Starting Nov. 12 and ending Dec. 10, 2018, Federal employees who participate in the Federal Employees Health Benefits (FEHB) program must decide which health insurance plan they, together with their eligible family members, want to be covered by during 2019. If they are satisfied with the FEHB plan they are currently enrolled in and want to be covered by that plan during 2019, they need not take any action. But if they want to enroll in a different plan for 2019, they must do so during the annual benefits “open season” with their new FEHB plan taking effect on the first day of the 2019 leave year, Jan. 6, 2019.
In the second of two STSW columns explaining health insurance choices for employees, this column discusses health maintenance organization (HMO) plans, point-of-service (POS) plans, consumer-driven health plans (CDHP) and high deductible health plans (HDHP). With last week’s and this week’s electronic newsletter discussions on the different types of FEHB plans, it will hopefully be easier for employees to decide which FEHB plan best addresses their medical needs and the medical needs of their eligible family members.
Also discussed in this column are dental and vision insurance choices for employees. Both the dental and vision insurance plans are offered through the Federal Employees Dental and Vision Insurance Program (FEDVIP). During the benefits “open season”, employees must decide if they want to enroll in a dental and/or vision insurance plan, change their current dental and/or vision insurance plan, or dis-enroll from their current dental and /or vision FEDVIP insurance plan for 2019.
Health Maintenance Organizations (HMOs)
HMOs have long been known for a focus on prevention and wellness. Traditionally, HMOs require that an enrollee receive most of their care from one primary care physician who is aware of their total health picture. HMO enrollees usually must receive all of their medical care from network providers except in emergencies. HMOs usually have set copayments rather than deductibles and co-insurance and no lifetime limits on coverage.
After an individual enrolls in an HMO, they will need to select a primary care physician who will be responsible for coordinating all of their care. Primary care physicians may be family practice doctors, internists, pediatricians, obstetricians-gynecologists, or general practitioners.
If an enrollee becomes ill, the primary care doctor will see the individual first unless it is an emergency. The primary care doctor will give the individual a referral if the doctor a specialist must be seen. Usually, an HMO will not provide coverage for a specialist unless the enrollee has this referral.
In most cases, the enrollee must see a specialist who participates in their HMO. In some special circumstances, HMO patients may be referred to providers outside the HMO network and still receive coverage.
If an enrollee needs to be admitted to the hospital and it is not an emergency, then the enrollee may have to obtain precertification from their plan. In most cases, the physician or hospital will take care of this. Non-emergency hospital care may not be covered without precertification. In case of an emergency admission, the enrollee or a family member, the doctor, or the hospital will need to contact the HMO plan within a certain timeframe (usually within 48 hours of admission) to obtain written confirmation of coverage for the hospital stay.
Today, some HMOs do not follow this “primary care model”. If one is considering a traditional HMO, then it is important to compare the features and requirements among the various HMO plans that are available. The three types of HMOs are: (1) Group Practice Plans – plans that provide care through a group of physicians who practice at medical centers; (2) Individual Practice Plans – plans that provide care through participating physicians who practice in their own offices; and (3) Mixed Model Plans – plans that are a combination of Group Practice and Individual Practice plans.
Each FEHB HMO sets a geographic area and service areas for which health care services will be available. The various FEHB HMOs by geographic and service area for 2019 together with their premiums may be viewed here. An employee can join a particular HMO if the employee lives within its service area. Some plans also accept enrollment from employees who work in the area even though they live elsewhere. Employees who have questions about living or working within an HMO service area should contact the plan before enrolling in it.
Point of Service (POS) Health Plans
A POS health insurance plan is structured in many ways to a combined Health Maintenance Organization (HMO) and a Preferred Provider Organization (PPO) health insurance plan, combining the advantages of both plans. In particular, a POS plan is not as restrictive as a traditional HMO in that a POS enrollee is not restricted to see HMO doctors. Overall out-of-pocket expenses associated with most POS plans are less when compared to the out-of-pocket expenses associated with a PPO plan, including coinsurance, copayments, and deductibles.
