Health insurance choices can ease the pain of the pay freeze

Federal employees worried about how next year's pay freeze will affect their finances should stay focused on ways to save money on health insurance during this year's open season, according to one adviser.

President Obama on Nov. 29 proposed a pay freeze for 2011 and 2012 that would apply to all civilian workers, including Defense Department employees, but not to military personnel. Workers still would be eligible for step increases and promotions, officials said. In addition to a freeze on base pay, civilian government workers would see no locality increases in 2011.

The proposal comes soon after federal employees received news of an increase in health care costs. The Office of Personnel Management in October announced that the average amount Federal Employees Health Benefits Program participants pay for their health insurance plans will rise 7.2 percent in 2011.

Walton Francis, author of the Consumers' Checkbook 2011 Guide to Health Plans for Federal Employees, said government workers should concentrate on making the best choices they can with rates and plan information already available to them.

"Don't get into some sort of paralysis worrying about these future events," he said. "Your immediate choice is what you're going to do this year."

A potential pay freeze doesn't change the options available, but it does make frugal decisions more important, Francis said.

"Families have approximately $2,000 in savings or more [annually] for making a better-buy plan choice including the obvious change from Blue Cross Standard to Blue Cross Basic -- probably as much as most people would have gotten in a pay raise," he said.

FEHBP participants could save money using flexible spending accounts or consumer-driven and high-deductible plans, Francis said. For example, individuals who switch from Blue Cross Standard to GEHA's high-deductible health plan could save $1,200 for the year.

FSAs allow participants in any FEHBP plan to make pretax contributions to a savings account to pay for medical and dependent care. Contributions do not roll over at the end of the year, so participants must spend the entire account balance, or lose it. The program does, however, have a two and a half month grace period for employees to spend leftover money.

Consumer-driven and high-deductible plans require users to carefully consider the type and cost of services they receive, according to Francis. These options have preferred providers, allow participants to seek out-of-network care and offer some type of savings account option for health care expenses. Enrollees pay several thousand dollars toward a deductible before coverage kicks in, he said.

"People who aren't making a conscious decision to stay in a higher-cost plan are throwing away money," Francis said. "It's time for homework, to look at plan brochures, think about your plan situation, and think about the other options you aren't in."

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.