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Posted on Thursday, 18th November 2021 by

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With the Federal Open Season this is a great time to review a benefit that is not widely used by Federal employees, the Federal Flexible Spending Account Program (FSAFEDS).

The first question most Feder employees ask is “What is the Federal Flexible Spending Account Program (FSAFEDS)?”

FSAFEDS allows federal employees to save money for health care expenses with a Health Care or Limited Expense Health Care FSA. Think of it as a savings account that helps you pay for items that typically aren’t covered by your FEHB Plan, the Federal Employees Dental and Vision Insurance Program, or other health insurance coverage. Things like deductibles, out of pocket expenses, and other expenses that may not be cover by the medical coverage (FEHB) and Dental or Vision (FEDVIP)

FSAFEDS also offers an account for families with young children or elder care expenses – the Dependent Care FSA. This account allows you to set aside money to pay for your day care expenses.

Eligible employees can enroll in FSAFEDS each year during the FEHB Open Season, November 8th to December 13th, 2021. Contribute are made directly from bi-weekly pay on a pre-tax basis into the FSA. New and newly eligible employees who wish to enroll in this program must do so within 60 days after they become eligible, but before October 1 of the calendar year. Retirees are not eligible to participate in the FSA program.

The next question is “How does it work?”

There are three different Flexible Spending Accounts plans available:

Health Care FSA (HCFSA)

With a Health Care FSA, you use pre-tax dollars to pay for qualified out-of-pocket Health Care expenses. The money you contribute to a Health Care FSA is not subject to payroll taxes, so you end up paying less in taxes and taking home more of your paycheck.

  • Used to pay for eligible medical, dental, and vision care expenses not covered by the plans
    • Co-pays, co-insurance, and deductibles
    • Professional services: physical therapy, chiropractor, and acupuncture
    • Prescription drugs, insulin, and prescribed over-the-counter medicine
    • Over-the-counter health care items: bandages, pregnancy test kits,
      blood pressure monitors, etc.
  • Can contribute up to a maximum of $2,750 per individual employee (2022)
  • Access the full amount of your account on day one of the plan year
  • Can carry over up to $550 from one plan year to the next (You must sign up for a least $100 to be deducted for the next plan year)
  • Can be reimbursed by check or direct deposit into checking or savings account

Limited Expense Health Care FSA (LEX HCFSA)

If you’re enrolled in an HSA-qualified high-deductible health plan and have a Health Savings Account (HSA), you can increase your savings with a Limited Expense Health Care FSA (LEX HCFSA). This pre-tax benefit account helps you save on eligible out-of-pocket dental and vision care expenses while taking advantage of the long-term savings power of an HSA.

  • Can contribute up to a maximum of $2,750 (2022)
  • Used to pay for eligible dental, and vision care expenses not covered by the plans
  • Co-pays, co-insurance, and deductibles
  • Vision exams, LASIK surgery, contact lenses, and eyeglasses
  • Dental cleanings, X-rays, fillings, crowns, and orthodontia
  • Access the full amount of your account on day one of the plan year
  • Can carry over up to $550 from one plan year to the next (You must sign up for a least $100 to be deducted for the next plan year)
  • Can be reimbursed by check or direct deposit into checking or savings account

Dependent Care FSA (DCFSA)

A Dependent Care FSA (DCFSA) is a pre-tax benefit account used to pay for eligible dependent care services, such as preschool, summer day camp, before or after school programs, and child or adult daycare. It’s a smart, simple way to save money while taking care of your loved ones so that you can continue to work.

  • With a Dependent Care FSA, you use pre-tax dollars to pay qualified out-of-pocket dependent care expenses.
    • Care for your child who is under age 13
      • Before and after school care
      • Babysitting and nanny expenses
      • Daycare, nursery school, and preschool
      • Summer day camp
    • Care for your spouse or a relative who is physically or mentally incapable of self-care and lives in your home
  • Can contribute to up to a maximum of:
    • $2,500 per year if you are married and file a separate tax return (2022)
    • $5,000 per year if you are married and file a joint tax return or if you file as single or head of household. Both cannot claim $5,000 (2022)
  • When the account has the funds, you can use your balance to pay for eligible expenses
  • Can only use the funds that are available in the account, not the entire election amount
  • Funds must be used by March 15th, 2022 or lose it and claims must be submitted by April 30, 2022

As a rule, you can’t change your Health Care FSA (HCFSA), Limited Expense Health Care FSA (LEX HCFSA), or Dependent Care FSA (DCFSA) election amount during a benefit period (the plan year). That’s why it’s important to plan an election that suits your needs for your entire benefit period. But there are circumstances – called qualifying life events (QLEs) – when you can make changes.

