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Did the premiums eat your paycheck?

Thousands of active and retired federal workers have gotten or are gonna get a real kick in the assets this month. That’s when they feel the impact of January health plan increases on their paychecks.

Premiums for federal and postal workers and retirees went up an average of 4.9% in January. After much end-of-year political jockeying in Congress, most white collar civil servants got a flat 1% increase effective this year. Federal retirees got a 1.3% cost of living adjustment. But while very real and very expensive numbers, they don’t tell the full story!

The increase in premiums within the Federal Employee Benefits Health Program is based on an average of a handful of plans that don’t include some of the more popular — and more expensive — so-called Cadillac plans. Those higher premium plans, mostly high or standard option models, provide excellent coverage. But the benefits aren’t much different from the basic version of the same plan which costs premium payers a lot more. Many, if not most of, the people in the standard and high option plans are either older federal workers or retirees. Many of them have higher and/or more frequent medical services and also use more prescriptions. They are also less likely to change plans (and move to a lower cost plan) than their younger colleagues. The result is known as “adverse selection” with the plans forced to raise premiums each year to cover costs.

During the November-December health insurance hunting season, expert Walton Francis said that many employees and retirees could save $1,000 to as much as $4,000 in premiums this year IF they would switch to a less expensive option. He edits the Consumer Checkbook Guide to federal health plans. In recent years the government, as well as some employee unions and associations, have subscribed to the online version of the guide. It pays off for agencies if their workers enroll in lower premium plans because the federal government — on average — picks up 70 plus percent of the total premium.

The problem each year during open season is that most workers — especially retirees — stick with the same plan each year. They either don’t do comparison shopping or are reluctant to leave a plan that has provided excellent coverage each year for an “unknown” option of the same plan. Francis says failure-to-shop overtime means that more than half of all workers and retirees are in the wrong plan. It may, as most FEHBP plans are, be excellent. But premiums are too high compared to what employees and retirees get back in coverage.

But shopping for health insurance is daunting to many.

Feds in the Washington-Baltimore metro area are eligible for more than 40 plans which include localized Health Maintenance Organizations, as well as national carriers like Blue Cross, Kaiser, Aetna and several excellent union-sponsored plans that are open to members and nonmembers.

The lowest self-only premiums this year — ranging from $1,200 to $1,700 per year — are preferred provider options like United, Kaiser, CareFirst and Aetna. The most expensive plan is $7,840 from Kaiser’s highest option.

Among national plans with preferred provider requirements, an individual can purchase any of several self-only plan this year for as little as $1,230 to $1,600. The top range plan for the Blue Cross standard option is $3,210 per year (paid by the employee/retiree), and $4,220 for the SAMBA high option plan. Most of the plans probably accept your doctor as part their preferred provider options. But you need to check to find out.

There are options available for self plus one as well for families. Families pay the same premiums regardless of size, but because of the children, their total costs out of pocket typically are much higher.

Bottom line: If you are a fed or retiree, you are generally stuck in your current plan — like it or not — until next year. People who undergo major life events (marriage, divorce, death of a spouse or moving to another geographic area) are eligible to change plans.

But for most FEHBP customers, in order to avoid a big jump in premiums or a small cut in take-home pay, shop when you have the chance.

Nearly Useless Factoid

By Alazar Moges

The record for the most patents by one individual is held by Japanese inventor Shunpei Yamazaki at 11,353. The patents are held in 10 different countries and Europe. All 11,353 patents have been reviewed by specialists and the total has been confirmed.

Source: Guinness World Records

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