How Insurance Works

Do I Have The Right Health Plan


Hello and welcome to Federal Employees Health
Benefits (FEHB) Program: Do I Have The Right Health Plan? My name is
Lionell Jones and I’m a Program Analyst with OPM’s Insurance Operations office.
Today’s session will be broken up into 2 parts. In the first we will be discussing the four
types of FEHB plans. Those are Fee-For-Service Plans (FFS), Health Maintenance Organizations
(HMO), High Deductible Health Plans (HDHP), and Consumer Driven Health Plans (CDHP)
In the second part we will be discussing how to Pick a Health Plan. This will include things
to consider, and a description of how to compare health plans.
Now let’s go into detail on the four types of FEHB Plans. The first is:
A Fee for Service plan, also known as a FFS. It is our most of a Traditional type of Insurance
plan. With this type, you go to the doctor and you file a claim for the services you
receive. These types of plans are Nationwide and are eligible to employees nationwide and
around the world. Most fee for services plans are available to everyone eligible for FEHB.
While other Fee for service plans are only available to specific groups. Those fee plans
are: Compass Rose, Foreign Service, Panama Canal and Rural Carrier. Information about
plan eligibility for these plans is in the plan brochures.
In a Fee for Service plan the Preferred Provider Organization (PPO) providers must be used
for full benefits. This means you can choose medical providers
who have contracted with the health plan to offer discounted charges. But you may also
choose medical providers who have not contracted with the plan, but you will pay more of the
costs for submitted claims. So to sum up fee for service plans. You may
incur some paperwork if a PPO provider is not used. But you will have fewer costs if
you use a PPO provider. An exception to this rule is Blue Cross, Blue Shield Basic, which
requires members to use PPO providers or no benefits will be paid.
In this illustration, we are looking at Section 5a of a FEHB fee for service plan brochure.
In this section you will see a benefit description, in this particular case, it is a surgical
procedure. To the right of that you will see what your out of pocket costs will be based
on if you choice of a doctor within their PPO network or if you selected a non-PPO doctor.
So let say you have a High Option plan and are going to an in network doctor. That means
you will pay 10% of the plan allowance. However if you went to a Non-PPO doctor or facility
under the same High Option Plan you would be responsible for 25% of the plan allowance
and any difference between the allowance and the billed amount.
Let’s try this with a real world example to see this will affect your out of pocket costs.
So let’s suppose you have an eligible biopsy procedure. The provider charges you $500 and
your plan allowance is $400. If you use a PPO provider, you pay 10% of the plan allowance,
which is $40. However, if you use a non-PPO provider, you
pay 25% of the plan allowance. I did a little math and determined 25% of
$400 dollars is $100. In addition to that $100 dollars you are responsible for the difference
between the plan allowance and the provider’s bill. In this case the provider charged $500,
and the plan allowed $400. The difference between the two is $100. When you combine
these two amounts, the 25% of the plan allowance which is 100 dollars, and the difference between
the allowance and the billed amount which is $100. You find out that your out of pocket
cost would be $200 if you had a non-PPO provider perform this procedure. But if you had the
same procedure done by a PPO doctor your out of pocket cost would have been just $40.
Please take note that sometimes a plan’s allowed amount is much less than the provider charges,
in which case using a non-PPO provider would be very expensive.
So how do you determine if your current doctor or hospital is in the PPO plan you are considering?
You can find out more information at www.opm.gov/FEHBbrochures. Should you consider a Fee-For-Service Plan?
Well think about what you may or may not want in a plan.
If using the doctor or hospital of your choice and not needing referrals to see other providers
is important to you and you don’t mind: – Paying out of pocket costs such as: a deductible
and coinsurance – Possibly having to file claims, and
– Potentially high out-of-pocket costs Then a fee-for-service plan may be for you.
Now that we have discussed a little bit about Fee for Service plans, let’s talk about the
second of the four types of FEHB Plans: HMOs. In Health Maintenance Organizations, also
known as HMOs, plans are based on your geographic location. Meaning the:
* Enrollee must live in HMO’s enrollment area to enroll.
