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How are FEHB premiums determined?
Mar 19, 2014
Premiums are negotiated annually between the Office of Personnel Management and each insurance carrier. The maximum government contribution is 72 percent of the weighted average cost of all plans, not to exceed 75 percent of the cost of any specific plan. The enrollee pays the balance, which averages about 30 percent of the total premium. By contract, the U.S. Postal Service pays a higher percentage on behalf of its own employees, under terms of contracts for unionized positions and consultative agreements for non-union positions.

The government contribution is the same for active employees and for retirees, except that retirees from the Postal Service experience an increase in premiums because the higher employer contribution paid by the Postal Service applies only to its active employees, not to its retirees.

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