Next year’s federal health insurance plans already taking shape

December seems like a long way off, but next year's Federal Employee Health Benefits Plans are already coming into view.

December seems like a long way off, but next year’s Federal Employee Health Benefits Plans are already coming into view. That info is from the Office of Personnel Management’s recent annual call letter to health insurance carriers. For more, the Federal Drive with Tom Temin and Federal News Network’s Drew Friedman talked with the editor of the Checkbook Guide to Health Plans for Federal Employees, Kevin Moss.

Interview Transcript: 

Tom Temin And just a quick question. This call letter that comes out every year, this is not like a dear colleague letter. You’re in trouble. But it’s more routine than that.

Kevin Moss It’s very routine. It comes out every spring or early spring or late winter, every year where OPM puts together their initiatives, what they want to see from health plans for the upcoming plan year, and if there are any new policies or new options that are now allowed by the FEHB plans. This is kind of the first notice to FEHB carriers on what those priorities will be for the upcoming plan year.

Drew Friedman And last year’s call letter to carriers from OPM. I know one of the big things there was about Medicare Part D. Are we seeing any similar size changes this year or anything with Medicare Part D that is changing for 2025?

Kevin Moss Yes. So part D was a huge story last year, and I think it’s going to be even a bigger story this year. One of the details in this call letter, we start getting some indication of how the PSHB program is going to work. This is the Postal Service Health Benefits program, which is launching for planned year 2025. So this upcoming open season will be the first year for postal employees and a new attempt to enroll in new PSHB plans. One of the requirements for PSHB is that if you’re in a new attempt, that you receive part D prescription drug coverage. So this is how postal annuitants will actually receive their prescription drug coverage. And every PSHB plan will have to have a part D plan in order to provide that prescription drug coverage. Now, last year was the first year that these supplemental part D plans were allowed by OPM. There are only 17 FEHB plans that offered a part D plan. My expectation is, since many of the PFP plans will offer PSHB plans, that part D bundling that we’re going to see in PSHB is also going to happen for FEHB. And so I expect almost every FEHB plan will have part D prescription drug coverage available to annuitants this year.

Drew Friedman Is that something that’s going to be more of a benefit for participants then? What change does that really mean for those who are enrolled?

Kevin Moss I think most federal new annuitants and postal annuitants will benefit from Medicare Part D coverage. So one thing is next year, the part D laws says that there’s a $2,000 out of pocket limit for all prescription drug costs. So if you have anywhere from about $167 or more per month throughout the year, that adds up to above 2,000, obviously, that catastrophic protection could save you quite a bit of money. OPM says that the coverage from these party plans should be as good or better, so that your out-of-pocket costs will be the same, or in some cases, it might be slightly less. But there are a few situations that you still need to watch out for that you still need to pay attention to make sure that you will benefit from this part D coverage.

Tom Temin Does the fact that there is this out-of-pocket limit for these participants also mean that certain drugs that might be newer or certain drugs that are expensive will be left out of the plan? I mean, what kind of control do people have for, say, some of these emerging weight control types of drugs? Some of these things are expensive. They’re kind of luxury drugs.

Kevin Moss Yeah. Well, Tom, you’ve actually hit on one of the big things that people need to pay attention to. OPM requires every FEHB plan to cover a GLP one weight loss drug. These are becoming very popular. They’re getting more widely used. These are brand names like Ozempic and Wegovy that you may have heard of. Every FEHB plan has to cover at least one of those weight loss drugs. However, Medicare currently does not provide coverage of weight loss drugs. And the way this part D plan works is that OPM allows the carriers to auto enroll FEHB plan members with Medicare on to these party plans. So you will receive notice from your plan that your auto enrolled. And if you are currently taking one of these GLP one drugs from your FEHB plan, that part d plan, as we sit here right now is not going to be covered by Medicare. So you will lose access to that drug. Now that’s a very strong reason for you to opt out. And if you are in an FEHB plan and you get enrolled in a part d plan, you have to be allowed to opt out, and losing access to the GLP one drugs would be one of the strongest reasons why you would want to opt out. Because, as you said, Tom, these are quite expensive. If they’re not covered by your health plan. We’re talking about out of pocket costs anywhere from like $15,000 a year, or maybe even more than that.

Tom Temin We’re speaking with Kevin Moss. He’s the editor of The Checkbook Guide to Health Plans for Federal Employees. And that’s kind of a side issue, because these drugs are not generally for people that want to lose 5 or 10 pounds. This is for the morbidly obese or people that have a deep seated health problem because of their weight.

Kevin Moss Yeah, I think that’s right. A lot of them are prescribed for type two diabetes and sometimes prescribed off label like Ozempic, for example, has FDA approval for type two diabetes. But many doctors are prescribing an off label for weight loss. But as you say, it’s mostly for the morbidly obese, not someone looking to lose 5 pounds for their beach trip.

Tom Temin What are these drugs for in the first place? I see endless ads for them, but what are they supposed to do? What’s their primary use? Just out of curiosity.

Kevin Moss I can’t answer that one, Tom.

Tom Temin I’ll have to turn the sound on for the ads one of these days to hear about them.

Drew Friedman In the call letter to carriers from OPM mentioned at least some of the recent priorities they’ve had gender affirming services and maternal health, fertility benefits. Was there anything new in the call letter that spoke to some of those recent priorities from OPM?