The final question is “How do I calculate how much to contribute to the FSA?”

This question can be a tricky because it depends on the individual, the family, FEHB plan selected and the Dental or Vison plan selected. The amount can vary based on other factors such as the plan copayments, deductibles, out of pocket expenses, prescription drugs and planned medical or dental procedures.

A good starting point is to look at your 2 years of uncovered expenses. You can obtain that information from your FEHB and dental and vision insurance plan providers by looking at your Explanation of Benefits (EOBs).  These can be obtained go going on the carrier’s website or contacting the carrier directly. Add up the two years’ worth uncovered expenses and subtract out any extraordinary expenses, i.e. broken foot. Then divide by 2. After you get that figure add in any planned expense for procedures you may have for the upcoming year, i.e. Lasik surgery. If you are unsure, you can always just contribute $550 for the first year. And since you can carry over up to $550 remaining in either your HCFSA or LEX HCFSA account from one plan year to the next (must re-enroll each year), there’s no reason not to take advantage of the tax savings this year and every year.

For more details on eligible expenses or to enroll in the plan go to the Federal Flexible Spending Account Program (FSAFEDS) website at www.fsafeds.com.

If you would like more information on how to optimize use of all your FERS benefits, check out Public Employees Benefits Advocates (PEBA), a self-paced, online course.

  1. Shawn McCoy is the President and Founder of Federal Employee Benefits Advocates, LLC (FEBA) an educational and training company located in Shreveport, LA. Mr. McCoy is an expert on Federal employee benefits and has spoken to more than30,000 Federal employees over the last 12 years. For more details about the training programs offered by FEBA check their website. www.febadvocates.com

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Saturday, 13th November 2021 by

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This summary compares the 2022 GEHA Standard and Blue Cross Blue Shield (BCBS) Basic plans. There are many other plans to consider. I used these two nationwide providers because BCBS has the most subscribers and GEHA has one of the lowest premiums for their standard plan.

Many annuitants change to a lower cost FEHB plan when they sign up for Medicare A and B because most plans waive the majority of the deductibles, copayments, and coinsurance when Medicare becomes your primary insurer. Medicare pays first and then your FEHB plan pays a portion if not all of the remaining bill for you.

This time of the year those 65 or older receive many offers from private insurers for Medicare Supplement Plans. When you sign up for a private insurer’s Medicare Supplement Plan your only option is to cancel your FEHB plan, you can’t suspend coverage. I wrote two articles, CAUTION – Don’t Lose Your FEHB Coverage and FEHB Suspensions that discuss the severe consequences a number of our readers suffered by doing so. The suspension article provides a detailed list of things you must know before making this move. Many private sector Medicare Supplement Plan brokers don’t understand the FEHB program and end up selling you a product that doesn’t provide the comprehensive coverage you now have. If you know of anyone considering leaving the FEHB program forward this article to them.

Each plan publishes a guide for Medicare enrollees. Here are links to BCBS and GEHA’s Medicare Brochures:

Costs

BCBS Basic limits deductibles, copayment, and coinsurance waivers for Medicare enrollees to in network providers while GEHA Standard includes waivers for both in and out of network providers plus they pay doctor visit copayments. Here is where it does get complicated. When you are enrolled in Medicare you can go to any provider. Just be aware that some plans, like BCBS Standard plans, may not waive deductibles, copayments, and coinsurance fees for out of network providers and that can be expensive. Check Section 9 of your FEHB plan brochure to verify coverage.

Medicare Part B Premiums add to your monthly healthcare costs which for 2021 are as low as $148.50 to as high as $504.00 due to Medicare’s Part B income adjusted premiums. The estimated 2022 Part B premiums are anticipated to increase to a low of $158.50 to as high as $538.90 per month.

To qualify for the lowest Part B premium in 2021 those filing an individual tax return must have a Modified Adjusted Gross Income (MAGI) of $87,000 or less and married couples $174,000 or less.  Gross Income (GI) is calculated before MAGI. Gross Income (GI) is total income earned through wages, dividends, interests, royalty and rental, business income, capital gains, and others. MAGI is calculated by adding back certain deductions such as tax-free municipal bond and student loan interest, tuition, rental loss and IRA contributions to name a few.

Total monthly health care premiums for those on Medicare and enrolled in the Self Plus One plans featured in this article are listed below:

BCBS Basic ($424.95), an increase of $15.08 from last year. GEHA Standard remained the same at ($291.92).

Medicare Part B ($148.50) currently for 2021 for those without an income adjustment.