Similar to an HMO, an enrollee in a POS health care plan will be asked to select a primary health care provider from a list of preferred providers within the POS network. The enrollee will then receive all medical care from the selected doctor or medical specialist. Referrals to other specialty doctors and hospitals that are also part of the POS plan will originate and be directed by the primary health care provider. Although many POS enrollees get slightly anxious or concerned when choosing from a list of doctors provided to them (especially if they have a hometown favorite doctor that they are more comfortable receiving medical assistance from) the lower overall costs usually with a POS plan ease those anxieties. For instance, the deductible is usually small and there is a minimal charge in the form of a co-payment for doctor visits and medical prescriptions. Perhaps one drawback associated with a POS plan with respect to prescription drugs is that a majority of the time an enrollee is required to use generic brands of any prescriptions or else pay more out-of-pocket.
Aside from having a primary health care provider referring an enrollee to specialists within the plan, the enrollee also has the option of using a specialist or doctor outside of the POS health care plan network; however; keep in mind this will warrant additional costs which will need to be paid out of the enrollee’s pocket. The one exception would be if an enrollee were in an emergency medical situation that required immediate medical assistance. If someone is truly looking for a health care plan that allows him or her to see their own doctor or health care provider, then the fee-for-service plan is more appropriate than a POS plan.
Many individuals like the flexibility that a POS health care plan offers. An employee’s decision to enroll in a POS should be based on whether the POS best serves the employee’s current medical needs. If this plan isn’t right for their health care needs, then their other choices include fee-for-service (FFS), health maintenance organizations (HMO), consumer-driven health plans (CDHP) and high deductible health plans (HDHP). FFS plans were discussed in the Nov. 6, 2018 electronic newsletter column. CDHP and HDHP plans are now discussed.
Consumer-Driven Health Plans
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, designing their health insurance coverage, choosing their service providers, selecting healthcare services, and managing 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 services through plan design incentives. In practice, a CDHP could encompass any of the following strategies:
- Modifications to traditional HMO, PPO, and POS benefit plans using plan design elements such as high-deductible, co-insurance, co-payments to provide incentives to plan participants to take a more vested interest in the cost and frequency of services utilized.
- Tiered networks within an HMO, PPO, or POS network where participants, paying higher co-payments or co-insurance when using higher-cost providers.
- Personal health savings accounts type plan where an account, either a Health Savings Account (HSA), Health Reimbursement Arrangement (HRA), or a Health Care Flexible Spending Account (HCFSA), is combined with a high-deductible PPO plan to empower the plan participant with greater flexibility and any funds remaining in an HSA may be rolled over into subsequent plan years.
- Information systems (Web and voice) that enable consumers’ greater price transparency in purchasing care along with tools to make prudent decisions about accessing healthcare services
CDHP plans offer:
- Greater choice. Members seem to be moving away from managed care restrictions as HMO enrollment continues to decline while enrollment in PPO plans is increasing.
- Incentives for employees become more involved in making economic decisions about the utilization of healthcare resulting in more educated purchasers demanding lower cost and higher quality service from their providers.
- Options to address cost and access problems within the current healthcare system.
High Deductible Health Plans
A High Deductible Health Plan (HDHP) is a health insurance plan in which during 2019 the enrollee has during a minimum deductible of $1,350 (self only coverage) and $2,700 (self and family coverage). The enrollee’s annual out-of-pocket expenses during 2019 (including deductibles and copayments) cannot exceed $6,750 (self only coverage) or $13,500 (self and family coverage). Under the Affordable Care Act of 2010 (ACA) HDHPs have “first dollar” coverage (no deductible) for preventive care. HDHP’s higher out-of-pocket copayments and coinsurance for services received from non-network providers. HDHPs offered in the FEHB program establish and partially fund HSAs for all eligible enrollees and provide a comparable HRA for enrollees who are ineligible for an HSA. The HSA premium funding or HRA credit amounts vary by FEHB plan.
A listing of the FFS FEHB program plans for 2019 including those offering CDHP and HDHP options may be viewed here.
The Federal Employee Dental and Vision Benefits Enhancement Act of 2004 provided OPM the opportunity to establish arrangements under which supplemental dental and vision benefits are made available to federal employees, retirees, and their dependents.
