In 1985, the Federal Employees Health Benefits Program (FEHBP) reserves had accumulated over $2 billion in reserve surplus, precipitating the program's first refund. Concerned about FEHBP reserve practices, the chairman of the House Committee on Post Office and Civil Service, United States Congress, asked the General Accounting Office (GAO) to determine FEHBP reserves over a 7-year period from 1979-1985 and compare the reserve balances with targeted levels; and to identify the different strategies for regulating reserves and the advantages and disadvantages of each. Literature and research on FEHBP reserves were reviewed, discussions with Office of Personnel Management (OPM) and Congressional Budget Office officials were held, OPM data were analyzed, and views of officials in 19 health plans were solicited for this study. The results indicated that FEHBP reserves have fluctuated widely from their targets. From 1979 through 1985, the majority of plans GAO reviewed held reserves that were more than 100 percent away from targets. OPM has three strategies for regulating reserves: (1) adjusting future premiums; (2) modifying future benefits; and (3) giving refunds. Adjusting future premiums is considered the best strategy to regulate reserves. The Congress should consider amending the FEHB Act to prescribe future premium adjustments as the only reserve adjustment strategy. (Four appendices, one figure, and 24 tables are included.) (NB)