during an "open enrollment" period, or "open season," after which the employee will be covered fully in any plan he or she chooses without limitations regarding pre-existing conditions. After the annual enrollment, changes can be made only upon a "qualifying life event" such as marriage, divorce, adoption or birth of a child, or change in employment status of a spouse, until the next annual open season, during which employees can enroll, disenroll, or change from one plan to another. The exact dates of the open season change from year to year, but are usually from the Monday of the second full week in November through Monday, the second full week of December. Enrollment begins at or near the beginning of the calendar year, and lasts until a different plan choice is made in a subsequent open season or through a qualifying life event. In practice, there is a great deal of inertia in enrollment, and only about 5 percent of employees change plans in most open seasons.


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