Dental and vision benefits are available to eligible federal and postal employees, annuitants, and their eligible family members on an enrollee-pay-all basis through the Federal Employees Dental and Vision Insurance Program (FEDVIP). This program allows dental insurance and vision insurance to be purchased on a group basis which means competitive premiums and no pre-existing condition limitations. Premiums paid by enrolled federal and postal employees in the FEDVIP are always withheld from an employee’s gross salary.
Enrollment in FEDVIP takes place during the annual federal benefits “open season” held each year from the second Monday of November and through the second Monday of December. New and rehired employees can enroll within the 60 days after they are hired. This year’s FEDVIP open season will occur between Nov. 12 and Dec. 10, 2018. For those employees who enroll in a dental or vision insurance plan or change their plan for 2019, coverage becomes effective Jan. 1, 2019 with insurance premiums deducted from employee paychecks starting with their first pay date in January 2019. Dental plan information may be viewed here.
Employees can enroll in a dental and/or vision plan. They may enroll as self only, self plus one eligible family member, or self and family coverage. Eligible family members include an employee’s spouse and unmarried dependent children under age 22 (not age 26 as is true with the FEHB program). Dependent children include legally adopted children and recognized natural children who meet certain dependency requirements. This also includes stepchildren and foster children who live with the employee in a regular parent-child relationship. Under certain circumstances, coverage may be continued for a disabled child 22 years of age or older who is incapable of self-support.
FEDVIP and FEHB rules for family member eligibility are NOT the same. For example, changes in dependent eligibility under the Patient Protection and Affordable Care Act (PPACA) of 2010 affects eligibility for eligibility under the FEHB program but does not affect eligibility for children under FEDVIP. It should also be noted that many FEHB program plans provide some dental and vision coverage.
Employees must be eligible to enroll in the FEHB Program in order to be eligible to enroll in the Federal Employees Dental/Vision Program (FEDVIP). It does not matter if they are actually enrolled in FEHB – eligibility to enroll in the FEHB Program is the key. The “last five years of employment” FEHB program participation rule for eligibility to carry FEHB coverage into retirement does not apply to the FEDVIP. Annuitants do not have to be enrolled in the FEHB Program in order to participate in the FEDVIP.
Information including enrollment information about the separate dental and vision plans may be obtained by going to the Web site www.benefeds.com. For 2019, there are 10 dental plans and four vision plans available nationwide to employees.
The question that employees have to ask: Should they enroll in a FEDVIP plan? In order to answer this question, employees have to ask themselves the following questions:
- Do they or a member of their family expect to incur significant dental and/or vision expenses during 2019?
- Assuming that the employee or a member of the employee’s family is expected to incur significant dental or vision expenses during 2019, is the employee better off “self-insuring”? That is, would the employee do better financially by setting aside money to pay the expected expenses? For example, does “self-insuring” using a health care flexible spending account (HCFSA), a limited expense flexible spending account (LEXFSA) or a health savings account (HSA) and using those accounts to pay dental and/or vision expenses make more financial sense than enrolling in separate dental insurance and vision insurance?
- Since employees pay the full cost of the FEDVIP premiums with no agency contributions, does it make sense for the employee to look into purchasing an individual dental and/or vision insurance plan from a private insurance company and comparing the premium rates?
Written by Edward Zurndorfer, who is a Certified Financial Planner™, Chartered Financial Consultant, Chartered Life Underwriter, Certified Employee Benefits Specialist and Enrolled Agent in Silver Spring, MD. He is the owner of EZ Accounting and Financial Services, an accounting, tax preparation, and financial planning firm also located in Silver Spring, MD. He is a seminar speaker at Federal employee retirement seminars throughout the country for the National Institute of Transition Planning, Inc. He is also a weekly columnist for MyFederalRetirement.com. Raymond James is not affiliated with and does not endorse the opinions or services of FEDZONE or Edward A. Zurndorfer or any of the above-listed organizations. The information has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Edward A. Zurndorfer, and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not offer tax or legal services. You should discuss tax or legal matters with the appropriate professional. Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Serving Those Who Serve is not a registered broker/dealer and is independent of Raymond James Financial Services
Plan Choices 2018