Open season and tax savings

If you want to take advantage of all the benefit choices available to you and your family, you have much to think about during the current Federal Employee Health Benefits Program Open Season that ends at midnight (EST) on Mon., Dec. 9. This week, I'd like to review the ways that, by making the right choices, you can save money and enjoy excellent coverage for you and your family in the new year.   

Hopefully, you have begun to review your health insurance coverage FEHB program or the new Postal Service Health Benefits program. Next year marks the launch of the PSHB, a new health benefits program established by the Postal Service Reform Act of 2022 for eligible postal service employees and annuitants, and includes eligible family members. 

If you are currently enrolled in a FEHB plan, you will be transitioned to a new PSHB plan automatically on Jan. 1, 2025. According to OPM, more than 90% of USPS members will be automatically enrolled into the corresponding PSHB plan that most closely resembles their current FEHB plan, if the FEHB carrier is offering that plan in PSHB. If you like that plan, you do not have to do anything further during this year’s open season. If you wish to choose a new plan, you can do so during open season just as you would under the FEHB program. 

Start by reviewing your plan choices for FEHB plans and PSHB plans (2025 premiums). You can also contact the PSHB Helpline at (844) 451-1261 for assistance. 

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 changed your coverage from a self plus one or self and family enrollment under your spouse to a self only enrollment and you are within five years of retirement, be sure to let your retirement specialist at your agency 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 for the five years immediately preceding your retirement. This includes time you are covered as a family member under another person's enrollment. Acceptable evidence of coverage under a family member’s FEHB is a copy of the family member’s SF 2809 or a statement of coverage letter from the FEHB insurance carrier   

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. 

High Deductible Health Plans with a Health Savings Account 

HDHPs are a great way to lower your taxable income for those who are eligible to have a HSA. Although there is a “higher” deductible, the premiums for HDHP plans are generally less expensive than many other plans as these plans tend to attract many younger enrollees who may have less need for expensive health care – one of the drivers that increase the premiums. The minimum deductible for a health plan to be considered an HDHP in 2025 is $1,650 for self-only enrollment and $3,300 for a +1 or family enrollment. If you choose to enroll in an HDHP for the 2025 plan year, be sure to take full advantage of your ability to contribute tax-free dollars to the HSA. 

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. 

The maximum that can be contributed to your HSA is an annual combination of HDHP “premium pass through” and your contribution funds, which when combined, do not exceed the maximum contribution amount set by the IRS of $4,300 for an individual and $8,550 for Self Plus One or Self and Family in 2025. HSA users aged 55 and older can make an extra $1,000 contribution to their HSAs. This amount will remain unchanged in 2025. If you are contributing to an HSA in 2024, you have until April 15, 2025, to make 2024 contributions to your account. To determine the amount you may contribute, subtract the amount the Plan will contribute to your account for the year from the maximum allowable contribution. 

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 or LEX-FSA. The annual FSA limit for 2025 health care and LEX FSAs will be $3,300. 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 $660.00 remaining in your account from one plan year to the next, so there's no "use or lose" risk. 

Here are some of the HDHP plans to choose from for the 2025 FEHB/PSHB plan year: 

• GEHA Benefit Plan High Deductible Health Plan 

• Self Only in-network deductible of $1,650 with HSA contributions of $1,000); out-of-pocket maximum of $6,000 for in-network 

• Self Plus One or Self Plus Family in-network deductible of $3,000 with HSA contributions of $2,000; out-of-pocket maximum of $12,000 for in-network 

• FEHB Enrollment Code 341 Self Only $76.27 biweekly or $165.26 monthly 

• FEHB Enrollment Code 343 Self Plus One $163.99 biweekly or $355.31 monthly 

• FEHB Enrollment Code 342 Self Plus Family $201.52 biweekly or $436.63 monthly 

• PSHB Enrollment Code 39A Self Only $78.60 biweekly or $170.29 monthly 

• PSHB Enrollment Code 39C Self Plus One $168.98 biweekly or $366.13 monthly 

• PSHB Enrollment Code 39B Self Plus Family $07.66 biweekly or $449.92 monthly 

• Aetna HealthFund HDHP w/HSA 

• Self Only in-network deductible of $1,800 with HSA contributions of $800) 

• Self Plus One or Self Plus Family in-network deductible of $3,600 with HSA contributions of $1,600. 

• FEHB Enrollment Code 224 Self Only $135.20 biweekly or $292.93 monthly 

• FEHB Enrollment Code 226 Self Plus One $287.01 biweekly or $621.86 monthly 

• FEHB Enrollment Code 225 Self Plus Family $241.49 biweekly or $523.23 monthly 

• PSHB Enrollment Code G3D Self Only $174.38 biweekly or $377.83 monthly 

• PSHB Enrollment Code G3F Self Plus One $377.42 biweekly or $817.84 monthly 

• PSHB Enrollment Code G3E Self Plus Family $342.76 biweekly or $742.65 monthly 

• MHBP Consumer Option HDHP w/HSA 

• Self Only in-network deductible of $2,000 with HSA contributions of $1,200) 

• Self Plus One or Self Plus Family in-network deductible of $4,000 with HSA contributions of $2,400. 