* Because of this, an enrollee can change plans if he, she or a covered family member
moves out of the service area. * There are few cases where you may be eligible
for additional HMO plans based on the location of your work. Please refer to the plan brochures
to see if this is the case for any HMOs in your area.
Points to consider when choosing an HMO are: * Each HMO plan operates in a specific geographic
area, also known as their service area. * Generally, you must use on HMO’s network
and get referrals from primary care doctor to see specialist
* Out-of-pocket costs are usually just limited to co-pays
* There is little, if any, paperwork that you have to fill out
* And HMOs will manage your care. So to sum up HMO Plans:
If little, if any, paperwork and Limited out-of-pocket costs are important to you and you don’t mind:
– Only using doctors and hospitals that are part of the plan’s network, and
– That you will need a referral to see both other providers and specialists
Then an HMO may be just the plan you are looking for.
A High Deductible Health Plan provides coverage for high-cost medical events and also allows
a tax-advantaged way to build savings for future medical expenses. They also provide
greater flexibility of how you use health care dollars. There is an annual deductible
and cost sharing, which means you will incur some out of pocket costs.
A major part of High Deductible Health Plans is a Premium contribution to Health Savings
Account (also known as an HSA) or Health Reimbursement Arrangement (known as an HRA). BOTH the HSA
and the HRA allow Tax-free withdrawals from accumulated funds to pay for qualified out-of-pocket
expenses. This includes your annual deductible. Now let’s talk about the vehicles you can
use to save for eligible expenses: Health Saving Accounts and Health Reimbursement Arrangements:
In a Health Savings Account, an account is created for by your High Deductible Health
Plan. Each month your plan will put money in your Health Savings Account. This is called
a premium pass through. You may also directly contribute to your Health Saving Account up
to the IRS allowed maximum. Please take note that this means both your contribution and
the plan’s contribution cannot go over those limits.
This account allows you to take Tax-free withdrawals for qualified medical expenses. A few examples
of qualified medical expenses are: out-of-pocket costs including deductibles, coinsurance and
co-payments, prescription drugs, eye exams, eyeglasses and contact lens and dental treatment
such as fillings, braces and extractions. The Account earns interest tax free. Any Unused
funds and interest carry over from year to year without penalty and the account has Portability.
This means the account is owned by you and is yours to keep even if you retire, leave
government service or change plans. On our next slide, we will be reviewing some
of the more important rules issued by the Treasury about eligibility. This is not an
exhaustive list. So please consult the department of Treasury rules in their entirety to ensure
your eligibility. Treasury rules state to be eligible for a
Health Savings Account you: must be enrolled in a High Deductible Health Plan, you cannot
be covered under: any non-High Deductible Health Plan, OR a flexible spending account
(with the exception of a: LEX-HCFSA). Health Reimbursement Arrangements are like
a Health Savings Accounts, but with a few major differences
On this page we have outlined the differences between the two accounts. As you can see
In Health Reimbursement Arrangements enrollees cannot make deposits directly into their account.
The plan funds this account, usually at the beginning of the year.
Whereas in Health Savings accounts enrollees can make their own deposits, so you can plan
for medical expenses by adding pretax dollars to the account up to the IRS limits.
In Health Reimbursements Arrangement enrollees will not earn interest on their accounts,
but in a Health Savings Account enrollees will have the ability to earn interest, and
lastly In a Health Reimbursement Arrangement the account is not portable. So if you leave
government service or change plans the money you have left in your account is forfeited
Whereas in Health Savings Accounts, the account is Portable. So if you retire, leave government
service or change plans, the account is still owned by you and is yours to keep.
Now that we have discussed the parts of a High Deductible Health Plan. Let’s talk about
the last of the four types of health plans, Consumer Driven Health Plans (CDHP). Like
a High Deductible Plans, a Consumer Driven Health Plan is one of our newer options.
