Once again, it’s time for federal employees and retirees to make a decision about their coverage under the Federal Employees Health Benefits program. As many of you already know, premiums for the average enrollee will experience another double-digit rise next year. Of course, the premiums for some plans and options will increase more than those in others. According to the Office of Personnel Management, the biggest factors driving these higher rates are the increased use of medical services, costly advances in medical technology, and an aging population.

Everyone needs to use a fine-tooth comb to check out which plan has the best balance of coverage and cost. In addition, those of you covered by Medicare will need to be sure that the combination of FEHB and Medicare results in the lowest possible out-of-pocket cost. While this is no easy task, here are some tips that will help you in that process.

Look at the differences between fee-for-service plans (such as Blue Cross-Blue Shield) and HMOs. If you join a fee-for-service plan, you will generally need to be covered by both Medicare A and B to reduce your out-of-pocket costs to nearly zero. Since HMOs provide more complete coverage, you may not need to enroll in Medicare Part B, for which you pay a monthly premium.

Regardless of which type of plan you choose, you need to look at the co-pays required for prescription drugs. One of the main reasons for premiums rising over the years has been the cost of medicine. Plans that used to waive co-pays for Medicare-covered retirees now require them. And the amount of those co-pays varies among plans.

Speaking of Medicare-covered retirees, they have often complained that their premiums are the same as those for employees, yet they should be less expensive to cover because Medicare pays a lot of their bills. The truth of the matter is that older people cost more to cover under FEHB even when covered by Medicare. If separate premiums were set for them, they would be higher than those of active employees. Putting all employees and retirees in one risk pool carries out the principle that the healthy should underwrite the less healthy. And it results in more reasonable premiums for the latter.

While you can’t always predict your health needs and those of your family members, if you have a clear picture of your needs for 2004, you should be sure to select a plan that provides the best coverage in terms of costs and benefits. However, don’t select a plan solely on one feature. You don’t want to find that an unexpected illness leaves you buried in bills. Look for balance in the rest of the plan.