Making Sense of FEHBP's New 'Indemnity' Plans
The plans are not much different than the health insurance program's fee-for-service offerings, despite the name.
For the first time in 30 years, the Federal Employees Health Benefits Program is offering a pair of governmentwide indemnity benefit plans: Elevate and Elevate Plus, both administered by the Government Employees Health Association.
But the label of the plans as “indemnity” plans is something of a misnomer. While technically a form of indemnity plan, the new options fall under the more modern category of fee-for-service plans. Unlike traditional indemnity plans, which do not use networks of doctors and pay a set percentage of what the insurance company deems to be a “reasonable” cost for a visit or procedure, fee-for-service plans offer different reimbursement rates for in-network and out-of-network practitioners.
“[Indemnity benefit plan] is an outdated term, but because it’s in the statute, we are required to use it,” said Laurie Bodenheimer, deputy OPM director for health care and insurance, last month. “In general, it now means a fee-for-service plan, and these plan options do have pharmacy benefits, a full network of participating or preferred providers, in addition to out-of-network benefits available to those who enroll.”
Walton Francis, an independent consultant and author of Consumers’ Checkbook Guide to Health Plans for Federal Employees, said use of the outdated “indemnity” terminology comes from the fact that in order to add a nationwide plan to the FEHBP offerings, OPM must comply with the nearly 60-year-old law establishing the program.
“At the time, the law contemplated three categories of plans, and it still has those same three categories,” Francis said. “First, there are the governmentwide plans, and it says there will be two. One will be an indemnity benefit plan, and the other [traditionally has been filled by] Blue Cross Blue Shield. Then there’s a second category for union and employee association plans . . . and then the third category is for comprehensive plans, which was just a word that meant HMOs.”
Many of the more than 200 insurance plans offered as part of FEHBP are regional or locally based—some cover a city’s metropolitan area, while others cover as many as 48 or 50 states. The value in finding a new provider to fill a governmentwide slot, which has been vacant since Aetna stopped offering its indemnity plan in 1989, is that it truly covers all federal employees, Francis said.
“There’s a legal obligation that goes with the governmentwide plans,” he said. “You have to provide coverage in the entire reach of the U.S. government. You have to cover federal employees in Puerto Rico and Guam, and you have to cover all 50 states, and you have to cover civilian personnel at military bases abroad.”
So while the new offerings may represent a more meaningful addition for federal workers stationed abroad, as a practical matter, the new GEHA Elevate and Elevate Plus plans merely represent another choice that should be considered on the merits of their premiums, out of pocket costs, and benefits.
“There is no difference of practical importance that I can think of for anyone living in the U.S.,” Francis said.