Health Premiums: When Expensive is Still Cheap

Wednesday - 12/8/2010, 4:00am EST

Federal workers and retirees who pick a health plan based solely on its premiums can easily make a big mistake. In most cases premiums are only part of the equation: Things like benefits, the plan's medical network, its catastrophic coverage and required co-payments are also very important.

As a general rule, going for the plans with the lowest premiums to the exclusion of anything else is not a smart move.

Unless...

  • You are the ex-spouse of a federal worker or retiree and are required to pay the full health plan premium which includes the 70 plus percent government contribution. That premium for workers and retirees for self-only coverage next year will be $1,360. But if you must pay the full premium (employee & government share) your premium tab will be $5,440. That's expensive but because you are getting the group rate it is still probably considerably less than you would pay for a comparable stand-alone insurance plan outside of the FEHBP.

  • You are turning 26 next year and will be dropped from your parent's family plan and have to find your own health insurance where you will be required to pay the full premium. If you pick the popular Kaiser standard option you will pay $3,970 next year compared to the $990 that regular government workers and retirees pay. Again, a lot, but probably less than anything you could buy on your own outside the FEHBP.

  • You are young, healthy and just starting out at a relatively low salary.

  • You are a fed who is piggybacking on your private sector spouse's health insurance until he or she retires at which time you will enroll in the far-better FEHBP program. If you want to be covered under the FEHBP program when you retire (and you should) you must be enrolled in any of the FEHBP plans for the 5 years prior to retirement. In effect you are buying health insurance (a low premium FEHBP plan) so you can continue it when you retire.

For all of the above categories, low-premium plans make sense.

According to Checkbook's Guide to Health Plans for Federal Employees for 2011, the least expensive self-only plan for individuals who must pay the full premium are Kaiser standard, where you will pay $3,970 and the Mail Handlers-Value plan, where your total premium will be $3,430. Kaiser is an HMO. Mail Handlers is a fee-for-service (national) plan. The most expensive is Aetna's open access high option where premiums will total $8,880. Among the Consumer Driven plans, Checkbook says individuals who must pay the full premium should check out APWU CD plan ($4,040 next year) or the Aetna HealthFund HD plan ($4,100).

Your Personal Shopper: At 10 a.m. today on our Your Turn with Mike Causey radio show the guest is David Snell. He's an insurance expert and retired fed now working for the National Active and Retired Federal Employees Association. If you've questions about the FEHBP program, he'll have the answers. You can e-mail them to me (mcausey@federalnewsradio.com) or better yet, call him (during the show) at 202.465.3080. In the DC area you can listen at 1500AM or you can listen anywhere on the internet by clicking here.

Sticking With Your Doctor: If you want to stick with your favorite doctor during the 2011 health insurance year, click here.

Best Buys for Retirees: If you are a retired fed or survivor annuitant some of the health plans are better for you (at bargain rates) than others. To check them out, click here.

To reach me: mcausey@federalnewsradio.com


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