Health Plan Checkup

The annual open season for federal benefits elections started on Monday, and given the recent spike in premiums and the introduction of new coverage options, it may be wise to weigh alternatives to your current plan.

During an online seminar hosted by Government Executive, Walton Francis, author of Consumer's Checkbook Guide to Health Plans for Federal Employees and Annuitants, encouraged employees to do their homework prior to selecting a plan.

Most employees have 20 or more options and can switch plans regardless of pre-existing conditions, Francis said. When determining which offering is the best fit, he recommends considering a variety of factors: your family size, age, pay system, full- or part-time status, geographic area, retirement status, Medicare status and overall risk of high medical costs.

Researching health plans "is a prudent and smart thing to do," Francis said. "Take into account whether or not you plan to have a child next year. Most conditions you can't foresee, so … you should try to prepare yourself against the worst."

Premiums will rise an average of 7 percent in 2009 according to the Office of Personnel Management -- the largest increase since 2005. But much of that increase was fueled by higher rates for Blue Cross Blue Shield Standard, the most popular FEHBP option. About 60 percent of program participants have selected that plan.

Also bear in mind that the actual increase will vary depending on the category of health plan you choose. It will make a difference whether you pick a traditional fee-for-service plan, a health maintenance organization, or a consumer-driven or high-deductible plan. For a self-only General Schedule employee in the Washington area, Francis said, annual premiums will range from $560 to $2,550. And while all plans provide reasonable to good coverage for catastrophic medical costs, he said, the best plan has a limit almost $10,000 higher than the worst.

Francis strongly encouraged employees to look at high-deductible and consumer-driven plans, noting they offer "some of the best bargains in the system." These plans provide you with a savings account larger than your actual premiums after taxes. You can end the year with more money than you started if your medical costs are low, and you're protected if your costs are high, he said. In low-cost years, and most but not all high-cost ones, you can save $500 to $1,000 in high-deductible self-only plans, and even more in family plans, according to Francis.

"These plans are not too difficult to understand," he said. "They have features that are desirable, and they have almost no undesirable features except for the one they're famous for -- that high deductible."

Employees also should consider HMOs, Francis said, noting that the M.D. Individual Practice Association health plan is a good alternative to Blue Cross Standard. Employees might want to look at less expensive national plans as well, including Blue Cross Basic and GEHA Standard, which are "much better buys than Blue Cross Standard," he said.

In addition, Francis encouraged employees to enroll in flexible spending accounts, which allow participants to put aside money, tax-free, for health costs ranging from dental care to sunscreen. "Amazingly, only about one in 10 employees enroll in an FSA," he said. "It's probably only worth a few hundred bucks to you, but if you don't get that few hundred bucks, you're throwing it away."

It also could be beneficial for agency leaders to learn more about the savings that can result from employees enrolling in lower-cost plans, Francis said. The government pays about 70 percent of the premium for most plans, but agencies can save an average of about $2,000 for every employee who switches to a lower-cost plan, he said.

Francis advised employees to read the brochures for all the plans they're considering for 2009. Their research should focus on the How We Change and the Summary of Benefits sections, he said. Also, some plans exclude deductibles and co-payments for catastrophic limits, which can distort the actual cost by thousands of dollars, according to Checkbook's guide, so be wary of misleading figures in plan summaries.

Many federal agencies have contracted with Consumer's Checkbook to provide free online access to the health plan guide for their employees during the open season period. Click here to see if your agency is among them.

FEHBP participants also can use OPM's online plan comparison tool to look at the benefits and costs of as many as four different plans simultaneously. OPM updated the tool with 2009 data on Nov. 3.

You have until Dec. 8 -- the end of open season -- to finish your homework.