During the annual open enrollment period for federal benefits, federal employees and retirees who are part of the Federal Employees Health Benefits (FEHB) program face the crucial decision of choosing a health insurance plan for the upcoming year. This involves selecting coverage that best suits their needs, and if applicable, the needs of their family members who are also enrolled.
This year’s enrollment period kicks off on November 11 and wraps up on December 9, 2024. Changes to health insurance plans take effect at the start of the 2025 leave year, which for most federal agencies begins January 12, 2025. If an individual is satisfied with their current FEHB plan and wants to keep it, no further action is needed—they will automatically continue with the same coverage into the next year.
Choosing the right health insurance plan isn’t always straightforward. This article aims to clarify the different types of health insurance plans available under the FEHB program. By understanding these options, employees and retirees can select a plan that aligns with their health requirements while minimizing costs.
Fee-for-Service (FFS) Plans
The Fee-for-Service (FFS) plan is a traditional health insurance model. Here, the insurance company either pays medical providers directly or reimburses the insured for out-of-pocket expenses after a claim is submitted. This plan offers notable flexibility in choosing healthcare providers, allowing enrollees to see any doctor or visit any hospital they prefer.
FFS plans typically cover 70 to 85 percent of medical expenses once the deductible is met, with the policyholder covering the remaining 15 to 30 percent. Out-of-pocket ceilings exist, ensuring that after reaching a specified amount, the plan covers the full cost of covered benefits for the rest of the year.
FFS Plans with a Preferred Provider Organization (PPO)
Some FFS plans incorporate a Preferred Provider Organization (PPO), allowing enrollees to use providers who agree to reduced fees with the plan. This usually results in lower out-of-pocket costs for those using PPO services. However, the availability of PPO providers can vary widely across different regions.
Health Maintenance Organizations (HMOs)
HMOs are recognized for their emphasis on preventative care and wellness. Members are typically required to see a primary care physician within the network, who coordinates their care. With set copayments replacing deductibles and coinsurance, HMOs offer predictability in costs, and most of the care occurs within the network.
Point of Service (POS) Health Plans
POS plans blend elements of HMO and PPO plans. They are less restrictive than HMOs, allowing use of out-of-network providers at higher costs. While they feature fewer out-of-pocket expenses compared to some PPO plans, POS plan holders must choose a primary care provider within the network.
Consumer Driven Health Plans (CDHP)
CDHPs encourage individuals to take charge of their healthcare choices and management. With varieties such as Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs), these plans promote cost-awareness and include incentives like high deductibles to involve participants more directly in healthcare spending decisions.
High Deductible Health Plan (HDHP)
HDHPs come with higher deductibles and out-of-pocket maximums, alongside “first dollar” coverage for preventive services under the Affordable Care Act, meaning certain services are covered before the deductible is met. Contributions to HSAs provide a tax-advantaged way to save for current and future medical expenses.
A thorough evaluation of the various FEHB plans, including FFS, PPO, POS, CDHP, and HDHP, helps enrollees align their healthcare needs with financial considerations. When selecting a plan, consider participating physicians, network hospitals, and whether the plan emphasizes preventative care and chronic condition management.
Lastly, it’s crucial to verify provider networks, ensure the availability of desired specialists, and consider the proximity of contracted hospitals. Choosing the right plan involves balancing personal healthcare needs with cost efficiency, ensuring both peace of mind and financial prudence throughout the year.
