The calendar says it is the middle of October. The Medicare annual enrollment period (AEP) has started, and the annual federal benefits “open season” is less than one month away. During the annual benefits open season (this year to be held from November 11,2024 through December 9,2024) federal employees and retirees must choose which health, dental, and vision insurance plan to enroll in for 2025. Federal retirees must make the same decisions regarding their insurance coverages. In addition, federal retirees who are age 65 or older and eligible to enroll in Medicare must decide which parts of Medicare they want to enroll in. Moreover, many federal retirees are not aware of how Medicare coordinates with their FEHB program enrollment.
OPM recently announced that employees will pay an average 13.5 percent more in their health insurance premiums in 2025 compared to what they are paying during 2024, a figure that is nearly double last year’s increase and marks the largest price hike in recent years. Under the Federal Dental and Vision Program (FEDVIP), the average premiums for dental plans will increase by 2.97 percent while vision plans will increase by an average of 0.87 percent.
Employees and retirees are advised to not lose sight of the fact that besides health, dental and vision premiums increasing for 2025, out-of-pocket costs in the form of higher deductibles, co-payments, co-insurance, and items that the insurance will not cover. The question that employees must ask themselves: “What is the best way to pay for these increasing out-of-pocket expenses?.” One answer is to enroll in a health care flexible spending account (HCFSA) or a health savings account (HSA). Both the HCFSA and HSA are tax-advantaged accounts.
Over the next 10 to 12 weeks. Serving Those Who Serve will present a series of FEDZONE columns helping federal employees and retirees make their Medicare AEP and “open season” benefits decisions. Among the topics to be presented:
- Types of FEHB program plans and how to choose the right plan given one’s and one’s family medical needs.
- Some suggestions for choosing/changing an FEHB program plan for 2025.
- Requirements for an employee and family members to keep FEHB program enrollment in retirement and what is the cost?
- What is the Federal Employees Dental and Vision Insurance Program (FEDVIP), and which employees are eligible to enroll?
- Are federal retirees eligible for FEDVIP?
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Are there better choices for dental and vision insurance besides FEDVIP for employees and retirees?
- With increasing out-of-pocket medical, dental and vision expenses that all employees are experiencing, no matter which insurance they have, why every federal employee should consider enrollment in a health care flexible account (HCFSA) or a limited health care flexible spending account (LEXHCFSA).
- How does an HCFSA and an LEXHCFSA work? Are there any specific requirements for enrolling in an HCFSA or a LEXHCFSA? Are there any disadvantages to being enrolled in an HCFSA or a LEXHCFSA?
- What is a Health Savings Account (HSA)? Which employees and retirees can enroll in an HSA?
- How ownership in an HSA can particularly benefit retirees.
- What is a Health Reimbursement Account (HRA)?
- How does the FEHB program work with an HSA and an HRA?
- Why federal retirees are encouraged to enroll in Medicare Part A and Medicare Part B (Original Medicare) when they become age 65.
- How an FEHB program health plan serves as a Medicare Supplement plan and therefore why federal retirees enrolled in Original Medicare do not have to shop for a Medicare Supplement plan.
- What is Medicare Advantage? Which federal retirees are eligible to enroll in a Medicare Advantage Plan?
- What specific choices do federal retirees have in enrolling in a Medicare Advantage plan?
- What is the difference between Original Medicare and Medicare Advantage?
- With the major changes to Medicare D (Prescription Drug program) resulting from the passage of the Inflation Reduction Act of 2022, does it make sense for some federal retirees to enroll in Medicare Part D.?
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Ed Zurndorfer, EA, ATA, CFP®, CLU®, ChFC®, CEBS®, ChFEBC℠: Federal Employee Benefits Expert
A former career Federal employee, Ed has published a staggering 1,200+ separate articles on Federal Benefits and Retirement!
Just “Google” his name, and you are likely to find a plethora of sites that contain his writings. Drawn to its mission to reach, teach
and serve Feds, Serving Those Who Serve is the only financial planning practice with which Ed has chosen to affiliate in over
20 years teaching. In addition to conducting Federal Benefits seminars for Serving Those Who Serve, you can find Ed’s
writings here on our blog in the FedZone, and on Fed-Soup, MyFederalRetirement, FederalNews Radio and NITP.
He is a member of the Maryland Society of Accountants, the National Association of Enrolled Agents, the International Society of Certified Employee Benefits Specialists, the Financial Planning Association, the National Association of Health Underwriters,
and the Society of Financial Service Professionals. Since 1999, Ed has taught many thousands of Federal employees about
their benefits, in person and at Federal agencies all over the country. Ed is a true national treasure.
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.