When federal employees hear that the government pays “about 72%” of FEHB premiums on average, the number usually registers as reassuring without quite registering as meaningful. The reassurance is correct — a 72% employer contribution toward health insurance is more generous than most private-sector employers offer and dramatically more generous than most individual market plans. The meaningfulness is incomplete, because the average conceals real variation between plans, between enrollment types, and between years.
Let me walk through what the average actually means, what generates the variation underneath it, and why it matters in retirement.
How the formula works.
The FEHB statute requires the government to contribute the lesser of:
- 72% of the average total premiumof all FEHB plans (weighted by enrollment), adjusted for the enrollee’s enrollment type and plan, or
- 75% of the total premium of the specific plan the enrollee has chosen.
The government pays whichever of those two calculations is smaller. In practice, this means the government’s share varies from plan to plan but generally falls in a range of roughly 65% to 75% of the total premium.
For most enrollees, the government’s share lands between 70% and 73% of the total premium. The widely cited “about 72%” figure is the enrollment-weighted average across the entire FEHB program in a typical year.
Why the formula is structured that way.
The formula was designed to balance two competing pressures: keeping FEHB affordable for employees (which argues for a higher government share) and avoiding windfalls to high-cost plans (which argues for capping the government share on expensive plans). The 72%/75% structure produces a government contribution that is generous on average but does not fully subsidize the most expensive plan choices.
What the variation looks like in practice.
For an inexpensive plan with a strong provider network, the government’s share may approach the 75% cap, leaving the enrollee with a relatively small premium contribution. For an expensive plan or one with a richer benefit structure, the government’s share may fall closer to the 72% average, leaving the enrollee with a meaningfully larger contribution.
The variation is not random. It tracks roughly with the total premium of the plan. Plans with higher total premiums tend to produce lower percentage contributions from the government, in the sense that the enrollee pays more in absolute terms even though the percentage stays in the same range.
Self Only vs. Self Plus One vs. Self & Family.
The formula applies separately to each enrollment type. Self Only premiums are lower in absolute terms than Self & Family premiums, but the percentage contribution from the government is calculated on the same basis. The dollar amount of the government’s contribution is therefore larger for Self & Family than for Self Only, but the percentage is in the same range.
What this means in retirement.
In retirement, the same formula applies. The government continues to contribute the same percentage of the total premium that it did while you were working. You, the retiree, pay the same percentage share of the total premium through your annuity deductions as you would have paid through your salary deductions.
What changes in retirement is not the percentage. It is the context:
- The deductions come out of a smaller annuity check rather than a salary.
- The plan that was right for you as an active employee may no longer be the plan that is right for you as a retiree with Medicare eligibility on the horizon.
- The total dollar cost over a 25-year retirement is substantially larger than the total dollar cost over your final five working years, simply because of the longer time horizon.
The comparison that is worth making.
The 72% average is most useful when it is used as a comparison to private-sector employer coverage, Medicare premiums alone, and individual market plans. Against any of those comparisons, the government contribution is remarkably generous.
A typical large private-sector employer in 2026 might cover 70% to 80% of an employee-only premium for a traditional PPO, with family coverage often requiring a substantially higher employee contribution. Federal FEHB coverage is more generous than that on average, and the retiree continuation of FEHB has no equivalent in the private sector at any price.
Medicare alone, without supplemental coverage, has significant deductibles and coinsurance. A Medicare Supplement (Medigap) plan or a Medicare Advantage plan can fill the gaps, but at a premium that does not come with a 72% employer subsidy. The math overwhelmingly favors carrying FEHB into retirement whenever it is available.
What you should not assume.
Do not assume that your specific FEHB plan produces exactly a 72% government contribution. Look at your actual enrollment documentation or the OPM plan comparison for your plan. The percentage for your plan may be slightly higher or slightly lower than the average, and the dollar amount of the contribution is a function of the total premium of your plan, not the average across all plans.