A Consumer Driven Health Plan combines a traditional health plan with separate medical and dental
funds. The Annual medical and dental funds must be used first for covered expenses (preventive
services, such as bi-annual teeth cleanings may be paid by plan at 100%). When the medical
fund is exhausted, a deductible must be met before traditional health insurance coverage
becomes effective. Every year, any remaining medical fund dollars left may be rolled over
to next year, helping to reduce your future out-of-pocket expenses. To summarize the high deductible health plan
AND the consumer driven health plan, if features such as:
More control over the cost of your health coverage,
Rolling over remaining medical fund dollars to next year OR
Saving for future medical expenses on a pre-tax basis, are important to you
And you don’t mind a high deductible, or higher cost-sharing when medical funds are gone.
Then, a High Deductible Health Plan or Consumer Driven Health Plan may be for you!
So how do you pick a health plan? You have a lot of factors to take into account.
When you think about choosing a health plan and which plan is best for you, ask yourself
these questions: Number 1. What health expenses do you and
your family expect for next year? For example: Are you expecting a new baby?
Are your medications changing? Does my child need braces?
Does anyone in my family need glasses? Number 2. Which available plan has the best
coverage for these expenses? For example: Are there plan limitations (such as, a number
of visits or dollar maximums) which will result in out-of-pocket expenses?
Are there any services you need (such as chiropractic care or acupuncture) that are not covered?
What is your share of the cost of prescription drugs? or
What deductibles, copays, and coinsurance must you pay? or Number 3. What are you priorities? If lowest overall cost is your priority you
may want to consider the premiums and expenses such as the deductible. That’s the amount
you must pay first before the plan begins to pay benefits. Also, look at the copays
and coinsurance. These are the amounts that you pay as your share in the cost of covered
services. Or maybe it’s the most freedom to see providers?
With an HMO you must use their providers; with a nationwide Fee-For- Service Preferred
Provider Organization network the network may be larger; and you can also go to providers
that are not part of the Preferred Provider Organization network; however, you will pay
more. Maybe your priority is the least paperwork?
Or possibly greatest protection for unforeseen medical expenses? You may want a plan that
does not have a deductible Number 4. Is there a Preferred Provider Organization
(PPO) or an HMO network? For example:
Are there providers near me? Is my doctor in the network now? Keep in mind provider participation in the
network is voluntary, and providers may terminate the agreement at any time. Number 5. How much are the premiums and my
out-of pocket-cost? You share the cost of your health benefits
premium with your employer. Please check our Premiums page on our website for more information.
You can also find premiums in your health plan brochure and the Guide to Federal Benefits.
In addition to the health plan’s premium, you may have to pay deductibles, copayments,
or coinsurance. Now that you have considered these questions,
you are on your way to making a more informed decision about your FEHB benefit choices for
next year. For more information on these questions, go
to www.opm.gov If you having a difficult time choosing between
plans FEHB offers a useful instrument to help you decide. It is called the plan comparison
tool. This tool allows you to compare up to four plans, apples to apples. All you have
to do is enter some information and you will be able to compare plans differences, similarities,
coverages and costs. Just go to: www.opm.gov In addition to OPM’s compare health plans
tool, there are 2 other comparison tools that you may want to try out before making a decision. Another is the Consumer’s Checkbook. This
is also a detailed plan comparison tool. It ranks health plans based on your age, location,
family size, and amount of your anticipated health expenses. It helps you find plans available
to you and compares approximate yearly cost, cost sharing, coverage features and flexibility.
It is available to employees of agencies that have subscribed. To find out more information
go to: www.checkbook.org/newhig2 We hope you’ve enjoyed this presentation.
You can watch all of our presentations at www.opm.gov/insure/openseason/webcast.asp
This year’s Federal Benefits Open Season will be November 9th through December 14th, 2015,
so be sure to make all of your Open Season changes and enrollments during that window.
Don’t wait til it’s too late!


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