How to Save Money On Your Federal Health Insurance

By on November 23, 2015 in Pay & Benefits with 0 Comments

Every year Washington Consumer’s CHECKBOOK publishes a detailed comparison of the Federal Employee Health Benefit Program (FEHB) plans for federal employees and annuitants. The Guide provides cost comparisons among health plans taking into account both premiums and likely out-of-pocket expenses. Large numbers of federal employees have free access to the Guide.

Among the results:

  • Many HMOs, most Consumer-Driven and High Deductible plans, the Blue Cross Basic plan, the NALC and Foreign Service High option plans, and the GEHA Standard option plan can save a family $2,000 or more a year, compared to the highest-cost plans.
  • In comparison, you can usually only save $100-$200 under the new Self plus One option, and sometimes that option costs more, as shown in the recent FedSmith article on this change. Check the back page of your plan brochure (and also the section on “Changes for 2016”) before you make the wrong decision.
  • Medicare Part B enrollment raises premiums and often lowers out-of-pocket costs by less than the premium cost. Annuitants know that some plans make enrollment in Part B much less expensive than others, but most don’t know that the number of plans with this savings feature has gone way up. The Guide also shows how much overall costs vary depending on whether enrollees pay lower “grandfathered” Part B rates, the higher rates that affect new retirees for 2016, and the much higher rates for annuitants with the highest incomes in 2016 and future years. But how many higher income annuitants know they can often get those costs reduced by applying to the Social Security Administration (for the allowable events, including retirement, see page 7 in this link.

Here are more shopping tips for FedSmith readers:

  • Taking into account the premium, Medicare wrap around benefit, and personal account, the Aetna Direct plan available in most of the nation will save an annuitant couple with Medicare Parts A and B over $4,000 a year compared to the GEHA High option, the SAMBA High option, and the Blue Cross Standard option.
  • The APWU, NALC, and Aetna Consumer-Driven plans, and the GEHA and Aetna High Deductible plans, will save Self Only employees over $1,000 a year compared to the highest cost plans.
  • With both spouses working for Uncle Sam, each can join a Self Only option and save a few dollars compared to Self plus One in most plans. This is a great strategy where one spouse wants one plan and the other spouse a different plan because they use different doctors. But, in many plans, enrollees would now be exposed to two maximum out-of-pocket limits, sometimes at double the cost, compared to one limit for them as a couple. For example, under the NALC High option, the limit is $3,500 each under Self Only, but $5,000 for a Self plus One or Family enrollment (extra hint: this is one of those plans where the Family premium is slightly less than the Self plus One premium).
  • Many plans offer dental benefits, including not only stand-alone dental plans, but also both official and “unofficial” dental benefits in the health plans. Many local HMOs, such as MD IPA and the CareFirst and Kaiser options in the DC area, and a few national plans such as NALC, outperform the stand-alone dental plans in all but the most expensive cost scenarios.
  • Many plans work better than others if you don’t have Medicare Part B in retirement. This includes most High Deductible and Consumer Driven plans. Of course, that wonderful plan you have at age 64 doesn’t change into a pumpkin at age 65, and if you continue working past age 65 Part B is “secondary” and a waste of money until you retire and enroll in Part B without penalty.
  • There is an incredibly easy cost-saving strategy that most forget. Suppose you have a doctor that you really, really need to see twice a year, who isn’t in the network of any low-cost plan. Do you really need to pay thousands more in premium to get this doctor? No you don’t—just pay cash for those visits. Let’s see, which is better, paying $2,000 extra in premium and $60 in co-pays for two visits, or paying nothing extra in premium and $250 in charges for two visits?
  • As a smart employee, you do plan, of course, to set up a Flexible Spending Account this Open Season, set aside up to $2,550 of your salary to be tax-free, and save about a third of that amount in reduced Federal, State, and OASDI taxes. Oh, that special doctor you need to see doesn’t cost $250, but only about $160, if paid from your FSA.

Once you have chosen the best plan for you and your family, many and probably most will want to change enrollment, either to a new plan option or to self plus one, or both. Employees can use agency human resources or in many cases the employee express service. Annuitants should use the OPM web site. OPM offers retiree help at 800-332-9798, but that number has been putting callers on hold for very long waits.

Regardless, do not delay. Experience so far in wait times suggests that as the December 14 Open Season deadline approaches, even online portals may be swamped beyond their capacity as several million employees and annuitants try to make changes.

If you want more information, individuals can subscribe to the online version of CHECKBOOK’s Guide to Health Plans for Federal Employees for $9.95. Orders can be placed online, or by calling 800-213-SAVE or 202-347-7283. Many federal agencies make the Guide available free to their employees and busy employees sometimes do not spot this in the annual “Open Season is coming” email from human resources.

© 2016 Walton Francis. All rights reserved. This article may not be reproduced without express written consent from Walton Francis.