Kevin Moss So they mentioned that all those priorities still exists, and they quickly reference previous call letters or letters to carriers to remind carriers that all these things are still present. There is one new thing that I saw this year, OPM is committed to reducing and preventing opioid misuse, so they’re encouraging carriers to offer non-pharmacological therapies and medications to treat pain. And all FEHB plans have to have one opioid rescue agent available without cost share. So it’s a kind of a broader definition of preventative care and more education about the issue of opioid misuse.

Tom Temin That’s the opioid equivalent of the EpiPen, you might say, to have that available.

Kevin Moss Yeah.

Drew Friedman Another part of the call letter references fraud, waste and abuse that might exist in the FEHB program. There was a report from the Government Accountability Office in 2023 that showed that OPM might be spending up to $1 billion a year on ineligible participants in FEHB. Did OPM mention anything about why that is occurring, or how they’re planning to try to address that huge amount of money?

Kevin Moss I think there’s two ways that OPM is looking to control ineligible family members on FEHB plans. I think one, they’re asking carriers to verify eligible family members. So if you add a family member, if they’re asking, the carrier to verify that new family member is actually an eligible family member. And then also, with the creation of the Postal Service Health Benefits Program, OPM is building a central enrollment platform where they will be verifying both employees and a new attends and family members in a more centralized fashion, which should reduce the number of ineligible family members that are currently on FEHB plans.

Tom Temin Yeah, waste, fraud and abuse is specifically called out in the call letter, so they’re on to it, I guess.

Kevin Moss Yeah, they definitely are.

Tom Temin And what about mental health services? That’s something that they have been increasing emphasis on and an expanding coverage on. I guess gender affirming types of work is also maybe under the mental health issue, anything new coming beyond what they’ve added for the current year?

Kevin Moss I think it’s the same priorities that we’ve seen in previous years. Obviously, it’s a very important issue. But OPM, to their credit, it has been really early on making sure that FEHB plans are providing the coverage that federal employees and a new intense need for mental health.

Drew Friedman And we’ve talked about it a little bit already, but the Postal Service Health Benefits Plan, that’s going to be something very huge this year and into next year. There’s a special enrollment period coming up. Anything that was mentioned about that or just the progress of that program as they’re trying to stand it up.

Kevin Moss A few things about Postal Service Health Benefits. One is that the Postal Service Reform Act specifies that year, one, which is going to be this upcoming open season for plan year 2025, that if you are an FEHB plan that offers a PSHB plan, that the benefits from that FEHB plan must be the same in that PSHB plan. So for example, let’s say it’s Blue Cross Basic, which is a popular FEHB plan. If there is a Blue Cross basic in PSHB those benefits and cost shares are going to be the same year one. Of course, the rates are going to be different because the Postal Service Employees annuitants, are going to be their new coverage entity away from all other federal employees in annuitant. And we don’t yet know what impact that will be. We do expect that those rates will be different, but we don’t know are they going to be higher or are they going to be lower? So that’s one aspect of PSHB that we know. We talked about the part D requirements that if you are a USPS annuitant on Medicare, that you’re going to be getting your prescription drug coverage through part D, we expect less plans. You have to have about 1500 covered lives. That’s what the law says in order to be able to offer a PSHB plan. There are some FEHB plans that are in some more rural areas around the country where there might not be 1500 postal lives. And so we do expect probably a smaller amount of PSHB plans year one with respect to the special enrollment period. So if you are a current postal annuitant and you do not have Medicare Part B, you have a six month window that starts April 1, that in Sept. 30, where you can sign up for part B, this is for part B coverage in year 2025, and that Postal Service will pay any late enrollment penalty which you normally would be subject to, which in theory could be quite high. Because that enrollment penalty is 10% for every year that you could have had Medicare Part B coverage and don’t. And so the Postal Service is covering that. So really every postal annuitant has to do their homework in the six month period to see if Medicare Part B is the right choice for them. Because once this six month period is over, if they ever decide that they want part B after this special enrollment period, they will be subject to that late enrollment penalty.

Tom Temin And just a question. You touched on this briefly, not really related necessarily to the the letter. But is it possible to discern what the population of providers might be in ’25? A couple of big plans dropped out from ’23 to ’24. And so that limited choice in some areas any way of telling.

Kevin Moss It’s a large market, Tom. We’re talking about 1.2 million USPS employees in annuitants. Again, and we do expect fewer plans. A lot of that is based upon the geography of some of these smaller regional HMO plans. It’s too soon to know. We don’t have any plan details yet in terms of which plans will be in PSHB. We won’t know that until September at the earliest, but obviously this is a big deal. Every Postal Service employee in annuitant has to proactively choose a new plan this open season. And so we do expect, though, that a lot of the existing FEHB plans will be there for PSHB with the comfort of knowing that the benefits that you’ve grown accustom, at least year one, are going to entirely match your existing FEHB plan.

Drew Friedman This is a huge change, 1.2 million postal employees, and they’re all going to have to change their health insurance. Not all of them are experts. Where can they get their questions answered? And what if they do have some confusion coming up?

Kevin Moss Yeah, the Postal Service has a lot of educational resources available. So if you’re a postal annuitant, keeping is the postal website for annuitants. They have a lot of education materials. They should go there. If you’re a current USPS employee you want to go to lightblue, that’s the hub. That’s the main HR hub for all USPS employees. And there are a lot of resources there for you to go to and to learn more and to explore your options.

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