Federal employees have fewer health insurance choices this year

As Open Season begins, choices are more limited than before as several plans leave the federal program or reduce their coverage.

The Federal Employees Health Benefits Program typically includes an array of health insurance options. But this year the choices are more limited than before because 32 health insurance plans are leaving FEHBP or reducing their coverage across the country.

"It's kind of a disturbing trend," said Dave Snell, retirement benefits service department director for the National Active and Retired Federal Employees Association. "It cuts down on choices, for one, and the federal program is all about choice."

Snell said primarily health maintenance organization plans are eliminating their FEHBP coverage leaving some regions with fewer options. According to the Office of Personnel Management, 10 states -- Alabama, Alaska, Connecticut, Maine, Mississippi, Nebraska, New Hampshire, North Carolina, South Carolina and Vermont -- will no longer have an HMO choice.

That leaves other options, such as fee-for-service plans or consumer-driven plans, with high deductibles.

Only two plans -- QualChoice, an HMO in Arkansas and Physician Plus, an HMO in Wisconsin -- are joining the program in 2010, according to OPM.

According to Snell, plans often drop their coverage due to factors outside the federal government's control, such as economic conditions, or changes to their provider networks that make it difficult to continue coverage in a certain area.

Another reason is declining enrollment, Snell said. According to OPM, about 61,000 enrollees will be affected by service interruptions, either through reductions in existing plans or plan terminations. Those affected represent about 1 percent of total FEHBP enrollees.

"Plans generally decide to withdraw based on an assessment of enrollment, utilization and premium," OPM stated when announcing the 2010 rates.

Insurance providers are required to notify their members about a plan's termination. If the members do not choose another plan during Open Season, they will lose health benefits in 2010. Despite the dropped plans, there are still 235 health plan choices for FEHBP enrollees, including 30 in the Washington area.

The terminated and reduced coverage are an extra wrinkle during an open season period that already forces enrollees to face tough choices. With the average contribution for a federal employee going up by as much as 8.8 percent, many government workers might have to choose a new plan to fit their budget.

"It's tough when these things go up, especially for retirees who are on fixed incomes," said Snell. "People are very conservative about moving out, especially if they have their favorite doctors."

Snell urged enrollees to study all costs when considering a new plan, not only premiums, but also out-of-pocket costs such as co-payments and co-insurance options.