As the upcoming FEHB Open Season approaches, it’s a good time to review the five biggest mistakes that federal employees, retirees, and their families can make when it comes to picking a new health plan under the Federal Employee Health Benefits (FEHB) or Postal Service Health Benefits (PSHB) programs.
Mistake 5: Not Understanding How FEHB Plan Works with Medicare
Many federal employees and retirees assume their FEHB plan will seamlessly cover all healthcare needs in retirement, but failing to understand how it interacts with Medicare can lead to costly gaps and missed opportunities.
Without knowing whether to enroll in Medicare Part B, for example, retirees might face unexpected out-of-pocket expenses, limited provider access, or penalties for late enrollment. Some FEHB plans coordinate well with Medicare, reducing deductibles and copays, while others do not. Misunderstanding this relationship can result in paying for redundant coverage or, worse, lacking critical protection when health needs escalate.
For PSHB, Medicare B is required to participate.
Mistake 4: Not Utilizing an FSA or HSA for Qualified Medical Expenses
Skipping an FSA or HSA means leaving tax savings on the table, especially for federal and postal employees with predictable medical expenses. FSAs let you use pre-tax dollars for out-of-pocket costs like copays, prescriptions, and dental work, reducing your taxable income.
HSAs go further: they offer triple tax advantages (pre-tax contributions, tax-free growth, and tax-free withdrawals for qualified expenses) and can act as a long-term investment vehicle. For those enrolled in high-deductible health plans, an HSA can build a powerful cushion for future healthcare costs. Ignoring these tools can mean paying more than necessary and missing a chance to grow tax-efficient savings.
Mistake 3: Not Considering a High-Deductible Health Plan (HDHP)
Overlooking a High Deductible Health Plan (HDHP) during FEHB open season can mean missing out on long-term savings and flexibility. HDHPs often come with lower premiums and pair with Health Savings Accounts (HSAs), which offer triple tax advantages and can accumulate funds for future medical expenses, even in retirement.
Many federal employees dismiss HDHPs due to the higher deductible, but for those with minimal annual healthcare costs or who want to build a tax-efficient safety net, they can be a smart financial move. Not considering one is a mistake rooted in short-term thinking.
Mistake 2: Assuming Some FEHB Plan Types are Cheaper than Others
Misunderstanding FEHB plan types can quietly drain a federal retiree’s budget.
Many assume “self plus one” is the most cost-effective choice for married couples, but in some cases, “self plus family” actually comes with lower premiums, especially as you get older.
Similarly, when both spouses are federal employees, opting for two “self only” plans might seem logical, but it can end up costing more than a shared “self plus one” or “self plus family” plan. These pricing quirks vary by carrier and plan, and overlooking them during open season can lead to unnecessary expenses year after year.
Biggest Mistake Federal Employees Should Avoid During Open Season
The biggest mistake federal employees can make during open season is defaulting to last year’s health plan without reevaluating their options. FEHB plans change annually: premiums, deductibles, provider networks, and prescription coverage can shift in ways that directly impact your costs and care. By not reviewing the updated plan brochures or comparing alternatives, you risk overpaying, missing out on better coverage, or sticking with a plan that no longer fits your health needs.
