Is your health plan a Cadillac or a Chevy?

If you have a worst case medical year in 2021 — something that is entirely possible for some of us — will your current health plan provide the best coverage possible while protecting you from catastrophic out of pocket costs? Should you sit tight during the current health plan open season or is now, more than ever, the time to check out other plans, options and premiums.?

One of the best things about being a current or retired fed is the Federal Employee Health Benefits Program. The government pays more than 70% of the total premium. Nobody can be turned down because of pre-existing conditions. And there are so many plans to choose from. Feds in the Washington D.C. area have 30 or more choices including a variety of options within the same plan. They can pay a little for basic coverage or a lot more for what many call Cadillac-coverage. The idea is when in doubt, go for the best. And the best — whether it is a steak, a vacation or brain surgery — usually costs the most. Or does it?

Depends.

But it’s a fair question when you are in the midst of the annual health insurance open season and when, hopefully, maybe, we can see light at the end of the deadly COVID tunnel. Health insurance, for a number of reasons, has never been more important.

Single feds and retirees in the D.C. area can get self-only coverage for less than $2000 in premiums in half a dozen plans — United HDHP, Kaiser Basic, CareFirst HDHP, Kaiser Standard, United Choice Primary, Aetna Saver and Aetna HealthFund CDHP. Among the national plans with preferred provider options, singles can pay as little as $$1170 next year for the NALC Value Plan, or up to $3210 for the Blue Cross standard plan or SAMBA high option. Both are sometimes called Cadillac plans because of their higher premiums. Blue Cross is extremely popular, particularly with retirees, some of whom have been in it for years. Obviously there are a wide range of plans — including both basic and standard options — available.

Walton Francis, editor of Checkbook’s Guide to Federal Health plans, believes that too many people are in the wrong health plan. Wrong as in too expensive. He says all the plans are good to excellent BUT some simply cost too much because their premiums are too high since they are top-heavy with what the industry calls “heavy users” — retirees who are older, sick, have higher prescription drug prices and who remain in the same plan year after year while younger and healthier workers move from plan to plan. Walt Francis says many people can save $1,000 to $2,000 in premiums next year if they’ll spend a couple of hours shopping online over the next few days. In addition to the free health plan shopping guide provided by the Office of Personnel Management, many agencies have subscribed to the excellent Checkbook Guide so you can comparison shop from home. It’s worth seeing if your agency provides that perk.

Today at 10 a.m. EST, Walt Francis will be my guest talking about best buys on Your Turn. You can stream it here or listen on the radio at 1500 AM in the D.C. area. The show will be archived so you can listen anytime. If you have questions, send them to me before showtime.

While many people are in the “wrong” plan by default, there are also many who shop around, crunch the numbers and still conclude that the plans with higher premiums provide the best coverage. Here’s an example from Abraham Grungold, a long time fed and private financial counselor. He writes:

Open Season and your Federal Employees Health Benefit Plan (FEHB).

Every year during Open Season, federal employees make their decision regarding the Federal Employees Health Benefit Plan. Every year, my coworkers discuss how expensive the premiums have become. First of all, if you are a federal employee and you do not have a health plan, you are simply playing with fire, or as I would call it, a potential financial catastrophe. In most federal health plans, the government pays 75% of the premium. I have always opted to carry the most expensive health care plan, which is the Blue Cross Blue Shield PPO. My wife describes it as the Cadillac of all health plans. Every year, I pay the premium with the hope not to utilize the services. For many, if you are healthy, you can go with a cheaper plan, but if you have medical issues, the more expensive plan provides comprehensive coverage. An inexpensive plan is better than no plan at all.

During 2020, I had some serious medical issues which resulted in several surgeries and a multitude of medical treatments and procedures. I never encountered any problems with getting any of my treatments or procedures covered. This week, my wife decided to check my online account and found that my total medical charges billed as of November 2020 was well over 1 million dollars. The healthcare provider negotiated that amount and ended up paying approximately $250,000 and my maximum total out of pocket for the year was $5,000. Without a comprehensive health insurance plan, my medical liabilities would have been astronomical and could have possibly led me to declare personal bankruptcy. Thankfully, I did not have to go that route and I will happily continue to pay my FEHB premiums. So please review your FEHB comparison chart during Open Season and see what benefits are offered by your plan and see if they meet your needs.

Financial success can easily be achieved; it only takes a little effort.

Any questions or comments, please contact me at Grungold LinkedIn or my Facebook page at FERS Federal Employees.

Nearly Useless Factoid

By Alazar Moges

James K. Polk of Tennessee is the first and only person to have served as both Speaker of the House and President.

Source: House of Representatives History

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THRIFT SAVINGS PLAN TICKER

Jan 26, 2021 Close Change YTD*
L Income 22.4243 -0.0047 5.15%
L 2025 11.3132 -0.0055 -
L 2030 39.4487 -0.0251 11.26%
L 2035 11.7891 -0.0085 -
L 2040 44.3904 -0.0359 13.16%
L 2045 12.1121 -0.011 -
L 2050 26.4229 -0.0261 14.79%
L 2055 12.7758 -0.0152 -
L 2060 12.7759 -0.0152 -
L 2065 12.7760 -0.0152 -
G Fund 16.5182 0.0004 0.97%
F Fund 21.0811 -0.004 7.50%
C Fund 57.3503 -0.0853 18.31%
S Fund 78.6099 -0.8663 31.85%
I Fund 36.1695 0.1263 8.17%
Closing price updated at approx 6pm ET each business day. More at tsp.gov
* YTD data is updated on the last day of the month.