The Federal Employees Health Benefits (FEHB) Program provides private health insurance to federal employees, retirees, and their dependents. It provides more than $40 billion in health care benefits annually. In a typical year, FEHB provides health insurance coverage to about 8.2 million federal employees, retirees, and their dependents. Participation in FEHB is voluntary. About 85% of federal employees participate, and about 90% of retirees participate. Coverage options available to eligible individuals include individual or family coverage in an approved health benefits plan. Beginning in calendar year 2016, individuals will have a third coverage option: self plus one coverage for themselves and one eligible family member. Generally, available health benefits plans fall into two broad categories: fee-for-service (FFS) or health maintenance organizations (HMOs). FFS plans tend to be available nationwide, and HMOs tend to be available locally. Premiums are shared between the federal government and the employee or retiree. Benefits and cost sharing vary among FEHB plans, but all plans must cover basic services such as hospital and physician care and may require cost sharing in the form of deductibles, co-payments, or coinsurance. Prior to the creation of FEHB in 1959, federal employees were not able to obtain health insurance through the federal government; instead, federal employees who wanted health insurance could purchase coverage voluntarily on their own or through the few union and employee association plans that offered plans to federal employees. By 1950, it was common for employers in the private sector to offer health insurance and pay at least a portion of their employees' health insurance premiums. As early as 1951, President Truman's Commission on the Health Needs of the Nation recommended that the federal government offer health insurance coverage for its employees. After debate on whether and how the government should pursue this option, Congress passed the Federal Employees Health Benefits Act of 1959 (FEHBA; P.L. 86-382). FEHBA generally established parameters for eligibility; election of coverage; the types of health plans and benefits that may be offered; and the level of the government's share of premiums. It also established an Employees Health Benefits Fund to pay for program expenses and put forth provisions for studies, reports, and audits. In addition, FEHBA outlined the role of the Office of Personnel Management (OPM). By law, OPM has the authority to contract with insurers and to prescribe regulations to manage FEHB, among other duties. FEHBA has been amended many times since its passage. The general model of FEHB, consisting of enrollees choosing between multiple types of coverage offered by competing private insurers, has not changed. Employees and retirees have always shared the cost of premiums with the federal government, and, in general, they have always had access to the same plans at the same cost. However, many other aspects of FEHB have been modified. For example, the formula for determining the government's share of premiums has changed several times, and the government's share of premiums generally has increased. In addition, eligibility, services, and benefits generally have been expanded in a number of ways. Congress, in its legislative authority, often has some part in modifying FEHB, either in proposing changes to the program or reacting to proposed changes. Since FEHB's inception, policymakers and researchers have been interested in the program both as a model for private and public health insurance programs (e.g., Medicare) and as an avenue for expanding coverage to certain individuals (e.g., the uninsured). The FEHB model consists of competing insurers providing numerous types of coverage to enrollees with minimal intervention from OPM. Many view this model as generally successful in giving enrollees the opportunity to make cost-conscious choices and in constraining the program's overall cost growth. For this reason, researchers have looked into exporting aspects of the FEHB model to other health care programs, such as Medicare. Others have considered expanding access to FEHB or creating new programs modeled after FEHB to provide coverage to individuals who are not federal workers or retirees, such as small business employees or the uninsured. Some policymakers have embraced these ideas, introducing legislation to create new programs or to expand FEHB eligibility. In the past, it also has been suggested that certain features of FEHB are a good model for state-level health insurance exchanges. In addition, some have said that lessons learned from FEHB may have been instructive for state and federal officials establishing the health insurance exchanges created by the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended). Congressional interest in FEHB often extends beyond FEHB's potential applicability as a model for other health care programs or as an avenue to provide coverage. Congressional policymakers have some responsibility for FEHB's viability and sustainability. Congress has a financial interest in the program, as the federal government has always paid a portion of FEHB's costs. In addition, Congress has the legislative authority to restructure FEHB to maintain or improve its function. The purpose of this report is to provide information that both helps to explain how FEHB has evolved into the program it is today and details how Congress has interacted with FEHB in the past. The report includes short discussions of certain changes to the program. It discusses how Congress has conditioned the use of federal funds on policy changes being implemented in FEHB ( Table 1 ); changed the formula for determining the government's share of FEHB premiums ( Table 2 ); modified eligibility for the program ( Table 3 ); and implemented policies that affect the relationship between Medicare and FEHB ( Table 4 ). In addition, the Appendix contains a summary of the enacting FEHB legislation and a chronological list of summaries of selected laws that have since amended or otherwise affected FEHB. Congress can place conditions on the use of federal funds, and it has done so to make changes to FEHB. For example, in 1983 Congress passed a law that prohibited using appropriated federal funds to cover abortions, except when the life of the woman was in danger. This provision was renewed with few changes every year except 1994 and 1995, when the 103 rd Congress excluded the provision. The reinstated provision prohibited the use of funds except when the life of the woman was in danger or in cases of rape or incest; this provision has been included in subsequent appropriations bills each year (as of the date of this report). Table 1 summarizes laws that have enacted policy changes to FEHB by placing conditions on the use of federal funds. Over the years, the government's share of premiums has increased overall. In the legislation that created FEHB, the government's share was set at 50% of the premium and had to fall within a specified dollar range. That provision changed very little until 1971, when the "big six" formula was created. The formula was equal to the simple average of the premiums of six health plans offered in FEHB that met the criteria specified in statute. The government's share originally was set at 40% of the simple average of the big six premiums, and it increased to 50% in 1974. The big six formula was in place with few changes until 1997. Passage of the Balanced Budget Act of 1997 ( P.L. 105-33 ) introduced the formula for setting the government's share of premiums that is in effect today. 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). FEHB-eligible participants specified in the enacting legislation included current federal employees and retirees who retired after July 1, 1960. Family members of employees and retirees also were eligible. (See the text box , "Eligibility Under the Federal Employees Health Benefits Act (P.L. 86-382)," for a complete list of eligibility under the enacting legislation.) Since FEHBA's enactment, eligibility to enroll in FEHB generally has been extended to more categories of federal employees, retirees, and their current and former family members. In 1978, FEHB was extended to part-time employees, and in 1988 it was extended to certain temporary workers. In 1988, Congress also authorized temporary continuation of coverage (TCC), whereby employees separated from service for reasons other than gross misconduct can continue coverage in FEHB. TCC enrollees must pay the entire FEHB premium, both the government's and the employees' shares, as well as a 2% administrative fee. In general, TCC is available to separating employees and their dependents for up to 18 months after the date of separation. However, there are exceptions, such as the availability of 36 months of coverage for children aging out of their parents' plans. FEHB was established five years prior to Medicare, and in the early years there was little interaction between the programs largely because, in general, federal employees and retirees were not eligible for Medicare based on their federal employment. This situation changed in 1982 when Congress passed the Tax Equity and Fiscal Responsibility Act ( P.L. 97-248 ), which applied Medicare's Hospital Insurance tax to federal employment, thereby enabling federal workers to be eligible for Medicare based on their federal employment. The following are detailed summaries of selected laws or provisions of laws that established, amended, or changed the Federal Employees Health Benefits (FEHB) Program. Federal Employees Health Benefits Act of 1959 (P.L. 86-382), September 28, 1959 Effective July 1, 1960, P.L. 86-382 established the FEHB program for the federal workforce. The act established the general parameters for the program, including eligibility and enrollment procedures; the types of benefits that may be provided; the level of the government's share of premiums; and the role of the Office of Personnel Management (OPM).