If you are receiving federal disability retirement benefits while, at the same time, getting your health insurance through the Federal Employees Health Benefits Program (FEHB), you should be aware of premium raises that are on the horizon.
As GovExec.com reports, health insurance premiums are expected to increase by 3.8 percent on average in 2015 for federal employees and retirees. In practical terms, this means you should expect to pay about $2.93 out of each paycheck in the coming year if you have a self-only health plan and about $6.89 more per check if you have a family plan.
If you are concerned about how much you are paying in health insurance premiums, the good news is that we have entered the “open season.” This is the period when federal workers and retirees can choose to switch their plans.
The open season runs through December 8. Typically, about a tenth of federal workers and retirees switch their coverage plans during this period.
FEHB Offers Wide Range of Health Care Coverage Plans
As you may be already aware, the FEHB is one of the world’s largest group health insurance plans. It is estimated that more than 9 million federal employees, retirees and their family members are covered through the plan, in which the federal government assume about 70 percent of the costs.
The FEHB gives you a wide range of plan types to choose from – in fact, in 2015, there will be a total of 257 plans, according to GovExec.com. The key is to find a plan that works best for you in terms of coverage and costs.
For an overview of the different plans, see this section of the Office of Personnel Management (OPM) website.
According to GovExec.com, the exact increases in premiums in 2015 will depend on the specific plan you are enrolled in.
For instance, more than 40 percent of federal workers and retirees are enrolled in the Blue Cross and Blue Shield Standard Option. Premium rates will increase 3.7 percent (or $3.21 per paycheck) for those with self-only coverage through this plan and 4.1 percent ($8.33 per paycheck) for those with family coverage.
However, you may choose to enroll in a different plan that ends up costing you less per paycheck (but ultimately leads to more paperwork or out-of-pocket costs if you need medical care and treatment).
Obviously, you need to take into account a variety of different factors when choosing to either stand pat or switch out of your health plan. Your flexibility may ultimately be limited if you are living on federal disability retirement income.
However, as this American Enterprise Institute writer notes, the percentage of after-tax income that retirees spend on health care (taking into account health insurance premiums, medical services, prescription drugs and medical supplies) is generally 11.6 percent. This may be a helpful figure as you consider how much you want to be paying in health insurance premiums during the coming year.
If you would like to read more about federal employee retirement planning, we encourage you to check out our recent blog article on this topic or feel free to give us a call at Harris Federal or contact us through our online form.