Federal Health Premiums Rise 10.9% for 2027 Amid Pay Freeze Debate

Key points

• FEHB enrollees will pay 10.9% more on average in 2027, down from 12.3% in 2026.
• PSHB enrollees will see an 8.2% average increase, down from 11.3% in 2026.
• OPM cites rising costs for inpatient services, GLP-1 drugs, and mental health care as primary drivers.
• The government’s share of premiums will rise by 6%, but enrollees’ share increases faster.
• Open Season runs from November 9 to December 14, 2026, with 118 FEHB plan options available.
• New rules require documentation for adding family members and mandate behavioral therapy for GLP-1 coverage.

Background

This increase follows a trend of rising health costs across the U.S., where ACA and employer-based premiums are also climbing in 2027. Large employers have already announced benefit cuts to manage soaring costs. In the federal sector, these premium hikes coincide with a proposed pay freeze for civilian employees, intensifying debates over real wage growth. Previous years saw even steeper increases, with 2025 seeing a 13.5% hike and 2024 a 7.7% rise.

How outlets are covering it

OPM Associate Director Matthew Kiley emphasized that the average rate of increase is slowing, framing it as a success in controlling costs. In contrast, NARFE President William Shackelford and AFGE described the hikes as 'sticker shock' and an effective pay cut, especially given the proposed 2027 pay freeze. FEDweek highlighted new administrative changes, such as proof requirements for family members and stricter GLP-1 coverage rules, while FedSmith.com focused on the specific dollar amounts of government contributions. All sources agree on the 10.9% average figure but differ in emphasis: OPM focuses on cost containment, unions on workforce retention, and industry outlets on plan logistics.

Why it matters

The rising premiums directly impact the disposable income of federal workers and retirees, particularly as they face a potential pay freeze. This financial pressure may affect recruitment and retention in the federal workforce. Additionally, the new requirements for GLP-1 coverage and family member documentation could alter access to care and administrative burdens for enrollees. The slowdown in the rate of increase, while positive, does not reverse the cumulative cost burden accumulated over the past three years.

What to watch

Enrollees will select plans during Open Season from November 9 to December 14, 2026. OPM is seeking public input on whether to reduce the number of plan options to optimize costs. The administration will also continue efforts to collect claims-level data to combat fraud, though this faces legal and privacy challenges. Congress may attempt to override the pay freeze via spending riders, which could indirectly affect the perceived impact of the premium hikes.