U.S. Employees Health Benefits

In response to a congressional request, GAO provided information on the: (1) duplication of benefits provided under the Federal Employees Health Benefits Program (FEHBP) and the Medicare Catastrophic Coverage Act of 1988; and (2) appropriateness of the 1989 FEHBP rebate amount for duplicate coverage.

GAO found that: (1) the act extended catastrophic insurance protection to about 33 million elderly and disabled beneficiaries, including Medicare-eligible federal retirees, many of whom were enrolled in FEHBP; (2) the act duplicated benefits already provided under FEHBP plans, except for expanded skilled nursing facilities, hospice, and blood transfusion coverage; (3) the average annual cost of all new unduplicated benefits for FEHBP participants would total about $13; (4) because Medicare, as the primary payer, paid for inpatient hospital stays, the law required a corresponding reduction of FEHBP payments; (5) to qualify for reduced FEHBP premiums, FEHBP annuitants needed to be enrolled in both parts of Medicare; (6) the Office of Personnel Management proposed a rebate of $3.10 monthly, that would take the form of a reduction in the FEHBP premiums deducted from the annuitant's monthly retirement check; and (7) based on an independent review of carriers' comments and revised hospital rates, the proposed rebate amount was reasonable.