Top Five (5) reasons why you should shop for health insurance
Does your bucket list include actively participating in the annual federal health insurance open season? Is plowing through up to 30 health plan brochures the equivalent of gliding down the grand canals of Venice, or running with the bulls in Spain, or visiting all 50 state capitals?
Probably not. Fun it isn’t. Comparing health plan brochures and discussing premiums, deductibles and the role of Medicare Part B in your life is hardly dinner table or cocktail party fare. And yet, picking right plan between now and close of business Dec. 9 may be the most important financial decision you will make this year.
Or if you or someone in your family has a serious accident or medical condition it could be the most important choice you will ever make. Medical bills are the number one cause of bankruptcy in the U.S., but most of us don’t think about it when picking our health plan.
Thinking about a potentially catastrophic medical emergency is not pleasant — it’s awful. But stuff happens. Think of your friends, office mates, relatives or yourself — how did they, and you, do this year?
Walton Francis, editor of Consumers’ “Checkbook Guide to Health Plans for Federal Employees” says “the most important reason for buying health insurance is to protect you against financial catastrophe.”
Because of that he suggests you may want to check out the “limit to you” column of Checkbook or its online version, which many agencies have purchased for employees. The limit to you includes both annual premiums you will pay regardless of what kind of health year you have in 2002, and the guarantee of the health plan for hospital, medical or prescription drugs.
In other words it’s the financial limit you will have to pay in a worst-case scenario. That limit to you ranges from $4,000 to $5,000 in the Kaiser, Carefirst United HDHP; to as much as $9,000 to $10,000 for Aetna open access and SAMBA high option for a self-only plan. Naturally your out-of-pocket maximum will be higher if you have a family plan.
If you’re like many feds you’ve either decided to remain in the same plan for 2020, or will, maybe, shop over the weekend. Not such a great idea. Francis says as many as six out of 10 retirees and workers may be in the “wrong” plan — wrong in the sense that while it’s a good plan, you may be paying more than you need. So how do you know?
Bear in mind the primary reason you buy health insurance is its catastrophic coverage, or how much you would have to pay out of pocket in 2020 if you or a family member suffers a major medical problem or accident. Here’s a checklist of things you should consider, starting with your plan’s catastrophic coverage:
2. Length of time in the same plan
3. An IRA
4. New plans for 2020
5. Is your doctor still in-network?
1. Does your federal health plan cover bankruptcy?
According to a 2015 Harvard University study, major medical bills are the leading cause of bankruptcy in this country.
But what about if you have good health insurance, like one of the 20 to 30 options available to most active and retired federal workers, and their spouses or survivors?
“A recent Harvard University study showed that medical expenses account for approximately 62 percent of personal bankruptcies in the US. Interestingly, the study also showed that 72 percent of those who filed for bankruptcy due to medical expenses had some type of health insurance, thus debunking the myth that only the uninsured face financial catastrophes due to medical-related expenses,” a Huffington Post column said.
If you have a major illness or accident and you don’t have insurance, you are probably toast.
But even if you have an overall good health plan — such as one of the FEHBP options — the most important thing is its catastrophic coverage. That cost-to-you is the amount you will have to pay, out of pocket, before your insurance takes over.
Walton Francis, editor of Checkbook’s Guide to Health Plans For Federal Employees, rated plans in his book according to the total known cost to you (premiums included), if you have little or no expenses in 2019. The yearly guide also rates your out of pocket costs if you have an average, high or catastrophic cost next year. There is an online version of the guide which many people prefer because you can custom-tailor your search.
Most of the plans with the best catastrophic coverage (least out of pocket cost to you) are health maintenance organization plans, or HMOs. The maximum cost to you (premiums and out of pocket) next year for a single person would be $3,830 for Kaiser high option; $3,870 for United Healthcare Choice Plus; $4540 for the Kaiser standard plan and $4,840 for Kaiser basic.
The most cost to you ($9,980) would be in Aetna Open Access-High option. Of the nationwide fee-for-service plans, the smallest out of pocket charge next year for a single person is $6,060 in the Government Employees Health Association’s high deductible health plan (HDHP) and $6,230 in the American Postal Worker’s Union plan.
The highest out of pocket limit to you for a single person would be $9330 in the SAMBA-Hi option.
