High Option

By Tammy Flanagan

November 13, 2009

Do you like the federal Flexible Spending Account program, but not its "use-it-or-lose-it" aspect and all the pre-planning that requires? If you are looking for a tax shelter and you're in relatively good health, you might consider a high-deductible health plan this open season. When using an HDHP with a Health Savings Account, you can shelter up to $7,150 per year tax free. Plus, when you use it for health care expenses, withdrawals also are tax-free.

The confusing thing to me is why more employees aren't choosing this kind of coverage. According to the Office of Personnel Management, of the 2.2 million Federal Employees Health Benefits Program policyholders, 71 percent are in preferred provider organization plans. Another 27 percent are in health maintenance organizations, while only 2 percent are in consumer-directed health plans and HDHPs.

What You Get

Here's what you get if you join an HDHP:


HDHPs are paired with either health savings accounts or health reimbursement arrangements. Let's look at how they compare.

Health Savings Account:

Health Reimbursement Arrangement:

For More Information

How do high-deductible health plans stack up against traditional FEHBP plans? The Office of Personnel Management offers a comparison tool.

To learn more about HDHPs, check out the following resources:

If you already are enrolled in an HDHP, I think your fellow readers would be interested in your thoughts about how it's working for you. Please share your experience in the comment area below. Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Monday mornings at 10 a.m. ET on federalnewsradio.com or on WFED AM 1500 in the Washington metro area.

By Tammy Flanagan

November 13, 2009