OPEN SEASON: Premium cost should not be a primary consideration when choosing an FEHB Plan for 2015: Part I

Starting Nov. 10 and ending Dec. 8, federal employees who participate in the Federal Employees Health Benefits (FEHB) program must decide which health insurance plan they, together with their eligible family members, want to be covered by during 2015.

If they are satisfied with the FEHB plan that they are currently enrolled in and want to remain in that plan for 2015, they need not take any action. But if they want to switch their plan for 2015, they must do so during this annual benefits “open season,” with their new FEHB plan taking effect on the first day of the 2015 leave year, Jan. 11, 2015.

A brief description and summary of the FEHB program may be found at www.opm.gov/healthcare-insurance/healthcare.

Rising health insurance premiums has been a reality for most individuals, and the FEHB program is no different. FEHB premiums will increase on average by 3.2 percent in 2015, slightly lower than the 2014 average increase of 3.7 percent. But when selecting a health insurance plan for 2015, employees should not focus solely on premiums as a criterion for choosing the “best” FEHB plan. They also need to focus on: (1) plan deductibles and co-payments; (2) whether their doctors are “preferred providers,” under the plan; and (3) what type of plan—fee-for-service, health maintenance organization, point of service, high deductible health plan, or a consumer-driven health plan—best suits their medical needs.

As federal employees and their families prepare for the 2014 FEHB open season, there is another health insurance open season taking place. Under the Affordable Care Act (ACA) (2010), from Nov. 15 through Feb. 15, 2015, individuals can obtain health insurance through state-run health care exchanges. Those individuals whose income is below certain limits will receive subsidies from the federal government in the form of tax credits for enrolling in a plan through the health care exchanges. Also, effective Jan. 1, 2014, those individuals who choose not to enroll in a health insurance plan—either through an employer-sponsored plan or through an exchange—will pay an IRS penalty.

Federal employees should be aware that the FEHB program is considered to be “creditable” coverage for purpose of the ACA. Also, in spite of the possibility that some employees may qualify for health care tax credits by enrolling in one of the plans offered on the exchanges, employees are strongly encouraged to enroll or stay enrolled in the FEHB program. 

Another decision for employees during this benefits open season is whether they and their families should enroll in a separate dental and vision insurance plan. Those employees who are currently enrolled in a dental and/or vision plan will have to decide whether they want to drop their dental and vision insurance or to enroll in a different plan offered through the Federal Employees Dental and Vision Insurance Program (FEDVIP). If they are currently enrolled in a dental and/or vision insurance plan through the FEDVIP and choose to remain in that plan, they need not take any action.

Information about the FEHB program can be obtained at www.opm.gov/healthcare-insurance/healthcare/plan-information/plan-types. The following is a summary of some of the important aspects of the FEHB program:

• There are no waiting periods and no pre-existing condition limitations for any FEHB plan.

• Each fee-for-service FEHB plan contracts with doctors and hospitals, known as a provider network. An employee’s doctor may participate in one or more provider networks.

• Employees will reduce out-of-pocket costs by visiting doctors and hospitals that contract with the employee’s plan. A plan’s website indicates which providers participate in the plan’s network.

• In 2015, the FEHB offers 257 health insurance plan choices, including four new plan choices in 12 service areas and two existing plans expanding to eight service areas.

• Due to the ACA, the FEHB program now covers more than 400,000 young people between the ages of 22 and 26 through their parents’ employer-based coverage

This first of two columns explaining medical, dental and vision insurance choices for employees discusses fee-for-service (FFS) plans (including FFS plans with preferred providers) and health maintenance organizations (HMOs). 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. 

Employees should carefully compare both costs and coverage; in particular, they should be sure to compare:

1. Premiums.
2. Coverage/benefits.
3. Access to doctors, hospitals, and other providers.
4. Access to after-hours and emergency care.
5. Out-of-pocket costs (coinsurance, copayments, and deductibles).
6. Exclusions and limitations.

Fee-for-Service (FFS) Plans

FFS plans offer more flexibility in choosing doctors and hospitals. A FFS plan enrollee can usually choose any doctor he or she wishes and can change doctors at any time. Although an enrollee usually will not need a referral to see a specialist or to go for X-rays or tests, the enrollee may need to bring with them paperwork such as the enrollee’s medical records from their primary care physician.

With an FFS “indemnity” plan, the plan pays only part of one’s medical bills. The enrollee is responsible for the remainder and will need to spend a certain amount each year before the plan begins to pay benefits. This amount is called a deductible. Deductibles might range from $100 to $1,000 per year per covered person, or $500 or more per year for a family.

FFS plans pay a portion of the bill—usually 75 percent to 90 percent—after the deductible has been met, although this may vary. The enrollee pays the remainder, typically 10 percent to 25 percent of the total bill. This is called coinsurance.

FFS plans typically have an out-of-pocket maximum. This means that once an enrollee’s expenses reach a certain amount during a calendar year, the fee for covered benefits typically will be paid in full by the insurance plan for the remainder of the year. If an enrollee’s doctor bills are more than the reasonable and customary charge, the enrollee possibly may have to pay a portion of the bill.

