“Open Season” – What Employees Need to Know and Do with Respect to Their Dental, Health and Vision Insurance Benefits and Flexible Spending Accounts
Edward A. Zurndorfer–
“Open season” is the time of year when federal employees and annuitants (retirees) have the opportunity to make decisions about their health insurance benefits under the Federal Employees Health Benefits (FEHB) Program (FEHBP), their dental and vision insurance benefits under the Federal Employees Dental and Vision Insurance (FEDVIP) program, and their flexible spending account benefits under the Federal Flexible Spending Account (FSAFEDS) program (employees only). The 2021 “open season” will run from November 8 through December 13, 2021 in which employees and retirees can make decisions about the aforementioned benefits for calendar year 2022. This is the first of six FEDZONE columns discussing the issues facing employees and annuitants during the “open season” with regard to their health, dental and vision insurance benefits and flexible spending accounts.
FEHBP
During “open season” employees can perform the following actions with respect to their participation in the FEHBP:
- (1) From not enrolled to enrolled,
- (2) From self only to self plus one, or self only to self and family coverage,
- (3) From one FEHBP plan to another FEHBP plan,
- (4) Cancel or change to self plus one or self only
- (5) Switch designated family member; or
- (6) Waive participation in premium conversion.
Each of these actions is discussed:
• From not enrolled to enrolled.
An employee may have elected at some point of their federal service to not participate in the FEHBP. For example, the employee enrolled on a spouse’s group health insurance plan offered by the spouse’s private industry employer. The employee decides that an FEHBP plan offers better coverage than his or her spouse’s health plan and elects to enroll in the FEHBP. Note that since the employee did not lose private health insurance coverage as a result of a qualified life event (QLE), the employee has to wait until the next “open season” to enroll in the FEHBP.
• From self only to self plus one, or self only to self and family coverage.
In order for surviving family members of a deceased federal employee or annuitant to continue the deceased’s FEHB enrollment, the following two conditions must be met: (1) The deceased employee or annuitant must have been enrolled in self plus one or self and family at the time of the employee’s/retiree’s death; and (2) a designated family member must be entitled to a CSRS or FERS survivor annuity (which will likely be a surviving spouse). Other eligible family members who are eligible for FEHB health benefits are children under the age of 26. This means that if a spouse has been designated as a survivor annuitant and there are children under the age of 26 (or a child of any age who was disabled before age 18), then upon the death of the employee or annuitant, all of the eligible family members will continue their FEHB enrollment until they are no longer eligible. For example, a child reaches age 26.
Note that when there is a qualifying life event such as an employee or an annuitant gets married, or an employee or annuitant has or adopts a child, family members can be added to coverage at any time and the individual does not have to wait until “open season.”
• Change from one FEHB program plan to another FEHB program plan for 2022.
If an employee/annuitant makes no plan changes, then the employee will keep the same FEHB program for 2022 that he or she was enrolled in during 2021. Some considerations for choosing a new plan: Premium cost should not be the most important consideration in choosing a new plan. Just because a particular FEHB program plan is cheaper in premiums does not mean that the plan is “better.” The most important consideration is that in selecting a new plan that the plan meets the health care needs of the employee/annuitant and family members enrolled in the plan. It is also important what the “out-of-pocket” costs will be with a particular FEHB program plan. “Out-of-pocket” costs include deductibles, coinsurance, copayments, as well as the annual catastrophic dollar limit, the most the plan enrollee will pay out-of-pocket during the year. Just because a plan is cheaper (in premium costs) does not necessarily mean that the plan is a better plan. There is a need to look at all costs.
• Cancel or change to self plus one or self only.
An employee/annuitant must provide the information requested on any other health insurance that covers the employee/annuitant. An FEHB self plus one enrollment covers the enrollee and one eligible family member designated by the enrollee. An FEHB self and family enrollment covers the enrollee and all eligible family members. The enrollee or a family member cannot be covered under another FEHB enrollment. If that is the case, then canceling or changing one’s FEHB enrollment to self plus one or self only may be necessary during the open season.
• Switch designated family member.
An employee/retiree enrolled in self plus one coverage desires to switch the one eligible family member. For example, switch a spouse to a child under the age of 26. Or switch from one child under age 26 to another child under the age of 26. This switch can only be done during an “open season.” This is true unless there is a qualifying life event that necessitates the change such as divorcing a spouse who is no longer enrolled in the FEHBP, and the employee/retiree adds a child in the spouse’s place.
• Waive participation in “premium conversion.”
Employees automatically participate in premium conversion unless they waive it. Employees who participate in “premium conversion” have their FEHBP health insurance premiums deducted before-tax from their gross salary. There are tax advantages for participation in “premium conversion.” But there are other reasons an employee may not want to participate. Waiving participation in premium conversion can be done during an open season or upon a qualifying life event.
Employees should be aware that any of the aforementioned changes to FEHBP insurance (change of family coverage, change of plan and waiver of premium) will become effective January 2, 2022, the first day of the 2022 leave year. Retirees should be aware that any of the aforementioned changes to FEHBP insurance (change of family coverage and change of plan) become effective January 1, 2022, the first day of the 2022 calendar year.
