Open Season: Selecting an FEHB plan: Don't focus solely on premiums—Part II

Starting Nov. 11 and ending Dec. 9, 2013, federal employees who participate in the Federal Employees Health Benefits (FEHB) program must decide which health insurance plan they want for themselves and any eligible family members during 2014.

This second of two columns explaining medical, dental and vision insurance choices for employees discusses point-of-service (POS) plans, consumer driven health plans (CDHP) and high deductible health plans (HDHP). The purpose of this discussion is to make it easier for employees to decide which FEHB plan best meets their needs, and if applicable, the needs of their families.

This column also discusses the separate dental and vision insurance choices for employees. Both the dental and vision insurance is offered through the Federal Employees Dental and Vision Insurance Program (FEDVIP). 

Point of Service (POS) Health Plans

A POS health insurance plan is similar in many ways to a Health Maintenance Organization (HMO) health care plan and a Preferred Provider Organization (PPO) health insurance plan. In fact, a POS plan almost offers the best options and benefits of both the PPO and HMO plans. For instance, the POS plan is not as restrictive as a traditional HMO and yet the overall out-of-pocket expenses are less when compared to the expenses associated with a PPO plan, including the deductible portion of one’s health insurance bill.

Normally with a POS health care plan, an enrollee will be asked to select a primary health care provider from a list of preferred providers within the POS network. The enrollee will then receive all medical care from the selected doctor or medical specialist. Referrals to other specialty doctors and hospitals that are also part of the POS plan will originate and be directed by the primary health care provider.

Although many consumers get slightly anxious or concerned when choosing from a list of doctors provided to them, especially if they have a hometown favorite doctor from whom they are more comfortable receiving medical assistance, the lower overall costs usually ease those anxieties. For instance, the deductible is usually quite small and there is a minimal charge in the form of a co-payment for doctor visits and medical prescriptions. Perhaps the only drawback would be that a majority of the time an enrollee must use the generic brands of any prescriptions that the enrollee receives.

Aside from having a primary health care provider referring an enrollee to specialists within the plan, the enrollee also has the option of using a specialist or doctor outside of the POS health care plan network; however, keep in mind this will warrant additional costs (sometimes as much as 50 percent higher), which will need to be covered out of the enrollee’s pocket. The one exception to this would be if someone were in an emergency medical situation that required immediate medical assistance. If someone is truly looking for a health care plan that allows him or her to see their own doctor or health care provider, then an indemnity plan is more appropriate than a POS plan.

Many individuals like the flexibility and cost that a POS health care plan offers. Whether one does or does not is entirely up to the individual (and their family, in the case of self and family coverage) and should be based on their current medical needs. If this plan isn't right for their health care needs, then there are other choices, including fee-for-service (FFS), health maintenance organizations (HMO), consumer driven health plans (CDHP) and high deductible health plans (HDHP). FFS and HMO plans were discussed in the Nov. 6 e-newsletter column. CDHP and HDHP plans are discussed below.

Consumer Driven Health Plans (CDHP)

The term "Consumer Driven Health Plan" (CDHP) is used to describe a variety of mechanisms for providing health insurance or funding healthcare costs, all of which encourage individuals to become actively involved in making their own healthcare decisions (for example, designing their health insurance coverage, choosing their service providers, selecting healthcare services, and managing their own fitness and wellness).

A CDHP is a broad definition incorporating several emerging healthcare strategies that heighten consumer awareness of the cost and utilization of healthcare services through plan design incentives. In practice, a CDHP could encompass any of the following strategies.

• Modifications to traditional HMO, PPO and POS benefit plans using plan design elements such as high deductibles, co-insurance, and co-payments to provide incentives to plan participants to take a more vested interest in the cost and frequency of services used.

• Tiered networks within an HMO, PPO or POS network where participants pay higher co-payments or co-insurance when using higher-cost providers.

• Personal health savings account types of plans where an account, either a Health Savings Account (HSA), Health Reimbursement Arrangement (HRA), or a Health Care Flexible Spending Account (HCFSA), is combined with a high-deductible PPO plan to empower the plan participant with greater flexibility; Financial Savings Accounts or Health Reimbursement Arrangements may be rolled over into subsequent plan years.

• Information systems (web and voice) that furnish consumers with greater price transparency in purchasing care, along with tools to make prudent decisions about accessing healthcare services.

