Employees of the nation’s largest employer, the federal government, have more to consider than they might think before open enrollment begins on November 13, 2023. Too often, an employee will simply continue their Federal Employees Health Benefits (FEHB) Program plan from one year to the next, rather than considering all of the available options. Fact is, there are around 270 different health plans within the FEHB system, yet there are employees who’ve stuck with the same plan for decades. This can be costly, in terms of lost opportunities as well as the hit to the wallet.
Weigh the costs
The U.S. Office of Personnel Management (OPM) provides an online worksheet where federal employees can compare the cost and coverage of up to three different plans. What many don’t seem to take advantage of is Consumers’ Checkbook, which is more robust in the number of plans that can be compared. Consumers’ Checkbook is an independent company that sources its information directly from OPM.
You might have free access to Consumers’ Checkbook through your agency intranet; you can find that information here. Otherwise, contact your HR department to learn how to gain access.
The doctor list is one tool that Consumers’ Checkbook has and OPM doesn’t. Federal employees living in the Washington, D.C., area can type in the name of their doctor to see if the plan they’re considering is accepted by that doctor. Search results can then be filtered by plan type—HMO, PPO, or high-deductible health plan (HDHP)—and by other factors such as total estimated out-of-pocket costs or annual premiums.
Speaking of HDHP, this is an oft-missed opportunity, especially for those who are younger and healthier. Even with a lower premium than a PPO, it’s easy to be scared away by the words “high-deductible.” But there are benefits associated with this type of plan. For example, enrolling in an HDHP allows you to contribute to a health savings account (HSA), which can yield triple benefits: tax-deductible contributions, tax-deferred growth, and tax-free withdrawals, provided they’re for qualified medical expenses (see IRS Publication 502 for the list). Keep in mind that for 2024, the HSA contribution limit is $4,150 if you’re enrolled in self-only coverage, and $8,300 for family coverage.
Now, before enrolling in an HDHP, consider the healthcare needs of you and (if applicable) your family. If you or a covered family member are not in good health and require greater use of your healthcare plan, an HDHP may not be the best choice.
In comparing healthcare plans, many people focus on the premium or the deductible, which is understandable. However, there’s another factor to consider with greater emphasis: maximum out-of-pocket costs. This means the maximum amount—including copayments, coinsurance, and deductibles—that you’re responsible for paying for healthcare services. You might be surprised to learn there are HDHPs that have lower out-of-pocket maximums than some PPO plans. Nonetheless, it’s vital to be aware of out-of-pocket maximums in case you require significant use of your healthcare plan.
Don’t blindly make the same selection as last year
Some plans change from year to year, and unless you’re reading the plan brochure, you might not be aware of it. For example, Blue Cross Blue Shield Standard Option, which is popular among federal employees, made the following change for 2023: Preferred insulins require a $35 copay for a 30-day supply, or a $65 copay for a 31- to 90-day supply, but only when dispensed by a preferred retail pharmacy. Previously, the payment due was 20% of the plan allowance for each purchase of up to a 90-day supply. There are also times when a handful of health plans leave the FEHB program completely.
Married and both working for the government
Lastly, we want to give federal-employee couples some items to consider. Take advantage of “premium conversion” while you’re working, which means premiums are deducted on a pre-tax basis from wages. If enrolled in a self-plus-one or self-and-family plan, it’s typically best to have the spouse who intends to work longest pay for the coverage. Finally, for federal-employee married couples who have no covered dependents, weigh the cost of each spouse maintaining a self-only plan versus a self-plus-one plan. This could yield some significant savings in premiums and deductibles.
The upcoming open enrollment season should be approached with a great deal of thoughtfulness. Consumers’ Checkbook is an extremely helpful tool, and working with a trusted advisor can help you navigate the plan selection process in a way that’s financially advantageous for you and your family.