If you pick a family plan for your 2019 coverage, the lowest out of pocket total for you would be $8,210 in Kaiser-HDHP and $8,960 for CareFirst HDHP. Among the national fee-for-service plans the highest out of pocket costs next year are in SAMB-HDHP at $20,490; SAMBA-Standard at $17,600 and $15,570 in the GEHA-Standard.
“The most important reason for buying health insurance is to protect you against financial catastrophe,” Francis said. And therefore “you may wish to approach plan selection by comparing plans on the basis for potential financial risk, rather than average cost.”
On Wednesday, Nov. 21, at 10 a.m., Francis will again be my guest for our hour long Your Turn radio show. He’ll talk about best buys, high deductible plans, the pros and cons of an HMO over a fee-for-service plan and even how to get free health insurance.
If you have questions for him send them to at email@example.com
2. Overpaying for health insurance? Check the checklist
So who’s paying way too much for health insurance? Hint: Check the nearest mirror. There’s a good chance that unlucky soul is yours truly!
Health premiums can be hefty. Yet with all the choices in the Federal Employees Health Benefits Program there is no reason someone should pay more than necessary.
Consider the following: Premiums for a single person in the federal employee health benefits program can range from around $1,200 a year to more than $7,500. And that’s after the government pays its share, which is about two-thirds of the total premium.
A family of three next year will pay anywhere from $3080 to as much as $16,000. So it stands to reason that the most expensive plan is the best, right? Cadillac versus Chevy, right?
Wrong — while all of the plans in the FEHBP are good to excellent some simply cost too much. Many are top-heavy with older, less healthy workers and retirees. As their costs go up, so do premiums. The current health insurance open season ends Dec. 9. When it’s over only about 6% of those eligible for the program will have changed plans although Walton Francis, author of Consumers’ Checkbook “Guide To Health Plans for Federal Employees,” says 60% or more should probably change plans.
If wasting a couple thousand dollars next year is no big deal to you, you can skip this. But if you’d be interested in saving $1,000-$2,000 on your federal health plan in 2020, read on.
Francis, who literally wrote the book on the federal health program, said that many, many workers and retirees are paying too much because of the plan they are in. And with a little shopping they could save a bundle and still get excellent coverage.
The Federal Employee Health Benefits Program is considered the finest employer-provided health package in the country. Workers, retirees and their spouses and survivors are eligible for 20-30 plans. That includes national plans like Blue Cross Blue Shield, Aetna, GEHA, APWU and NALC as well as hundreds of local HMOs.
People in the same plans pay the same premiums whether they are 22-year-old marathoners or 100-year-olds in assisted living. Nobody can be turned down because of age, sex, pre-existing conditions or personal lifestyle. The government pays anywhere from 70%-75% of the total premium for whichever plan you choose. If you approach your plan’s lifetime limit you can simply switch plans during the annual open season. This year that is Nov. 11 through Dec. 9.
So what are some signs that you may be paying more than you need to?
Have you been in the same plan for five years or more?
Have you been in the same plan since you joined the government, or retired?
Do you get the most expensive high-option plan because it’s got to be the best?
Do you have no idea what the catastrophic limit is in your plan?
Do you have no clue what a catastrophic limit is, other than it doesn’t sound good?
Are you unsure of how many other, maybe less expensive FEHBP plans include your favorite doctor in their network?
Do you know the difference in drug coverage between different plans?
Many people in the private sector have the same problem but for different reasons. In many companies workers are offered just a few very limited plans. Their employer may pay a small portion of the premium, but not like the lion’s share Uncle Sam routinely picks up.
Many people use the old paralysis-by-analysis cop out. That is, there are simply too many choices, so they do nothing. But there are ways to narrow down your shopping list to just three or four plans — then shop, then save.
3. Does your health plan have an IRA-on-steroids option?
Interested in a health plan that would give you $1,000 to $2,000 a year for staying healthy? Which health plans pay some or all of your Medicare Part B premium?
Do a little home now — the health insurance hunting season ends Dec. 9 — and save thousands of dollars next year. The savings may come in the form of an IRA-on-steroids offered by some high deductible health plans (HDHPs), or from choosing a plan which will pay some or in many cases all of your Medicare Part B premium.
