Open Season and tax savings

Updated at 4:29 p.m. ET

Open Season has begun and hopefully, you have plans to review your health insurance coverage under the Federal Employees Health Benefits Program and determine if a supplemental dental or vision plan is needed for the 2024 plan year under the Federal Employees Dental and Vision Insurance Program(your current coverage will continue if you do nothing). 

For employees, it is very important to submit your request for a flexible spending account allotment for 2024 since your election from last year will expire on Dec. 31. This is the first week of the open season period, but Dec. 11 will be here before you know it and Thanksgiving officially starts the busy holiday season. What are you doing Saturday morning?

If you want to take advantage of all the benefit choices available to you and your family, you have much to think about. This week, I'd like to introduce you to the ways that choosing the right health plan can save you money and provide you with excellent coverage for you and your family in the new year.  

High Deductible Health Plans with a Health Savings Account

High Deductible Health Plans are a great way to lower your taxable income for those who are eligible to have a Health Savings Account. Although there is a “higher” deductible, the premiums for HDHP plans are generally less expensive than many other plans as these plans are relatively new and have attracted many younger enrollees who may have less need for expensive health care which is one of the most significant drivers that increase the premiums. 

If you choose to enroll in a HDHP for the 2024 plan year, be sure to take full advantage of your ability to contribute tax-free dollars to the HSA. For the 2024 plan year, the IRS announced the annual limits for HSA contributions for self-only enrollment is $4,150 (a 7.8% increase over 2023) and for self-plus-one and self and family enrollments is $8,300 (up 7.1% over 2023). For those 55 and older, an additional $1,000 catch-up contribution is allowed. In addition, the HDHP plans in the FEHB Program all provide a “premium pass-through” which funds your HSA with money that can be used to meet your deductible and is included in the IRS contribution limits.  If the money in your HSA is not spent, it stays in the account. This money belongs to you and earns interest. If you leave the HDHP, you may continue to maintain the HSA account, but will not be permitted to make additional contributions.  

Before you get too excited, be sure that you are eligible to make contributions to an HSA. Since this involves tax-savings, the IRS has some requirements:

• You are enrolled in a qualified HDHP.
• You’re not covered by any other non-HSA-compatible health plan, like Medicare Parts A and B.
• You’re not covered by TRICARE.
• No one (other than your spouse) claims you as a dependent on their tax return.

Preventive care is covered 100% in HDHP plans without a deductible or co-payment, so it's possible for healthy people to keep a balance in their HSA account from year to year and allow the funds to grow. 

Employees who contribute to an HSA are eligible to make additional contributions to a Limited Expense Flexible Spending Account). The annual FSA limit for 2024 health care and LEX FSAs will be $3,200 (an increase of $150 over the $3,050 limit this year). This pre-tax benefit account helps you save on eligible out-of-pocket dental and vision care expenses while taking advantage of the long-term savings power of an HSA. Plus, if you re-enroll in FSAFEDS during Open Season, you can carry over up to $640.00 remaining in your account from one plan year to the next, so there's no "use or lose" risk.

Here is an example of the GEHA HDHP:

GEHA HDHP 341

• Self only: $71.45 biweekly; $154.81 monthly
• Self Plus One:  $153.62 biweekly; $332.84 monthly
• Self and Family:  $188.78 biweekly; $409.02 monthly

Premium pass-through (GEHA contributes to your HSA) 

$1,000 for self only and $2,000 for + one and family enrollments.

Deductible:  $1,600 / year for self only and $3,200 / year for + one and family enrollment

Catastrophic protection (in-network providers):  $6,000 for self only and $12,000 when enrollment is + one or family.  

Other FEHB plans offering similar HDHP benefits include: 

• MHBP HDHP
• Aetna HDHP 
• Blue Choice Advantage HDHP (DC Metro area)

There are other regional HDHP plans that you can locate using OPM’s Plan Information tool (click on your state for a menu of all of the available HDHP plans).  

Flexible Spending Account Program

Employees have a great opportunity to lower their taxable income by thousands of dollars each year by participating in a health care or dependent care FSA. This is a way to take the money that you already spend out of pocket on healthcare and dependent care and turn it into a tax break! You must reelect your FSA allotment every year, this does not carry over from last year’s election!

Dependent care FSA accounts can be used for your dependent who is under age 13 to pay for before and after school care; babysitting and nanny expenses; daycare, nursery school, and preschool; and summer day camp.  You may also allocate funds to pay for care for your spouse or a relative who is physically or mentally incapable of self-care and lives in your home. Use the FSAFEDS tool to calculate your tax savings. You can contribute up to a maximum of $2,500.00 per year if you are married and file a separate tax return and $5,000.00 per year if you are married and file a joint tax return or if you file as single or head of household.  

Health care FSA accounts can be used to pay for eligible medical, dental, and vision care expenses - those not covered by your health care plan or elsewhere. You must re-enroll in FSAFEDS during Open Season if you would like to carry over up to $640.00 remaining in your account to avoid losing this money due to the “use it or lose it” aspect of these accounts. You can use your Health Care FSA funds to pay for a wide variety of health care products and services for you, your spouse, and your dependents. The IRS determines . Look here for a list of eligible expenses (you may be surprised at the number of things that are included).  

Federal Couples

Sometimes it's less expensive for married federal employees or retirees without dependent children to carry two individual self only plans. Keep in mind that employees do not have to pay income tax on premiums for health benefits, but retirees do. Because of this, if one spouse retires before the other, consider having the spouse who remains employed carry self and family coverage. In addition, if you or your spouse is 65 or older, Medicare Part B enrollment can be delayed without incurring a late enrollment penalty if you are covered by health insurance through current employment (if the employer has 20 or more employees).  This can be another benefit for the spouse who is employed to carry the coverage for a federal couple.  

If you have recently switched to self only coverage prior to retirement and your personnel records do not show that you will have five years of coverage when you retire, be sure to let your personnel office know that you were under your spouse's self and family plan. To continue FEHBP coverage into retirement, you must have been continuously covered by an FEHBP enrollment. This includes time you are covered as a family member under another person's enrollment.

If your spouse is eligible for his or her own CSRS or FERS annuity, it is not necessary to leave a survivor's benefit for your spouse to carry health benefits. If you die while in a self and family plan, your CSRS or FERS spouse may continue coverage through their own federal salary or retirement benefit. They must enroll within 31 days of the date of your death.

If you do nothing else this open season, at the very least, review your current plan brochure for the 2024 plan year. On the cover you will find a reference to find the rates, the changes for 2024, and a summary of the plan benefits. You can find links to all of the plan brochures and websites available in your area along with links to the OPM Plan Comparison Guide and the Checkbook Guide to Federal Health Plans on OPM’s website. By spending a few hours reviewing your options for 2024, you may save a few hundred or even a few thousand dollars next year!