High health premiums could force some employees to shop around

Open season always is a time for choices. But this year, a combination of rising health insurance premiums and tight family budgets could make those choices tougher for many government employees.

The average premiums civil servants pay under the Federal Employees Health Benefits Program will increase 8.8 percent in 2010, according to the Office of Personnel Management. While Congress has yet to pin down the annual pay raise, all the figures under discussion are lower than this year's 3.9 percent boost. Pressure from both ends means some federal workers might be forced to drop their existing plan and look for a more budget-friendly option.

According to benefits specialists, that means taking a broad look at myriad FEHBP offerings and examining the associated costs and benefits, not just the premiums.

"They all have good benefits," said Walton Francis, author of the Consumers' Checkbook 2010 Guide to Health Plans for Federal Employees. "Unless you have some unusual circumstance, in general, you're buying a financial product. You're looking for the lower cost -- the lowest premium and the lowest out-of-pocket cost taken together."

Another important factor to keep in mind is whether you or one of your family members anticipate making many trips to the doctor, Francis said.

David Snell, retirement benefits manager for the National Active and Retired Federal Employees Association, noted that a plan with a low premium isn't necessarily a bargain, if it would require an enrollee to pay more in out-of-pocket costs for medical care.

"Most of the plans cover the same benefit levels," Snell said. "Part of that shopping around is to look not just at the premiums, but the co-pays, co-insurance [and] deductibles, and to make sure that if their family members have a special need… that need is being covered."

Francis noted that for many federal workers, high-deductible plans can be a great way to save money because they have lower premiums but don't substantially reduce benefits. This option also offers savings accounts enrollees can use to cover medical costs before paying out-of-pocket, Francis said.

"Federal employees are underestimating, substantially, the value of consumer-driven, high-deductible plans," Francis said. "They turn out to be very good deals, not just for the young in health."

Snell cautioned, however, that high-deductible plans might not be optimal for those nearing or past retirement, unless the retiree thinks that he or she will not incur many health care expenses.

One additional consideration for retired federal workers is to ensure that FEHBP and Medicare complement, rather than duplicate, each other.

"People who are enrolled in the federal plan and enrolled in Medicare A and B should not be paying a high premium for the FEHBP coverage, because it basically duplicates the benefits provided by Medicare," Snell said.