Walton Francis, editor of “Consumers’ Checkbook Guide to Health Plans for Federal Employees” says the IRA on steroids is available to workers who pick from one of several HDHPs or consumer-driven health care (CDHC) plans that will give you money each year to be used for medical services. Or, if not used, they can be rolled over into an account that earns interest. In some cases, he says, participants have built up five-figure accounts.
HDHPs, for example, offer two kinds of spending accounts: Health savings accounts which can grow in value — many people have $12,000-plus accounts, money you can keep even if you leave the plan; and health reimbursement arrangement plans (HRAs), which also offer accounts which terminate if you leave that plan. So how do they work and is one of them your best buy?
Knowing that the plans with the savings options exist is a first step. Don’t be wedded to your current, traditional plan just because you’ve been with it for years. Although it is torture for some, do some shopping. Start with the Checkbook Guide, either the online or print version which is available in many Washington, D.C.-area book stores and drugstores.
Also, check with your agency, union or professional association. Many have subscribed to the online version of Checkbook. Many agencies encourage workers to shop at the office because when workers pick lower premium plans the government, which pays two-thirds of the total premium, saves money. How do you know if your agency has subscribed for you? Click here for the list.
If not, you can actually pay for it yourself. Some items for your health plan checklist:
Know the five-year rule: Be sure you are enrolled in one of the Federal Employees Health Benefits Program health plans for the five years prior to retirement. Otherwise you and your spouse could be left without insurance in retirement, or you could be forced to delay retirement for five years.
Know the difference between a fee-for-service plan and a local health maintenance organization. HMOs are great and generally have lower premiums. But if you want to go for treatment at the Mayo Clinic odds are they won’t pay.
Couples should crunch the numbers to determine if two single plans or a self-plus-one plan is the better deal. Consider deductibles as well as premiums.
If one partner is a working fed and the other a retired fed, who should pay the premium? Short answer — the working fed. Why? Taxes!
Should you wait until retirement to put your private sector spouse on your FEHBP plan? If you die first and he or she aren’t covered by your plan they won’t be eligible for FEHBP.
Listen to our Your Turn radio show today at 10 a.m. EST, either by tuning into 1500 AM in the Washington, D.C. area or by listening live at www.federalnewsnetwork.com. Walton Francis is my guest and he’s got all the answers, including to questions you didn’t know should be asked about coverage for you and your family.
Feds in the Washington area have 40 bewildering plans and options to choose from. In other cities there are about 30 choices. Today’s show was prerecorded so we won’t be taking questions. But Walt will address the IRA-on-steroids issue and tell how you can find a plan that will let you buildup a cash nestegg while paying your Medicare Part B. premium in 2020.
4. 60% of feds in wrong health plan — does that include you?
With 10 working days to go until the health insurance open season ends, the $2,000-to-$3,000 question to ask is are you in the right Federal Employees Health Benefits Program plan? Can you really afford to sleepwalk during the chance to pick the health plan that will cover you and yours next year, if 2020 is the year that produces catastrophic medical costs because of a major accident or medical situation?
It could be a year when out-of-pocket costs for a family of three ranges from $8,300 to more than $20,000, depending on which plan you are in when the worst happens. That out-of-pocket cost is out of your pocket!
And according to the man who wrote the book on the FEHBP health plans only about 6% of all feds, and even fewer retirees, switch plans each year when in fact 60% or more of you may be in the “wrong” plan. It’s not a bad plan, but it’s wrong for you in the sense of its premium are too high for what you might get in return.
First consider this point: All the FEHBP plans are good to excellent and the government will pay roughly two-thirds of the total premium. The problem is that with 30 fast-evolving health plan choices available to most feds — 40 in the metropolitan Washington, D.C., area — there are a lot of choices. And while you may be in an excellent plan, its premiums may be too high.
There’s a good chance many if not most feds and retirees could get the same coverage with the same doctors in their network and save a couple of thousands dollars in premiums next year. That’s according to Walton Francis, long-time editor of Consumers’ Checkbook “Guide to Health Plans For Federal Employees.”
But with 30 to 40 choices of plans and options, where do you start? How do you know if you are probably paying too much in premiums, if you could save a lot of money simply by shifting from the Standard Option of your plan into its equally good Basic Option?
Take this simple test:
Are you still in the same plan you had when the impeachment proceedings began — Clinton, not Trump?
