2027 FEHB Plan Types: How to Choose Your Health Plan

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During the annual federal benefits open season, federal employees and retirees enrolled in the Federal Employees Health Benefits (FEHB) program decide which health insurance plan they (and their families, if family members are enrolled) want for the forthcoming plan year. For federal employees, the plan year coincides with the “leave” year. For federal retirees enrolled in the FEHB program, the plan year coincides with the calendar year (January 1 through December 31).

This year’s open season started November 9, 2026, and concludes December 14, 2026. Any change of health insurance plans becomes effective on the first day of the 2027 leave year, which at most federal agencies will be January 10, 2027, and will conclude on January 8, 2028. If an employee or a retiree is enrolled in an FEHB program health plan during 2026 and elects not to change plans, no action is needed. The employee will remain in that plan (be a participant in the plan) during leave year 2027. The retiree will remain in their FEHB program plan during calendar year 2027.

Selecting a health insurance plan is not an easy task. This column discusses the distinct types of health insurance plans offered through the FEHB program. By understanding those types, it is hoped that employees and retirees will be able to choose the plan that best meets their medical needs and their family members’ medical needs at the least possible cost.

Fee-for-Service Plans

A Fee-for-Service (FFS) plan is a traditional type of health insurance plan in which the insurance company will either pay the medical provider directly or reimburse the insured after the insured has filed an insurance claim for each covered medical expense. FFS plans offer more flexibility for participants with respect to choosing doctors, hospitals and laboratories. An FFS plan enrollee can usually choose any doctor or hospital he or she wants.

FFS plans typically pay a portion of covered medical bills (on average 70 to 85 percent) after the plan deductible has been met. The portion of the bill that an FFS plan pays may vary from one FFS plan to another. The insured pays the remainder, typically 15 to 30 percent of the total bill.

FFS plans have an out-of-pocket maximum. This means that once an enrollee’s out-of-pocket expenses (including the deductible, coinsurance and copayments) reach a certain amount during the plan year, the fee for covered benefits will be paid in full by the FFS insurance plan for the remainder of the plan year. FFS premium rates for 2027 may also be viewed on the Office of Personnel Management (OPM) premiums page.

FFS Plans with a Preferred Provider Organization

A type of FFS plan allows participants to use medical providers who reduce their charges to the plan. These medical providers are called preferred providers. This type of FFS plan is therefore called a preferred provider organization (PPO) plan. Plan participants usually pay less out-of-pocket when they use a preferred provider.   Enrolling in an FFS plan does not guarantee that a PPO provider (a doctor, clinic, lab or hospital) will be included in that plan. PPOs have a stronger presence in some regions of the country than others.

Health Maintenance Organizations (HMOs)

HMOs have long been known to focus on participant health care prevention and wellness. HMOs require that a participant receive most of his or her care from one primary care physician who is fully aware of the participant’s entire health status. HMO participants receive their care from network providers except in emergencies. HMOs usually have set copayments rather than deductibles and coinsurance, with no lifetime limits on coverage. In most cases, an HMO participant who needs to visit a medical specialist will visit a specialist who practices within the HMO. HMO participants may be referred to health care providers outside of the HMO network to receive treatment.

Each FEHB program HMO sets a geographic area for which health care services will be available. The various FEHB program HMOs, listed by geographic and service areas for 2027 together with their premiums, may be viewed on the OPM premiums page. An employee can join a particular HMO if the employee lives within its service area. Some HMO plans also accept enrollment from employees who work in the HMO service area even though they live outside the service area. Employees who have questions about living or working within an HMO service area should contact the plan before enrolling.

Point of Service (POS) Health Plans

A POS health insurance plan is structured in many ways as a combined HMO and PPO health insurance plan, combining the advantages of both. A POS plan is not as restrictive as a traditional HMO plan in that a POS participant is not restricted to using only HMO doctors. Overall out-of-pocket expenses associated with most POS health plans are less than those associated with a PPO plan. These out-of-pocket expenses include coinsurance, copayments and deductibles.

Similar to what happens with an HMO, a POS participant will be asked to select a primary health care provider from a list of preferred providers within the POS network. The participant will then receive all medical care from the selected doctor or medical specialist. Referrals to other specialists and hospitals that are part of the POS network will originate and be directed by the primary health care provider.

