Posted on Friday, 14th October 2016 by

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I was fortunately able to get an early start on this year’s FEHB Open Season that runs from November 14 through December 12.  Last week’s column discussed the average 4.4% premium increase for 2017 and post card that GEHA sent about changes to my plan. I was able to download the GEHA 2017 plan brochure; well ahead of the November date that OPM will have them available. I also visited OPM’s Open Season Online site but they don’t allow registration until November. OPM’s Open Season Site for annuitant’s is very easy to use and allows retirees to request copies of plan brochures and you can initiate plan changes online.

 

2016 FEHB Open Season

2016 FEHB Open Season

OPM released the 2017 premiums recently and many FEHB insurers now have plan brochures available.  You can download GEHA and Blue Cross and Blue Shield (BCBS) plan brochures direct from the providers now. Plan premiums didn’t increase significantly from last year. For example the BCBS  premium for Basic Self Plus One increased $8.43 to $356.72 per month. The GEHA Standard Self Plus One premium increased $9.65 to $250.90 per month.

All plan brochures have a similar layout and index. I always review the Summary of Benefits section, that is typically available on the last few pages of each brochure, and then review the pricing and changes for the new year on the back cover. You will find changes to your 2017 coverage in Section 2 and for those age 65 or older and have Medicare as their primary provider review Section 9 which discusses coordinating benefits with Medicare.

After reviewing Section 2 for my GEHA plan I discovered that my hearing aid benefit increased to $2,000 every three years from $1,000 every five years. A significant increase and sufficient to cover a new set of hearing aids without changing to their high option. The GEHA High Self Plus One option covers up to $2,500 every three years. It isn’t worth changing especially considering that the high option costs twice as much as the standard option that my wife and I have. If you elected to carry Medicare A and B when you turned 65 changing to a lower option FEHB plan may be prudent. That’s what my wife and I did after signing up for Medicare.

A friend from work died in 2015 and his wife called me to find out about the new 2017 premiums. She heard that premiums were increasing dramatically. Fortunately, that wasn’t the case however she was upset that she will have to pay a $1,500 copayment for a MRI that she has scheduled. They didn’t sign up for Medicare B when they turned 65 because they considered it to be duplicate coverage. Now that she is 75 if she signed up for Medicare B her premium would be twice the standard due to the 10% a year penalty for not signing up at age 65.  One of the major advantages of having both A and B is that Medicare becomes your primary health care provider and most FEHB plans waive copayments, coinsurance, and deductibles except for prescriptions.

Another concern that she had was that her THRIFT plan Minimum Required Distribution (MRD) is pushing her into a higher tax bracket and she had to pay a significant amount of taxes last year as a result. The increased taxes were due to two factors, she was filing as a single tax payer now and the MRDs added to her taxable income. For those still working the ROTH THRIFT option is attractive because even though you have to pay taxes on ROTH contributions you aren’t required to take MRDs at age 70 and a half plus all of you ROTH investment grows tax free. In other words all of the interest, dividends, and capital gains are tax free for all funds within your ROTH account.  I converted half of my business employment plan in 2011 to a ROTH so that we wouldn’t have to take minimum withdrawals at 70 1/2. Since converting to a ROTH the account has increased over 100% in the past 5 years. All of that increase is basically tax free.

Best Date to Retire in 2017

We updated our Best Date to Retire information recently and include links to Tammy Flanagan’s calendar with the best 2017 dates to retire dependent on your personal situation and desires. If you are considering leaving the best date is determined by your retirement plan, CSRS or FERS, and other factors.  Now is the time to request several retirement annuity estimates for desirable 2017 departure dates from your HR office and look closely at your finances to ensure you will be able to live comfortably on your annuity and other income. You also have to be emotionally prepared when you walk out the door.  It’s best to start planning as early as possible to give your self sufficient time to plan your exit.

  • Request a  Federal Retirement Report™  today if you would like to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections.

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Disclaimer: Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

 

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