Did you last decide to shop, do you health plan homework and actually switch health plans during your favorite show “Mad Men,” or “Fresh Off The Boat,” or maybe even “The Leftovers” was your companion in 2015?
How many health plans, other than Blue Cross Blue Shield, Aetna, Kaiser or GEHA can you name? Remember there are 7 brand new plans this year. Do have a clue what they are called, how their premiums stack up, and how their premiums and their “catastrophic” coverage stack up?
For bare bones shopping Francis recommends choosing three plans, including your own, and compare premiums, catastrophic coverage (out-of-pocket to you), prescription drug benefits and whether your doctor will be in-network in 2020. You can go online on the Office of Personnel Management website, or check out Checkbook’s paper book guide ($10.95) at many D.C.-area drug stores.
Many people prefer Checkbook’s online version. You can buy it yourself but first check to see if your agency or union or professional association has done it for you. Workers at the departments of Labor, Education, and Health and Human Services can get it free at the office, as well as employees of the Congressional Budget Office, Environmental Protection Agency, Federal Energy Regulatory Commission, the Federal Reserve, OPM, Library of Congress, the U.S. Postal Service, members of the National Treasury Employees Union and the American Foreign Service Association — among many others.
Walt Francis will be our guest on this Wednesday’s episode of our Your Turn radio show. He’ll run through the highlights of different plans, tell how you can pick a plan that will pay most of the premiums and give you an IRA on steroids, and explain why catastrophic coverage — which most people don’t like to think about — is actually the first thing you should think about.
5. Health plan choices driving you nuts? Shop at the office
Suppose you had three weeks to make a decision that could have a make-or-break impact on both your health and your finances. And that the right answer for you is out there.
But it is buried among 30-40 options, serious shopping is required.
Welcome to the open season, also known, to some long-time civil servants and retirees, as Nightmare Alley. Between now and close-of-business Dec. 9 feds and retirees have a chance to pick a 2020 health plan at the lowest premium; whose network includes their favorite doctor(s); and which provides the best financial protection if they or a family member are hit with crippling medical bills next year for whatever reason.
And while picking the best plan for age, family status and medical needs, workers and retirees also have the chance to save $1,000 to $2,000 in premiums while getting the best possible medical care. No brainer, correct? Yes, but shopping for health insurance, unless you had a very strange upbringing, is not fun. It isn’t rocket science, as they say, but it is difficult in part because people, regardless of age, health, preexisting conditions, family size, have so many choices.
In the Washington, D.C. metro area, which includes the Maryland and Virginia suburbs, many feds and retirees have 40 plans and options to choose from — 40! Imagine picking from 40 mutual funds, or lunch choices, except this is much, much more important. And you have about 21 days.
So, you can do nothing. That’s the route 96% of all health plan holders choose. You stay in the plan you’ve been in for years, decades, maybe forever. And that may have been a good plan back in the day. But today, and next year, your plan may be suffering what is known as “adverse selection,” meaning it is top-heavy with older workers and retirees who’s higher medical costs mean premiums have gone up dramatically. By shopping around you can probably find a similar plan that has lower premiums but gives you all the protection you need. At less cost to you. In many cases you can stay in the same plan, like Blue Cross Blue Shield, but switch to a basic option where benefits are roughly the same and premiums are much lower. And your doctor is in the same network.
But for whatever reason most people do nothing during the open season, year-after-year, even though insurance expert Walton Francis says many people — maybe 50% or more — are in a plan that is too costly for what they are paying. Or it doesn’t provide the catastrophic coverage protection they may need next year if they are a family member have a serious illness, accident or both.
So what if you could shop at the office, online, compare various health plans to check out premiums, catastrophic coverage and whether they may offer you money you can save for medical emergencies or invest on your own? So many options, so little time!
And the good news is that a growing number of federal agencies have figured out that they too can save money — taxpayer money, actually — by subscribing to the online version of Walt Francis’ Consumers’ Checkbook Guide To Health Plans for Federal Employees.
They pay for, and allow you to shop at work, conferring with your friends because a good deal for you is a good deal for the government, too, since in many cases Uncle Sam pays two-thirds of your total premium. So if you save money, your agency does too. Win-win.
By Mike Causey: Mike Causey is senior correspondent for Federal News Network and writes his daily Federal Report column on federal employees’ pay, benefits and retirement. Follow @mcauseyWFED