Although many POS participants get anxious or concerned when they choose from a list of doctors provided to them, especially if they have a hometown favorite doctor or health care specialist who is not part of the POS network, the lower overall costs associated with a POS health plan ease those anxieties.

One disadvantage associated with most POS plans is with respect to prescription drugs. A POS participant who needs to fill a prescription is required to use generic brands of any prescription or otherwise pay more out-of-pocket.

Consumer Driven Health Plans (CDHP)

The term “Consumer Driven Health Plan” (CDHP) is used to describe a variety of mechanisms for providing health insurance or funding healthcare costs, all of which encourage individuals to become actively involved in making their own healthcare decisions. For example, they may choose their service providers, select healthcare services and manage their own fitness and wellness.

A CDHP is a broad definition incorporating several emerging healthcare strategies that heighten consumer awareness of the cost and utilization of healthcare through plan design incentives. Some of these strategies are:

• Modifications to traditional HMO, PPO and POS benefit plans, using plan design elements such as high deductibles, coinsurance or copayments to provide incentives to plan participants to take a more personal stake in the cost and frequency of services utilized.
• Personal health savings account type plans in which an account, either a Health Savings Account (HSA), Health Reimbursement Account (HRA) or a Health Care Flexible Spending Account (HCFSA), is combined with a high-deductible PPO to give the plan participant greater flexibility. Any funds remaining in an HSA may be rolled into subsequent plan years, including retirement.
• Information systems (web and voice) that give consumers greater price transparency in purchasing care, along with tools to make prudent decisions about accessing healthcare services.

High-Deductible Health Plan (HDHP)

An HDHP is a health insurance plan in which the participant has a minimum deductible during 2027 of $1,750 for Self Only coverage, and $3,500 for Self Plus One and Self and Family coverage. A participant’s annual out-of-pocket expenses during 2027 (including deductible, copayments and coinsurance) cannot exceed $8,700 for Self Only coverage and $17,400 for Self Plus One and Self and Family coverage.

Associated with an HDHP is a Health Savings Account (HSA), to which the HDHP participant contributes in a tax-advantaged way and saves in order to pay for out-of-pocket medical and dental expenses both currently and in the future, including retirement.

Under the Affordable Care Act, HDHP health plans have “first dollar” coverage with respect to preventive care services, including annual check-ups (well visits). “First dollar” coverage means that the deductible does not have to be met before those services are covered by the HDHP. HDHPs will require higher out-of-pocket costs, such as copayments and coinsurance, for services performed by non-network providers.   A listing of the FEHB program FFS, PPO and POS plans for 2027, including those plans that are CDHP and HDHP, may be viewed on the OPM premiums page.

Comparing the Types of FEHB Program Plans

The following is a summary comparing the different types of FEHB program health plans.

You are enrolled in an FFS plan and do not use the PPO (or one is not available):

• You will generally pay more when you get care.
• Fewer preventive health care services may be covered.
• You will have to file claims for services yourself.

You are enrolled in an FFS plan and use the PPO:

• You will generally pay less when you get care.
• More preventive health care services may be covered.
• You may have less paperwork.

You are enrolled in an FFS plan’s “PPO-only” option:

• You must use network providers to get benefits.
• You will generally pay copayments and have no deductibles.
• You will have little paperwork.

You are enrolled in an HMO:

• You will have limitations on the doctors and other providers you can use.
• You will usually pay less when you receive care.
• You will have little if any paperwork.
• More preventive health care services may be covered.

You are enrolled in a POS plan and use only the providers in that network:

• You will pay less when you get care.
• You will get full network benefits and coverage.
• You will have little paperwork.

You are enrolled in a POS plan and do not use network providers or referral procedures:

• You will pay more when you receive care.
• Some services may not be covered out of network at all.
• You generally have to file claims for services yourself.

Be sure to look at the primary care physicians, specialists and hospitals with whom your health plan contracts (the provider network). Does it promote prevention and early detection and intervention? Does it have specialists who treat your chronic condition? Does it contract with a hospital close to your home?

You are enrolled in an HDHP and use only the providers in that network:

• You will usually pay less when you receive care.
• Preventive care is often covered in full, usually with no or only a small deductible or copayment.