FEDVIP
During the FEBVIP “open season” (this year held between November 8 and December 13, 2021) employees/annuitants can perform the following actions:
- (1) From not enrolled to enrolled in the dental insurance, vision insurance, or both,
- (2) Change their coverage from self only to self plus one or to self and family, from self plus one to self and family, or self plus one or self and family to self only for dental insurance, vision insurance, or both,
- (3) Disenroll from dental insurance, vision insurance, or both, and
- (4) Switch designated family member.
Each of these actions is discussed:
• From not enrolled to enrolled in the FEDVIP for dental, vision or both types of insurance.
All full-time and part-time permanent employees/annuitants and survivor annuitants can elect to enroll in separate dental insurance, vision insurance or both insurances through the FEDVIP. There is no requirement to be enrolled in the FEHBP in order to elect separate dental insurance and/or vision insurance through the FEDVIP. If an employee/annuitant is enrolled in dental insurance and/or vision insurance through the FEDVIP and is satisfied with his or her insurance plan(s) and type of coverage, then the employee/annuitant need not take any action during “open season” for continued insurance coverage during 2022.
• Change coverage from self only to self plus one or to self and family, or self plus one to self and family, or self plus one to self only, or self and family to self only.
FEDVIP allows employees, annuitants and survivor annuitants three types of coverage:
- (1) self only (employee, annuitant, survivor annuitant);
- (2) self plus one (employee, annuitant, survivor annuitant and one eligible family member – spouse and child under the age of 22); or
- (3) self and family (employee, annuitant survivor and more than one eligible family member).
• Disenroll from dental insurance, vision insurance or both insurances.
Employees, annuitants and survivor annuitants who want to disenroll from the FEDVIP for 2022 must do so during the annual “open season”.
• Switch eligible family member.
Employees, annuitants and survivor annuitants who want to switch designated family members as part of their FEDVIP coverage may only do so during the open season. For example, as part of self plus one coverage, an employee or a spouse switches a spouse to a child under the age of 22 or vice versa. Another example is an employee or annuitant is enrolled in self plus one coverage and switches from one child who will become age 22 next year to a younger child.
Some other items that employees, annuitants, and survivor annuitants should be aware of with respect to FEDVIP: (1) employees, annuitants and survivor annuitants pay the full cost of the premiums with no federal government contributions; (2) for employees, there is not five-year pre-retirement participation rule in FEDVIP in order to be eligible to enroll in FEDVIP after they retire from federal service; (3) enrollment, changes to one’s FEDVIP insurance plans and changes to one’s FEDVIP coverage type (self only, self plus one, or self and family) are performed at https://www.benefeds.com; and (4) any enrollment changes to one’s FEDVIP insurance plans, including disenrolling, and changes to one’s coverage become effective on January 1 following the ‘open season”. This year’s effective date for enrollment and FEDVIP plan changes made during the “open season” is therefore January 1, 2022.
FSAFEDS
During the 2021 FSAFEDS “open season”, employees (but not annuitants who are not permitted to enroll in flexible spending accounts – either a health care flexible spending account (HCFSA) or a dependent care flexible spending account (DCFSA) can perform the following actions:.
- (1) Enroll or reenroll in the HCFSA and/or DCFSA for plan year 2022 (January 1 – December 31, 2022),
- (2) Enroll or reenroll in the limited expenses health care FSA (LEXHCFSA) for plan year 2022,
- (3) Due to the passage of the Consolidated Appropriations Act (CAA) of 2021, there is unlimited carryover of health care expenses for HCFSA and LEXHCFSA for the 2021 plan year to the 2022 plan year but reenrollment in the HCFSA or LEXHCFSA during the “open season” is required, and
- (4) Due to the passage of the Consolidated Appropriations Act (CAA) of 2021, employees enrolled in a DCFSA during 2021 can incur dependent care expenses through December 31,2022 and apply those expenses against their 2021 DCFSA balance. Reenrollment in the DCFSA is required during the upcoming FSAFEDS “open season.”
Each of these actions is now discussed:
• Enroll or reenroll in an HCFSA or LEXHCFSA for plan year 2022.
As a general rule, employee have to enroll or reenroll (if they are contributing to a HCFSA or LEXHCFSA in the current plan year) for the new plan year starting January 1. Some employees, especially those employees who plan to retire sometime during 2022 but who would like to participate in a HCFSA or LEXHCFSA for the portion of the year 2022 while they are still in federal service, must decide how much of their gross salary they want to set aside for 2022 to be allocated to their HCFSA or LEXHCFSA.
• Enroll or reenroll in the DCFSA for plan year 2022.
Like those employees who are enrolled in an HCFSA or LEXHCFSA, those employees who plan to retire sometime during 2022 and who would like to participate in a DCFSA for the portion of the year 2022 while they are in federal service, must decide how much of their gross salary they want to set aside for 2022 to be allocated to their DCFSA.
• The CAA allows employees with HCFSAs or LEXHCFSA s to carryover unlimited amounts of unused funds in their accounts to be used in 2022.
CAA allows employees with DCFSAs to incur dependent care expenses until Dec. 31,2022 and be reimbursed from money left over from funds set aside via payroll deduction during 2021 to their DCFSAs. To take advantage of these provisions resulting from the CAA passage, employees contributing to their HCFSAs, LEXHCFSAs, and/or DCFSAs during 2021 must reenroll for 2022, even if they do not plan to contribute additionally to these accounts via payroll deductions during plan year 2022.
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.
