Federal government employees and their families have access to some of the most comprehensive healthcare benefits in the country through the Federal Employee Health Benefits (FEHB) Program.
Coverage for family members extends to spouses, and their children under 26, including legally adopted children.
The same benefits are available to federal employees and their surviving spouses during retirement if you meet the following requirements:
- You are entitled to retire on an immediate annuity under a retirement system for civilian employees (including FERS MRA + 10 retirements); and
- You have been continuously enrolled (or covered as a family member) in any FEHB plan(s) for the 5 years of service immediately before the date your annuity starts or for the full period(s) of service since your first opportunity to enroll (if less than 5 years).
Source: Federal Benefits Fast Facts from OPM.
If you do qualify, you can continue coverage into retirement while paying the same premiums as those who continue to be employed. This often makes it easier for federal employees to retire comfortably and, in many instances, retire early.
Understanding your FEHB options is key, and which plan works best for you will depend upon several factors, such as:
- How often you typically need care
- Which doctors and hospital systems you want to have included in your plan
- Which prescriptions you need to have covered
- Your tax bracket
You can change plans during Open Season as your circumstances evolve, so it’s important to understand every option and when each plan may be best for you. Open Season runs from mid-November to mid-December every year.
Four Types of FEHB Health Plans
There are four general types of health plans that have even more variability within them. The Office for Personal Management has a comparison tool to help you find a plan that best fits your needs according to your zip code and enrollment type.
Knowing What You’ll Pay
Before diving into the four plan options, it’s important to get a clear picture of the total costs for each type of plan. Here are the terms you need to know:
- Premium—the amount you pay to maintain your policy every month.
- Deductible—the amount you must pay before insurance benefits kick in.
- Copayment—once you’ve paid your deductible, a copayment is a fixed price for specific health services.
- Coinsurance—this number represents the percentage of costs you have to cover for care once you surpass your deductible.
Now that you know what these terms mean let’s review each plan in more detail.
1. Fee-for-Service (FFS) Plans
There are generally two types of FFS plans: Preferred Provider Organization (PPO) or non-PPO.
An FFS, non-PPO, is a healthcare plan in which either the plan pays the provider directly or reimburses you after you file an insurance claim. This option is typically the most expensive, though you’re free to visit any doctor or hospital you choose without in-network restrictions—a plus for those who see several specialists or require additional care.
An FFS plan with a PPO allows you to choose doctors and hospitals that are in-network and will reduce their charges to the plan. You don’t need a referral, and you can see healthcare providers in any area for PPO benefits.
In addition to being less expensive, you typically don’t have to file any claims or paperwork when paying for healthcare services. Keep in mind that there’s no guarantee that a PPO will be available in your area or for all of your needed services. In that case, non-PPO FFS price options are the standard benefit.
2. Health Maintenance Organization (HMO)
This type of plan provides healthcare through a network of doctors and hospitals in particular service areas. The HMO provides a comprehensive set of services as long as you use the doctors and hospitals affiliated with the HMO.
They then coordinate the care you receive and coordinate billing, which frees you from completing claims and paperwork or high services fees. In general, there’s no deductible or coinsurance for in-hospital services, lowering your out-of-pocket expenses.
The HMO will provide a comprehensive set of healthcare services. As long as you use in-network doctors and hospitals, you’ll have a copayment at the time of service for primary care physician (PCP) and specialist visits and no deductible or coinsurance for hospital care. These restrictions make HMO premiums more affordable than PPOs.
To get started, you choose a PCP who provides general medical care. The PCP can then provide referrals to other healthcare providers as needed. Keep in mind you generally can’t see a specialist without first checking in with your PCP. If you choose a doctor or facility that’s out of network, non-emergency expenses generally won’t be part of the HMO benefit plan.
The availability of in-network doctors and facilities can vary by region, so your enrollment eligibility depends on where you live or work. If you’re wondering about your provider, check with the participating provider directory. Each HMO and FFS plan with a PPO publishes a provider directory. Many plans have these documents on their websites, making it easy to access.
3. HMO with Point-of-Service (POS)
This HMO has a bit more flexibility in that it lets you choose out-of-network healthcare providers. If you choose an out-of-network provider, it does come with an additional cost, and you’ll lose the benefit of the HMO handling the billing.
Your deductibles and coinsurance will be higher than if you stay in-network. For out-of-network care, you’ll also need to file an insurance claim to be reimbursed after receiving services, similar to what an FFS requires.
4. Consumer-Driven Health Plan (CDHP) Options
In addition to these plans, the FEHB Program also offers access to several Consumer Driven Health Plans (CDHP). These are different approaches to health insurance designed to give consumers more incentive to control healthcare costs.
With CDHP, you have flexibility in healthcare spending up to a certain limit while receiving full coverage for in-network preventive healthcare. The tradeoff is that you’ll be responsible for higher cost-sharing expenses after you’ve reached your spending limit.
One type of CDHP is a High Deductible Health Plan (HDHP). As the name describes, this plan features a high deductible and a maximum out-of-pocket limit. The IRS sets these limits every year.
|2022 HDHP Limits
|HDHP Minimum Annual Deductible (Individual)
|HDHP Minimum Annual Deductible (Family)
|HDHP Maximum Annual Out-of-Pocket (Individual)
|HDHP Maximum Annual Out-of-Pocket (Family)
As with the other health plan options, copays and coinsurance are higher if you choose a non-network provider. Keep in mind that deductibles don’t apply to preventive care because it’s free in all health plans.
HSA and HRA Eligibility
If you choose an HDHP, the FEHB will also establish and partially fund a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA) for you. These are tax-favored accounts from which you can pay for current or future healthcare expenses. Funds avoid current taxation (aka lowers your annual taxable income) while growing tax-free, and withdrawals are tax-free if you use the money to pay for qualified healthcare expenses.
Health Savings Account (HSA)
This acts like a bank account wherein you can contribute pre-tax dollars or even invest them. There are maximum annual limits for HSAs. The IRS sets these limits every year, too. HSA funds carry over year to year, and you can take the account with you if you change employers.
Note the different amounts for an individual, family, and contributors over 55. HSA eligibility ends once you enroll in Medicare, which is why there’s an additional allowance for those trying to aggressively save before turning 65.
|2022 HSA Contribution Limits
|HSA Maximum Annual Contribution Limit (Individual)
|HSA Maximum Annual Contribution Limit (Family)
|HSA Catch-up Contribution Limits (over age 55)
HSAs can be a great vehicle for additional pre-tax savings, particularly if you’ve already made the maximum contribution allowed to your Thrift Savings Plan account. This post provides more details on the pluses and minuses of HSAs.
Health Reimbursement Arrangement
HRAs are similar to HSAs, with a few key differences. First, you can’t contribute money to an HRA—the federal government will contribute funds on your behalf. Also, you can’t earn interest on HRA funds or take any balances with you if you leave the plan.
More detail on HDHP plans is available in this FAQ from OPM.
Compare Your Options
As a federal government employee, healthcare takes on added importance as you plan for retirement. One step to take as you plan for retirement is to compare benefits plans—FEHB, Medicare, or even ACA benefits and Tricare—to understand your options and plan for the costs.
The good news is that, in most instances, the number of options available within the FEHB system means you’ll be able to find a plan that works well for you, and the Office of Personal Management provides a tool to compare plans here.
Minerva offers complimentary introductory calls if you need assistance weaving your federal benefits into a more long-term retirement plan.
Updated in October 2022