FEHB Open Enrollment starts on Monday, running from November 9ᵗʰ through December 14ᵗʰ. Federal employees will be able to change or retain their FEHB provider as well as increase or decrease their coverage, depending on what makes sense for their situation coming into the new year. All changes will go into effect January 1ˢᵗ, 2021¹. For some of you, this may mean shifting from Family coverage to a Self + 1 plan now that your children are age 26 or older. For others, it could mean switching to more expensive coverage that better suits your prescription needs. Whatever the consideration, make sure you think through the decision carefully before you make it.
We've mentioned this before, and will detail it further in our upcoming webinars, but FEHB is perhaps the most valuable benefit available to federal employees. In fact, one could argue that FEHB coverage may be worth more than your pension!
As a federal employee or retiree, about 70% of your FEHB premiums are paid for by the government. This is an enormous subsidy. For example, a family on a Blue Cross Blue Shield plan that costs $250 per pay period is receiving a $583 subsidy on those health care premiums per pay period. Put another way, the FEHB plan that costs you $250 per pay period through work would cost $833 on the private market. You receive this subsidy not only while you are working, but throughout retirement as well—that’s a big deal!
Further, FEHB premiums are not “age ranged”; everyone on a given plan pays the same premiums, regardless of their age. Put simply, the 24-year-old new hire on an Anthem plan in Pennsylvania pays the same premium as an 83-year-old federal retiree. In the private market, that 83-year-old would have to pay dramatically higher health insurance premiums, as their need for health care would likely be higher than that of the younger person.
If you are planning to retire in the next few years, don’t forget: you must have been covered under FEHB for the 5 years leading up to retirement to continue that coverage after you retire. Additionally, you must retire with an immediate annuity (your pension). As we discussed in our early retirement webinar, there are ways to get this coverage if you don’t retire with an immediate annuity, but those steps are cumbersome and not without risk, most notably being that you don’t have that coverage until you turn on your retirement benefits.
As always, PARCO strategies are here to help you navigate your FEHB or any financial and retirement planning you make.
P.S. If you need to find your FEHB rate, you can locate it here:
Works Cited:
¹United States, Congress, “Active Federal Employees”, Open Season, OPM.
https://www.opm.gov/healthcare-insurance/open-season/active-federal-employees/