Considerations in Choosing a Health Insurance Plan for 2019

The annual federal benefits open season has started. Between now and Dec. 10, 2018, federal employees and retirees must decide which health insurance plan offered through the Federal Employees Health Benefits (FEHB) program they want to be covered by for themselves and, if applicable, for eligible members of their families during 2019.

This column discusses some of the factors that employees and annuitants should consider in making their decision for health care coverage during 2019.

Too Much Emphasis on FEHB Premium Costs

One factor that should not be given too much emphasis in making this decision is an FEHB program plan’s premium cost. While premium cost is certainly important, the fact is that just because one FEHB program plan has lower premium costs than another FEHB program plan does not mean that the “cheaper” FEHB plan is a better plan.

OPM recently announced that FEHB program plan premiums for 2019 will increase on average 1.5 percent over their 2018 premiums. What OPM did not announce is the average increase of “out-of-pocket” FEHB plan costs during 2019. Employee and annuitant out-of-pocket costs include deductibles, co-insurance and co-payments. These costs are definitely increasing at a rate far exceeding 1.5 percent annually.

Types of FEHB Plans

Before making specific suggestions, it is important to review the different types of FEHB program plans that employees and annuitants can choose from. These different types are:

Fee-for-service (FFS) plans (non-PPO)

A traditional type of insurance in which the health plan will either pay the medical provider directly or reimburse the plan enrollee after an insurance claim for each covered medical expense. The employee or annuitant can visit the doctor or hospital of his or her choice. This approach may be more expensive and require extra paperwork.

FFS plan with a Preferred Provider Organization (PPO)

An FFS option that allows the plan enrollee to see medical providers who reduce their charges to the plan; the plan enrollee pays less money out-of-pocket when using a PPO provider. A visit to a PPO usually does not file claims or paperwork on behalf of the enrollee. However, going to a hospital does not guarantee PPO benefits for all services received within that hospital. For instance, lab work and radiology services may not be covered by the PPO agreement.

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

Health Maintenance Organization (HMO)

A health plan that provides care through a network of physicians and hospitals in a particular geographic or service area. HMOs coordinate the health care services an enrollee receives and frees the enrollee from completing paperwork or being billed for covered services. An employee’s or annuitant’s eligibility to enroll in an HMO is determined by where the employee or annuitant lives. Some HMOs are affiliated with, or have arrangements with, HMOs in other areas for non-emergency care in case an enrollee travels or is away from home for extended periods. Plans that offer reciprocity discuss it in their brochures.

Other features of HMOs include:

• HMOs provide a comprehensive set of services to doctors and hospitals affiliated with the HMO:
• HMOs charge a co-payment for primary physician and special visits and generally no deductible or co-insurance for hospital care;
• most HMOs ask an enrollee to choose a doctor or medical group to be a primary care physician (PCP). The PCP provides the enrollee’s general medical care and an enrollee must get authorization or a “referral” from the PCP in order to be treated or evaluated by a different physician; and
• care received from a provider not in the plan’s network is not covered unless it is emergency care, or the plan has a reciprocity arrangement.

HMO Plans Offering a Point of Service (POS) Product

In an HMO, the POS product allows an enrollee to use providers who are not part of the HMO network. But an enrollee will pay more for using these non-network providers in the form of higher deductibles and co-insurance compared to what is paid with a plan provider. Also, the enrollee has to file a claim for reimbursement, like in a FFS plan.

Consumer-Driven Health Plans (CDHP)

With a CDHP, an enrollee is given the incentive to control the cost of either the enrollee’s health benefits or health care. The enrollee has greater freedom in spending health care dollars up to a designated amount and receives full coverage for in-network preventive care. In return the enrollee assumes significantly higher cost sharing expenses after the designated amount. The catastrophic limit is usually higher than those in other plans.

High Deductible Health Plan (HDHP)

An HDHP is a health insurance plan in which the enrollee is subject to a deductible of at least $1,350 for self only coverage, or $2,700 for self plus one or self and family coverage. The annual out-of-pocket amount, including deductibles and co-payments, that the enrollee pays cannot exceed $6,750 for self only or $13,500 for self plus one or self and family. All of these amounts are for 2019, and IRS annually announces what these limits are. HDHPs can have first dollar coverage (no deductible) for preventive care and have 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 health savings accounts (HSAs) for all eligible enrollees and provide a comparable health reimbursement account (HRA) for enrollees who are ineligible for an HSA. HSAs and HRAs are discussed in a separate column.

RELATED:

• How Health Savings Accounts (HSAs) Can Reduce the Cost of Medical Care
• How to Get the Most Out of Your Savings by Using an HSA

Types of FEHB Coverage

Three types of coverage are offered to federal employees and retirees in the FEHB program:

• Self only. Enrollment coverage is for the annuitant or employee only;

• Self plus one. Enrollment coverage is for the annuitant/employee and for one eligible family member. Eligible family members include a current spouse or child under the age of 26; or

• Self and family. Enrollment coverage is for the annuitant/employee and more than one eligible family member.

Suggestions for Selecting an FEHB Health Plan for 2019

• For those employee and annuitants currently enrolled in 2018, determine if the FEHB plan they are currently enrolled is satisfactory and provides sufficient coverage with the least amount of out-of-pocket costs for themselves and, if applicable, for members of their family.

• For those employees married to Federal employees and who do not have other eligible family members enrolled on their FEHB plans, having two “self only” coverages for the same FEHB plan will be cheaper in most cases than one spouse enrolling in “self plus one” coverage and covering the other spouse.

• For annuitants enrolled in Medicare Parts A and B, which together will pay on average 60 to 80 percent of an annuitant’s hospital and medical expenses, it makes sense to choose a cheaper FEHB PPO-type plan. This is because the PPO-type plan would be the Medicare supplement insurance and be paying 20 to 40 percent of the annuitant’s medical costs.

• In selecting a PPO plan, employees and annuitants should double check that their preferred doctors and hospitals are “in the network”. Since the doctors and hospitals may change their preference as to whether remain in the network for year-to-year, employees and annuitants should contact their doctor and hospitals to ask them whether they intend to remain in the PPO’s network for 2019.

• No PPO, HMO, POS, CDHP or HDHP will pay for all of an enrollee’s medical costs. There will be co-payments, coinsurance or deductibles that will have to be paid. Employees and annuitants have to determine the best way to pay these out-of-pocket costs. Those include HSAs, health care flexible spending accounts (HCFSAs) and limited expense flexible spending accounts (LEXFSA) which will be discussed in upcoming columns.