Every year during Open Season, only about 6% of federal employees change their health plan. Are the other 94% just that satisfied with their current plan? Possibly, but the Office of Personnel Management consistently says 20-30% of feds can and should be changing their plans. So why don’t they?
“Federal employees have what’s called a passive renewal, in that if they don’t want to change any plans, they don’t have to do anything,” said Gavin Toner, manager of the Federal Employee Benefit Plans at Kaiser Permanente. “Generally, we find that for federal employees, unless they get a premium shock, or unless there’s a significant change in benefits, or unless maybe they lose some doctors that they had seen in network, they don’t have the incentive to examine what their options are.”
But Toner said that could mean feds are leaving money on the table – the difference between the lowest cost premium and the highest cost is $4,000 per year, and as much as $11,000 for families.
Too many options?
Another reason feds might not be examining their options each year is choice paralysis. The FEHBP offered 279 different plans for 2020. Faced with so many options to compare, is it any wonder 94% simply choose to stick with what they have?
But there are ways to narrow that down. For example, feds should consider whether they need an HMO or a PPO. HMOs have lower premiums, but a narrower network. For that reason, many people opt for PPOs so they won’t face the same high costs if they go out of network. But then many of those people never actually go out of network. Toner said PPOs might make sense for someone who travels a lot, which could make it hard to stay in network. But otherwise, you might just be paying for the illusion of choice.
Plan for your future
Another reason for feds to reexamine their health plans is impending life changes. The majority of the federal workforce is approaching retirement age, and that brings up a number of considerations. For example, federal employees who have held a plan for five years before retirement can take that plan with them into retirement.
And then there’s the question of Medicare Part B.
“You can pair that with your Federal Employee Benefit Plan and that will often reduce, and in many instances, eliminate your cost sharing, your co pays and other costs like that. So that’s a good way to make sure that you have cost certainty going into retirement as well,” Toner said. “And obviously, one of the key things is once you turn 65, if you’re no longer employed, for every year that you don’t choose Medicare Part B you will be penalized with a premium tax of 10%.”
Other potential life changes could include starting a family, in which case it might be worth swapping to a plan with higher premiums in exchange for 100% coverage of prenatal care, deliveries and postpartum care, including mental health services. And some plans even cover 100% of care for the child, up until age 18.
Choosing the right plan
That’s actually how Kaiser Permanente’s standard care option, available to federal employees, works. In addition, most labs and x-rays are also covered in the co-pays.
“The way our integrated model works, you go to your doctor. If he needs to send you for an X ray, you get it done in the same facility. And then he’ll read that, give you your diagnosis, and then if you need to pick up a prescription, you pick it up on the way out the door, because every one of our buildings has got primary care, lab, pharmacy and X ray all in them at every location,” Toner said.
Kaiser Permanente also offers a higher premium plan in the FEHBP, which costs more out of your paycheck each month, but the cost at the point of service is lower. This is a good plan for feds who may be managing one or more chronic conditions, Toner said.
And then Kaiser Permanente’s lowest premium plan in the FEHBP, which can have premiums as low as just under $50, is great for younger, healthier people who don’t need to visit the doctor very often. Toner said this plan also comes with certain incentives, such as rewards cards that can be spent on health care, and gym membership reimbursement of up to $500.
“There was some research that came out about eight or nine years ago: People spend less than 30 minutes choosing their health care each year, whether they’re a federal employee or whether they’re private industry employee, whether they’re on an individual plan. People will spend three and a half hours deciding on their new TV, the resolution, the size, the features,” Toner said. “So what is more important in the long term: your health care or a new TV?”