Open season: What you need to know about family plans

Wednesday - 11/17/2010, 11:34am EST

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November 17 and November 24, 2010 -- Our coverage of open season continues with an in-depth look at what to consider when choosing the right family plan.

Walton Francis, editor of the "Checkbook Guide to Health Plans for Federal Employees," joined Mike Causey on Your Turn.

New coverage for adult children up to 26
Adult children up to age 26 are eligible for coverage under your family plan even if they are not dependents, Francis said.

Enrollment of your adult child is not automatic, but you simply have to notify your health care provider.

"A telephone call is enough," Francis said.

After age 26, they are eligible for continuation of coverage up to age 29, he added.

However, stand-alone dental and vision plans are not subject to the new coverage up to age 26. One option is to set up a flexible spending account where you can put up to $5,000 in pre-taxed money into the account.

Essentially, you are getting a one-third discount on what you spend, Francis said. The caveat: It's "use or lose money."

That's why people should also consider a consumer-driven or high-deductive plan.

"The beauty of those plans is you get a savings account and if you're healthy...your savings account can pile up," Francis said about consumer-driven and high-deductible plans.

"It's like an IRA on steroids," he said.

Catastrophic coverage
Some plans offer "loophole-free" guarantees about the out-of-pocket limit for catastrophic coverage.

But watch out for separate out-of-pocket coverage amounts for hospital and prescription drugs, Francis said.

All high-deductible and consumer-driven plans do not have such a loophole, he said.

Is an HMO right for you?
An HMO is good for someone who does not have an established physician or has a chronic condition that requires frequent visits, Francis said.

"HMOs tend to have very low out of pocket costs and most have low premiums," he said.

HMOs are not ideal for "snowbirds," people who move around throughout the year.

However, if you also have Medicare Part A and B, you can go out of network and be covered under Medicare, Francis said.

Retiring couples
If two married feds are retiring, Francis suggests staying with one person's family plan, opposed to two self-only plans to avoid "two catastrophic expenses you could face."

"The requirement for pre-retirement is you are continuously covered for five years. It doesn't say who's buying the coverage," Francis said.

However, if one person is retiring before the other, "the one who is still employed should be carrying the insurance because it's tax preferred. Once you retire you lose that tax preference," Francis said.

Click here for more Federal News Radio stories about open season.