FEHB Open Season: Decision Time for Federal Employees (Part I)

With the Start of Benefits FEHB Open Season, Employees Need to Make Decisions About Their Insurance Benefits - Part I

Starting November 13,2023 and ending December 11,2023, federal employees and retirees will be making decisions about their health, dental and vision insurance benefits. Employees must make decisions regarding participation in the FSAFEDS in which they can contribute to a health care flexible spending account (HCFSA) (to help pay out-of-pocket health care expenses) and/or a dependent care flexible spending account (DCFSA) (to help pay qualified child and dependent care expenses).

The FEHB program is the largest employer-sponsored health insurance program in the United States. The program covers millions of federal employees and retirees and their families. Enrollees in the FEHB program have hundreds of health insurance plans to choose from. They can change their health plan every year during the “open season”. Eligible family members who can be covered by the FEHB program insurance include spouses, and children under the age of 26. Both employees and retirees pay on average 25 to 28 percent of the FEHB program health plan premiums and the federal government pays the other 72 to 75 percent.

Choosing an FEHB Program Health Plan for Plan Year 2024

Both employees and retirees enrolled in the FEHB program can make changes to the FEHB program health insurance plan they are currently enrolled in during 2023. Changes include switching from one FEHB program health plan to another health plan, changing from “low deductible” to “high deductible”, or from “standard” to “basic”. They can change enrollment type to “self only”, to “self plus one” (including one eligible family member such as a spouse to their coverage) or add eligible family members such as children under the age of 26 to their existing “self and family” coverage. They can cancel their FEHB program enrollment, or they can “suspend” their FEHB program enrollment in order to either enroll in a private Medicare Advantage plan or to enroll in TriCare if they are retired members of the Uniformed Services.

If an employee or a retiree is satisfied with their current FEHB program enrollment during 2023, then the employee/retiree need not take any action. The employee or retiree will remain in that health plan for plan year 2024. There are several types of FEHB program health plans to choose from including: (1) Fee-for-Service (FFS); (2) Preferred Provider Organization (PPO); (3) Point of Service (POS); (4) Health Maintenance Organization (HMO); (5) Consumer Driven Health Plan (CDHP); and (6) High Deductible Health Plan (HDHP) associated with a health savings account (HSA). The actual number of choices available to choose from for employees and retirees will vary by geographic locations.

Don’t miss our Special FEHB Open Season Webinar on November 28th

The following are some questions for employees and retirees who are considering changing their FEHB program health plan for plan year 2024:

There are FEHB program health plans that are withdrawing from the FEHB program, effective in 2024. Undoubtedly employees and retirees enrolled in these plans during 2023 have received notices from these plans informing them of the plans’ departure from the program. These employees/retirees must choose a new health plan for plan year 2024.
FEHB program health plan premiums during 2024 are increasing on average 7.7 percent over 2023 FEHB program plan premiums. While premium cost is certainly a factor in choosing a health plan, premium cost should not be the primary factor.
Should an employee or a retiree try to find an FEHB program plan that will pay for most of their (and family members) medical expenses or just the larger expenses? There is no FEHB program health plan that pays 100 percent of an enrollee’s medical expenses, including doctor bills, hospital bills, pharmacy bills, and laboratory bills.
How much of a deductible, copayments and coinsurance is the employee/retiree willing to spend for himself or herself, and family members?
If an employee or a retiree is enrolled during 2023 in a Preferred Provider Organization (PPO) or a Point of Service (POS) health plan in which there are savings for using in-network doctors, hospitals and pharmacies, will these same in-network doctors, hospitals and pharmacies remain in the network during 2024?
Retirees over age 65 who are enrolled in Traditional Medicare (Medicare Parts A and B) and enrolled in an FEHB program health plan should be aware that Medicare is considered the primary health insurance, paying on average 60 to 80 percent of a retiree’s doctor and hospital bills, while their FEHB plan in considered a secondary (Medicare supplemental) health insurance, paying on average the remaining 20 to 40 percent. Under this arrangement, a federal retiree enrolled in Traditional Medicare is encouraged to change their FEHB program health insurance plan to something that is less expensive. For example, change from “low deductible” to “high deductible” or from “standard” to “basic”. This change can be made during an FEHB program open season. Before changing their insurance plan, they are advised to check with their doctors, hospitals, and pharmacies to make sure that they accept the retiree’s new FEHB program health insurance plan.

Where Do Employees and Retirees Get Information about FEHBP Program Health Plans and Premium Rates?

Employees and retirees should visit here get more information about FEHB program health plans available in their geographic areas. To view the 2024 premium rates, they should go here.

Effective Dates of FEHB Program Enrollment for Employees and Retirees

The effective date of an employee’s FEHB program enrollment change made during the open season is the first day of the 2024 leave year. The 2024 leave year at most federal agencies begins on Sunday, Jan. 14, 2024. Those employees enrolled in the FEHBP program during leave year 2023 (Jan. 1,2023 through Jan. 13, 2024) will continue to be insured under their health plans through Jan. 13,2024.

However, the Jan. 14,2024 effective starting date of FEHB program insurance assumes an employee will be in pay status during pay period 27 of leave year 2023. Pay period 27 at most federal agencies will occur from Dec. 30,2023 through Jan. 13, 2024.

If an employee is not in pay status during pay period 27 of leave year 2023 and returns to pay status effective Jan. 14,2024, then the effective date of enrollment for changes or new enrollment made during open season will be Jan. 28, 2024.

For retirees who made changes to the FEHB program enrollment during the open season, the changes will become effective Jan. 1,2024.

Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.