Retirement & Financial Planning Report

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In the annual Federal Employees Health Benefits program open season—this year from November 9 to December 14—enrollees may change plans, levels of coverage within a plan for those with more than one, or change between self-only, self plus one and self and family coverage.

However, only about 5 percent of enrollees make a change in any given year. OPM officials and other experts have said that most commonly, the reason is simple inertia. They suggest that at the minimum, enrollees examine certain basics.


First, have you explored the differences among plans fully? While the FEHB often is described/derided as a “vanilla” program—because OPM sets basic standards of coverage all plans must meet—there are substantial variations among them. These include incentives to use certain providers, differences in copayments and other out of pocket costs, and differences in coverage—all of which add up to differences in premiums.

You can choose from among managed fee for service (FFS) plans, regardless of where you live, or plans offering a point of service (POS) product and health maintenance organizations (HMO) if you live (or sometimes if you work) within the area serviced by the plan. You will find managed care features in all the plans. There are two other major variants. In “consumer-driven” options, enrollees get a sum of money to pay toward health costs, then pay a deductible, and then have standard fee-for-service or HMO coverage. In “high-deductible health plans,” enrollees have a tax-favored account that can be used to pay the deductible and certain other qualifying health expenses.

On top of the basic features mandated by OPM, plans do vary in their coverage. While your exact need for health care is unpredictable, you can act on what you reasonably can foresee. Then examine whether your existing plan is best for such considerations, or whether a change would better fit your needs.

Do you expect to have any medical costs in the coming year that you didn’t have in the current year? For example, are you expecting upcoming surgery? Or can you reasonably expect different types of care or procedures than you currently experience, such as chiropractic care, laser eye surgery or extensive dental work? If you have family members on your plan, don’t forget to think through those same issues regarding them.

What would be your share of the cost of prescription drugs you reasonably expect to be taking? Could your medication needs foreseeably change, and what would be your cost for them? What deductibles, copays, and coinsurances would you pay under your various options? Can you (if an active employee) make them effectively more affordable by paying for more of them through a health care flexible spending account?

One valuable feature of FEHB is that you can change your coverage each year. That is, you could switch plans to capture the benefits of an attractive feature that you may need in only one year—related to the upcoming birth of a child, for example—and then switch back again the following year.

Also reexamine your level of coverage. Choosing the self-only option isn’t necessarily just for someone who is either unmarried and/or has no eligible children. It’s also an option for married couples. In some cases both work for the federal government and have an entitlement to enroll in the FEHB program on their own. One attraction of having separate coverage is that it allows each of them to tailor their plan selection to their specific needs. Another is that there are times when the premium cost of two self only enrollments will be less than that for one self plus one or one self and family enrollment.


However, each enrollee would have to meet the co-insurance and deductible requirement plus the catastrophic limit on his or her own. Also, one of the enrollees would have to elect a self plus one or self and family plan to obtain coverage for any eligible child or children, probably overriding any savings from having separate coverage on the two spouses.

There are also situations where one of the spouses has a job outside the federal government and where coverage is provided at little or no cost, at least for self-only enrollment. In such cases it might make sense to have two self-only plans. Just remember that it’s not uncommon for employees retiring from non-federal jobs to lose their health benefits coverage or have it substantially reduced.

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