How to pay for 2011 premiums on a frozen salary

Tuesday - 11/30/2010, 5:49pm EST

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December 1, 2010 -- Health insurance premiums next year are going up as much as 30 percent, even if the proposed federal pay freeze goes through. How do you pay for 2011 health costs on a 2010 salary?

Health insurance expert Walton Francis says you can save $1,000 to $2,000 next year by picking the best health plan during this year's open season which ends Dec. 13.

Walton Francis, editor of Checkbook Guide to Health Plans for Federal Employees, says even if you are happy with your plan, it's important to consider other options.

For example, Francis suggested taking a look at your plan's catastrophic limits.

"Look at loopholes," he said.

HMOs are generally "safe plans" when it comes to catastrophic limits. High-deductible plans all have "no worst than a $5,000 catastrophic limit," meaning you will not pay more than $5,000 out of pocket, "no loopholes, no if's and but's," Francis said.

Whatever a fed does, Francis recommends enrolling in the federal health plan if you want to be covered in retirement. A fed must be with a federal health plan for at least five years prior to retiring to be covered, he said.

A person can always drop and join Medicare later, Francis said. However that's not the case with a federal plan.

"If you're gone for one day, you're gone forever," Francis said.

Click here to read about open season tips and traps.

Pay freeze: What happens next in Congress?
Days after President Obama's announcement of a two-year federal pay freeze, questions still remain about the future of feds' pay.

Jessica Klement, government affairs director at Federal Managers Association, told Your Turn with Mike Causey that the biggest misconception is that the two-year freeze is now law.

"Congress has to act to put a pay freeze in effect," Klement said.

If Congress does not act, feds will automatically receive a 0.9 percent pay raise, Klement said.

President Obama had proposed a 1.4 percent increase for feds but this raise is "off the table," she said.

The co-chairmen of the budget deficit panel proposed a three-year federal pay freeze that includes a freeze on bonuses and step increases. However, the proposal must be approved by 14 of the 18 commission members.

"At this point, it's highly unlikely," Klement said.

What is "widely known" now is the White House is sending over its two-year pay freeze language to Congress to either include in a continuing resolution or another bill, Klement said.