     CDHP plans offer:

• Greater choice. Members seem to be moving away from managed care restrictions as HMO enrollment continues to decline while enrollment in PPO-style plans is increasing.

• Incentives for employees to become more involved in making economic decisions about the utilization of healthcare, resulting in more educated purchasers demanding lower cost and higher quality service from their providers.

• Options to address cost and access problems within the current healthcare system.

When the question comes about as to what size of company and type of company would offer a consumer-driven plan, the answer is many types of employers are implementing strategies that are in some fashion consumer-driven programs. Larger employers have more options, as the more progressive plans may only be available on a self-funded basis. Many providers have begun to offer these progressive plans on an insured basis in some form or fashion, but enrollment remains a fraction of traditional plans.

High Deductible Health Plans (HDHP)

A High Deductible Health Plan is a health insurance plan in which the enrollee pays a deductible of at least $1,250 (Self Only coverage) or $2,500 (family coverage). The annual out-of-pocket amount (including deductibles and co-payments) the enrollee pays cannot exceed $6,250 (Self Only coverage) or $12,500 (family coverage). These dollar amounts are for 2013. HDHPs can have first dollar coverage (no deductible) for preventive care and higher out-of-pocket co-payments and co-insurance for services received from non-network providers. HDHPs offered by the FEHB Program establish and partially fund HSAs for all eligible enrollees and provide a comparable HRA for enrollees who are ineligible for an HSA. The HSA premium funding or HRA credit amounts vary by FEHB plan.

HSAs and HRAs will be discussed in the Nov. 20, 2013, “open season” e-newsletter.

Dental and Vision Insurance

The Federal Employee Dental and Vision Benefits Enhancement Act of 2004 provided OPM the opportunity to establish arrangements under which supplemental dental and vision benefits are made available to federal employees, retirees and their dependents.

Dental and vision benefits are available to eligible federal and postal employees, retirees and their eligible family members on an enrollee-pay-all basis through the Federal Employees Dental and Vision Insurance Program (FEDVIP). This program allows dental insurance and vision insurance to be purchased on a group basis, which means competitive premiums and no pre-existing condition limitations. Premiums paid by enrolled federal and postal employees in the FEDVIP are always withheld from an employee’s gross salary.

Enrollment in FEDVIP takes place during the annual federal benefits open season held each year from the second Monday of November and through the second Monday of December. New and newly eligible employees can enroll within the 60 days after they become eligible.

Employees can enroll in a dental and/or vision plan. Coverage includes self only, self plus one eligible family member, or self and family coverage. Eligible family members include an employee’s spouse and unmarried dependent children under age 22. Dependent children include legally adopted children and recognized natural children who meet certain dependency requirements. This also includes stepchildren and foster children who live with the employee in a regular parent-child relationship. Under certain circumstances, coverage may be continued for a disabled child 22 years of age or older who is incapable of self-support.

FEDVIP rules and FEHB rules for family member eligibility are NOT the same. For example, changes in dependent eligibility under the Patient Protection and Affordable Care Act (PPACA) of 2010 affect eligibility for children under the FEHB program but do not affect eligibility for children under FEDVIP. Also, many FEHB plans will pay for some dental and vision expenses. 

Employees must be eligible for the FEHB Program in order to be eligible to enroll in FEDVIP. It does not matter if they are actually enrolled in FEHB—eligibility to enroll in the FEHB program is the key. The “last five years of employment” FEHB program participation rule for eligibility to carry FEHB coverage into retirement does not apply to the FEDVIP. Annuitants do not have to be enrolled in the FEHB program in order to participate in the FEDVIP.

Information including enrollment information about the separate dental and vision plans may be obtained by going to the website www.benefeds.com. For 2014, there are 10 dental plans and four vision plans available nationwide to employees. 

The question that employees have to ask is: Should they enroll in a FEDVIP plan? To answer this question, employees should consider the following:

1. Do they or a member of the family expect to incur a significant dental or vision expenses during 2014?

2. Assuming that the employee or a member of the employee’s family is expected to incur a significant dental or vision expense during 2014, is the employee better off “self-insuring”? That is, would the employee save money by setting aside money to pay the expenses? One of the best ways to self-insure is through a health care flexible spending account (HCFSA) or through an HSA.

3. Since employees paid the full cost of the FEDVIP premiums with no agency contributions, does it make sense for the employee to look into purchasing individual dental and/or vision insurance from a private insurance company?