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Facts You Should Know About the FEHBP's
New "High Deductible" Plans
Open season for the Federal Employees Health Benefits Program (FEHBP) ends Dec. 13, 2005.
This year the Bush Administration introduced a new type of plan into the FEHBP under the slogan of "empowering" federal
employees to make more decisions about their health care. Federal employees, however, need to take the time to understand
the financial risks facing those who sign up for these "high deductible" plans.
The "high deductible" plans require
enrollees to establish health savings accounts or "health reimbursement" accounts which work a lot like Individual Retirement
Accounts*except that withdrawals from the accounts have to be for "qualified" health care expenditures.
The plans
work as follows: The employee and the employer each pay a share of the premium. When a federal employee enrolls in a high
deductible health insurance plan, a health savings account is established in his or her name. The insurance company deposits
money into the health savings account, and this money now belongs to the enrollee, tax-free, as long as it is used for qualified
health care expenditures. The enrollee can add to the account with his or her own tax-free contributions up to the amount
of the plan's deductible.
The deductibles in the FEHBP's "high deductible" plans range from $1,050 to $5,000 for self-only
coverage and from $2,100 to $10,000 for family coverage. No insurance coverage kicks in until the enrollee has paid the entire
deductible.
Except for some plans that will pay for some types of preventive care prior to an enrollee's having spent
the entire deductible, the enrollee has to pay the full cost of all medical services up to the deductible amount.
Some
plans give enrollees the same discounts the insurance company has negotiated while others do not. For example, an enrollee
in a high deductible plan with a $5,000 deductible who gets sick and needs hospitalization would have to cover the first $5,000
with money in the health savings account. Enrollees who do not have $5,000 in their health savings account would still be
liable for the full amount.
From: Rod Kroft
AFGE Local 148
Health Benifets
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