• FEHB Enrollment Code 481 Self Only $84.20 biweekly or $182.43 monthly 

• FEHB Enrollment Code 483 Self Plus One $186.33 biweekly or $403.72 monthly 

• FEHB Enrollment Code 482 Self Plus Family $195.65 biweekly or $423.90 monthly 

• PSHB Enrollment Code 74A Self Only $94.93 biweekly or $204.60 monthly 

• PSHB Enrollment Code 74C Self Plus One $217.49 biweekly or $471.23 monthly 

• PSHB Enrollment Code 74B Self Plus Family $219.42 biweekly or $475.40 monthly 

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 the available HDHP plans).  

Flexible Spending Account Program and www.fsafeds.gov   

Benefits of Contributing to an FSA 

• Tax Savings: Contributions to FSAs are deducted from gross income, which lowers taxable income and can lead to significant tax savings. 

• Predictable Healthcare and Dependent Care Budgets: FSAs provide employees with a pre-set amount to use on eligible expenses, helping families budget more effectively for out-of-pocket costs. 

• Yearly Rollover and Grace Periods allowing a portion of unused funds to carry over to the next plan year, or a grace period, which extends the time to use funds. 

Under the FSAFEDS program, employees have a great opportunity to lower their taxable income by thousands of dollars each year by participating in three types of FSA benefits: 

1. Health care (HCFSA)  

2. Dependent care (DCFSA) 

3. Limited Expense (LEXFSA) 

An employee who chooses to participate in a HCFSA or LEXFSA can contribute up to $3,300 through payroll deductions during the 2025 plan year. A DCFSA has a limit of $5,000 per household. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax. If the employee's spouse has a plan through their employer, the spouse can also contribute up to $3,300 to that plan. In this situation, the couple could jointly contribute up to $6,600 for their household. The maximum carryover amount to 2025 is $660, increasing from $640 in tax year 2024. The carryover doesn’t affect the maximum amount of salary reduction contributions that can be made. This is a way to take the money that you already spend on out-of-pocket 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! 

DCFSA or Dependent Care Tax Credit? 

You may apply up to $3,000 of expenses paid in a year for one qualifying individual, or $6,000 for two or more qualifying individuals to your taxes through the Dependent Care Tax Credit. If you have two or more dependents and your household adjusted gross income is less than $43,000, you might find the federal tax credit to be more beneficial. However, if your household adjusted gross income exceeds $43,000, it is likely the DCFSA will provide greater tax savings. Learn more at the FAQ section of www.fsafeds.gov. Some federal agencies do not participate in FSAFEDS, but may offer their own FSA program and they include: 

• District of Columbia Government 

• Farm Credit Administration 

• Farm Credit System Insurance Corporation 

• Federal Reserve System 

• National Science Foundation 

• Office of the Comptroller of the Currency 

• The Federal Judiciary 

• The Supreme Court of the United States 

• United States Institute of Peace 

• United States Postal Service 

• Postal Regulatory Commission 

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.  For a Dependent Care FSA, the benefit period is January 1 of the current year through March 15 of the following year. It's longer because DCFSA has a grace period. You have until midnight EST on April 30 following the end of the benefit period to file claims for eligible expenses incurred during the previous benefit period or grace period. 

Federal Employees Dental and Vision Insurance Program and www.benefeds.gov  

 FEDVIP offers eligible participants a range of plans from 12 dental and five vision carriers. This gives you a choice and the flexibility to select the right coverage for you and your family.  

• FEDVIP dental plans provide comprehensive dental coverage, including preventive services covered at 100% when you use an in-network provider. There are no deductibles when using in-network dentists. Also, there is no waiting period for major services such as crowns, bridges, dentures, orthodontia, and implants.  

• FEDVIP vision plans provide comprehensive vision coverage, including routine eye exams and vision correction without a referral. Plans also include low vision exams, eyeglass frames and lenses, and contact lenses at many optometrist offices or optical retail stores. Also, there are lens options such as shatter-resistant polycarbonate, scratch-resistance solutions, anti-reflective solutions, UV coatings, tinted and progressive lenses, and discounts on laser eye surgery.  

Refer to individual plan brochures for the official statement of benefits. 

BENEFEDS is the online benefit management portal where you can enroll in and manage your FEDVIP dental and vision plans and pay your Federal Long Term Care Insurance Program bills online and view your FLTCIP payment/FSAFEDS allotment histories. In addition, all employees and annuitants may determine if a supplemental dental or vision plan is needed for the 2025 plan year under FEDVIP program (your current coverage will continue if you do nothing).  

What are you doing Saturday morning? Maybe it’s time to act before it’s too late!