Open Season Q&A

Throughout the Federal Employees Health Benefits Program open season, my email inbox has been filled with questions about insurance choices. This week, I thought I’d share some of them in the hopes they might help you consider your open season options. You have a little more than a week to make your choices before open season ends on Dec. 12.

Both my husband and I are federal employees. I will retire at the end of February 2017, while my husband plans to retire in early 2018. Last year, after many years of family coverage, we had planned to move to the self plus one option, but research revealed that for the Blue Cross standard option plan, we could save around $800 in premium costs if each of us took a self only policy instead. For 2017, we did the same comparisons and once again discovered a savings in premium costs if each of us has a self only policy for the Blue Cross standard coverage. However, is there is a tax savings enjoyed by the federal employee who holds the policy instead of the retiree who pays with after-tax dollars?

It can be a close call, but depending on your tax bracket, there can be a difference. You would only end up paying around 60 percent of the premium if you didn't have to pay an estimated 28 percent federal tax, 4 percent or 5 percent state tax, 6.2 percent Social Security tax and 1.45 percent Medicare tax on the Blue Cross/Blue Shield standard option premium as an employee. Here’s a comparison:

• Option 1: Spouse who retires first carries self only coverage into retirement and spouse who is still working carries self only (pre-tax) as an employee. Self only premiums: $229.64 per month or  $2,755.68 a year x $.60 (tax savings) = $1,653.40 (pre-tax) + $2,755.68 (no tax savings for retiree) = $4,409.08.
• Option 2: Spouse who is still working carries self plus one until he retires: Self plus one: $521.67 per month x 12 = $6,260.04 a year x $.60 (tax savings) = $3,756.02 a year.

The savings under Option 2 total $653.06 a year.

Remember, if you carry self only coverage, each of you must meet your deductible individually before the plan begins paying benefits. With self plus one, one family member can meet the deductible for both of you. Also, catastrophic protection has a lower limit for self only enrollments. If one of you has a serious illness, then the cap is met after $5,000 rather than $10,000.

Is the decision revocable; that is, can we go back to a family option in the future?

Yes. You can change plan options once you are both retired. The key is to not have any gap in coverage. It doesn't matter who is paying the premiums. Coverage under a spouse's self plus one enrollment counts towards your five years of coverage requirement to carry the insurance into retirement.

If one of us should die and the other remarry, could the policy be changed back to a family policy?

Yes. You always can cover eligible family members if you continue your FEHBP coverage into retirement. Retirees can make changes resulting from qualifying life events, just like employees. Retirees generally make changes using OPM Form 2809 instead of SF 2809.

I am 64 years old and kept my federal health insurance when I retired three years ago. For the past few years I have been covered under the insurance of my wife, who doesn’t work for the federal government. We have been paying for both premiums. She will be retiring in March 2017. We have been been to a number of her retirement classes and she can keep me on her insurance for life and I can stay on even if she dies before me. The overall costs of her plan are cheaper and she wants me to drop my federal benefits during this open season. If I do this it goes away forever. What should I do?

Please do not drop your FEHBP coverage until you’re sure what the post-retirement coverage with your wife’s insurance will cost and until you explore the coverage and coordination with Medicare. Based on other information you provided to me, your wife has two HMO choices and one PPO option to choose from. In your area, you have more than 20 different FEHBP plans to choose from and you may change plans during the annual open seasons. Be sure to pay special attention to out-of-pocket costs for inpatient care, prescription drug coverage, durable medical equipment and other expenses that can come up in your retirement years. I’m always hesitant to recommend cancellation of FEHBP coverage since, as you note, retirees are not eligible to reenroll.

At a retirement seminar, I was told that federal retirees are entitled to a one-time suspension of health insurance. Suspending rather than canceling gives the retiree the option to pick up FEHBP again at a later date.

The option to suspend rather than cancel FEHBP is only available to those with Tricare, ChampVA, Medicaid, Medicare Advantage and Peace Corps health plans. The form that is used to suspend coverage is the same as the one used to cancel, so be sure to read it carefully.

How can I be sure that my new health plan will be accepted by my doctor and will cover my prescription drug costs in the same way my current plan does?

You need to do some research to discover how potential plans will cover your prescriptions and to find out if your doctors and other health care providers are included in the plans’ networks. You can use OPM’s plan information to find plans’ websites and view plan brochures. Section 1 of the brochure provides information about the plan network for health care and pharmacy benefits. Section 5(f) covers prescription drug benefits. Most of the FEHBP plan websites have a prescription drug cost calculator.

If you visit your doctor or health care provider’s website, you also may find a list of insurance plans in which your doctor participates. (Or you can call their office.)

Additional Open Season Resources

• The Consumers’ Checkbook Guide to Federal Health Plans for Federal Employees and Annuitants includes explanations and advice on choosing a plan.
• Most agencies hold health fairs, and Federal Long Term Care Partners is hosting a virtual health fair during this open season. On Wednesday, Dec. 7, the fair will feature a “chat day,” in which you can talk with representatives of the various health plans. I will be presenting a webinar from 3:30 to 5 pm ET on that day as well.
• Members of the National Active and Retired Federal Employees Association can view two webinars that I recently presented on open season.

Photo: Flickr user jasleen_kaur