There may be more paperwork to do with an FFS plan. Some doctors will submit the claim on behalf of the enrollee, and once the doctor receives payment from the insurance company, the doctor will bill the enrollee for the difference. With other doctors, the enrollee will have to pay the entire bill and then file a claim with the insurance company to be reimbursed.

FFS plan premium plan costs for 2015 may be obtained at www.opm.gov/healthcare-insurance/healthcare/plan-information/premiums/2015/nonpostal-ffs.pdf.

Managed Care

More than half of all Americans who have health insurance are enrolled in a managed care plan. Managed care plans usually cover a wide range of health services. With these plans, costs are lower when patients use the doctors and other providers who participate in the plan (network providers).

In most cases, enrollees will not have to fill out any insurance forms or submit any claims to the insurance company when the enrollee uses in-network providers. Usually, an enrollee will pay a copayment (typically $10 to $40 for an office visit) each time the enrollee goes to the doctor or hospital or fill a prescription. The copayment may vary depending on whether the enrollee sees a primary care doctor or a specialist and whether the enrollee receives a generic or brand-name prescription drug.

If one chooses to enroll in a managed care plan instead of an FFS indemnity plan, the individual may have lower out-of-pocket expenses for health care, as long as the individual sees doctors who are part of the plan (“in-network” providers).

FFS plans reimburse the employee or the health care provider for the cost of covered services. Employees can choose their own physician, hospital and other health care providers. Most FEHB FFS plans have preferred provider organization (PPO) arrangements. Those employees who receive services from a preferred provider usually have lower out-of-pocket expenses such as smaller copayments and/or a reduced or waived deductible.

The two main types of managed care plans are:

• Health maintenance organizations (HMOs).
• Preferred provider organizations (PPOs)

Both types of managed care plans have contracts with doctors, hospitals, and other providers. They have agreed on certain fees with these providers. As long as an enrollee gets care from a plan provider, the enrollee typically will be responsible only for any cost-sharing the plan requires.

PPO plans . PPO plans include the Government-wide Service Benefit Plan administered by the Blue Cross and Blue Shield Plans and the Government Employee Hospital Association (GEHA). These plans are open to everyone eligible to enroll in the FEHB program. PPO plans sponsored by unions and employee organizations may be open to all federal employees who hold full or associate memberships in the organization that sponsor the plans. Others are restricted to employees in certain occupation groups and/or agencies.

Employees should note that enrolling in an FFS plan does not guarantee that a PPO will be available in the employee’s geographic area. PPOs have a stronger presence in some areas than others, and in areas where there are regional PPOs, the non-PPO benefit is the standard benefit. In “PPO only” options, an enrollee must use PPO providers to get benefits.

Health Maintenance Organization (HMOs)

HMOs have long been known for a focus on prevention and wellness. Traditionally, HMOs required that an enrollee receive most of their care from one primary care physician who is aware of their total health picture. HMO enrollees usually must receive all of their medical care from network providers except in emergencies. HMOs usually have flat copayments rather than deductibles and co-insurance, and no lifetime limits on coverage.

After an individual enrolls in a HMO, he or she will need to select a primary care physician who will be responsible for coordinating all of their care. Primary care physicians may be family practice doctors, internists, pediatricians, obstetricians-gynecologists, or general practitioners.

If an individual enrollee becomes ill, the primary care doctor will see the individual first unless it is an emergency. The primary care doctor will give the individual a referral if the doctor a specialist must be seen. Usually, a HMO will not provide coverage for a specialist unless the enrollee has this referral.

In most cases, the enrollee must see a specialist who participates in their HMO. In some special circumstances, HMO patients may be referred to providers outside the HMO network and still receive coverage.

If an enrollee needs to be admitted to the hospital and it is not an emergency, the enrollee may have to obtain precertification from the plan. In most cases, the physician or hospital will take care of this. Non-emergency hospital care may not be covered without precertification. In case of an emergency admission, the enrollee or a family member, the doctor, or the hospital will need to contact the HMO plan within a certain timeframe (usually within 48 hours of admission) to obtain written confirmation of coverage for the hospital stay.

Today, some HMOs do not follow this “primary care model.” If one is considering a traditional HMO, then it is important to compare the features and requirements among the various HMO plans that are available. The three types of HMOs are: (1) Group Practice Plans—plans that provide care through a group of physicians who practice at medical centers; (2) Individual Practice Plans—plans that provide care through participating physicians who practice in their own offices; and (3) Mixed Model Plans—plans that are a combination of Group Practice and Individual Practice plans.

Each FEHB HMO sets a geographic area and service areas for which health care services will be available. The various FEHB HMOs by geographic and service area may be viewed at www.opm.gov/healthcare-insurance/healthcare/plan-information/premiums/2015/nonpostal-hmo.pdf. An employee can join a particular HMO if the employee lives within its service area. Some plans also accept enrollment from employees who work in the area even though they live elsewhere. Employees who have questions about living or working within a HMO service area should contact the plan before enrolling in it.

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