For a Self Plus One enrollment, the total cost for coverage would be $424.95 for BCBS, $148.50 times 2 or $297.00 for Medicare. Here is what you would pay monthly for your FEHB plan assuming both signed up for Medicare Parts A & B and the couple is earning less than $174,000 a year:

BCBS – $424.87 + $297 = $721.87 monthly, $8,662.44 / year)

GEHA – $291.92 + $297 = 588.92 monthly, $7,067.04/ year)

If BCBS Basic members apply for and each receive a $800 Medicare Reimbursement for a Self Plus One enrollment, their adjusted annual costs would be reduced to $7,062.44 in the above example. That’s $1600 a year for a Self Plus One enrollment when both have Medicare. To obtain the reimbursement you must provide proof that you paid Medicare premiums in 2022 by submitting a Medicare Reimbursement claim. Claims are submitted online by registering for a Medicare Reimbursement Account at fepblue.org/mra or through the EZ Receipts app. You can also mail or fax in a claim form. GEHA provides a $800 per member reimbursement only for their high option plan.

Another viable low-cost option is to consider Medicare Advantage (MA) plans. Aetna, Kaiser, and UnitedHealthcare offer special Medicare Advantage plans for retirees. Some of these plans reimburse almost the entire Medicare Part B premium and waive all doctor and hospital expenses. By doing so, some of these plans have the lowest estimated yearly cost for retirees. In order to join one of the new MA plans, retirees must sign up for the regular version of the FEHB plan, be signed up for both Medicare Parts A and B, and then sign up for the MA plan with their carrier.

2022 Plan Changes

For a complete list of changes for both plans review section 2 of each brochure.

Observation

Many federal annuitants are hesitant to sign up for Medicare Part B due to the additional cost and what appears to be duplicate coverage. I personally know a number of retirees that are paying large copayments and coinsurance fees because they didn’t sign up for Medicare Part B at age 65.

If you review coinsurance and copayment costs within your current FEHB plan you can see where the costs could be prohibitive for major medical problems. For example, in the GEHA Standard Plan those who don’t have Part B would have to pay a $15 copayment for a PPO primary care physician visit; a $30 copayment to see a specialist for covered office visits and 15% of other covered professional services including X-ray and lab.  If the service is provided by a non-PPO, the member has to pay 35% of covered professional services. With Part B these fees are waived.

Summary

My wife and I enrolled in GEHA basic to reduce cost when we applied for Medicare. Plus, we travel, and require coverage for in and out-of-network providers. Prior to signing up for Medicare, we were enrolled in the BCBS Standard plan because they have no annual deductibles and overall costs were lower. Even though the BCBS basic plan doesn’t cover out-of-network providers, 96% of hospitals, 95% of doctors and 57,000 retail pharmacies are in their network.

Over the past 18 months, providers billed us in excess of $150,000 for services rendered, we paid nothing for the three operations, doctor’s visits, and required tests. I use hearing aids and the GEHA Basic plan offers $2,500 towards the purchase of hearing aids every three years, BCBS Standards has the same reimbursement for hearing aids but limits them to once every five years. With Medicare A & B, GEHA benefits are the same whether or not your provider is in their network.

Those who use high-cost prescription drugs should ensure their medications are on their plan’s formulary list.

There is more to your selection than meets the eye. Take your time this open season to thoroughly review your options and costs. Use the following plan comparison tools to obtain a comprehensive analysis for plans of interest.

Plan Comparison Tools

OPM’s Plan Comparison Tool includes much of the information you would need to make an informed decision with some limitations. The Consumers’ Checkbook 2022 Guide to Health Plans is more comprehensive and provides additional costing information for low, average and high levels of health care usage. The Checkbook guide does all of these complex costing calculations for you on line and provides side-by-side evaluations with ratings for each plan. It calculates total healthcare cost including your income adjusted Medicare premium, any Part B reimbursements available, and FEDVIP costs.

The Consumers’ Checkbook Guide is available in print and online formats. Federal Retirement readers can order their Guidetohealthplans.org and save 20% by entering promo code FEDRETIRE at checkout. The Guide was released November 9th. Print books are mailed as early as the week prior to the start of Open Season.

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION, UNCATEGORIZED

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Posted on Friday, 5th November 2021 by

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Open season runs from November 8th through December 13th.  There are tools available to evaluate provider options, select your 2022 plan, and submit changes to OPM. Use the following resources to make an informed decision for you and your family’s health care needs.

Forward this article to others that can use this “Open Season” information.

FEHB Open Season

Obtain Copies of Plan Guides

Active Employees

  • Request hard copies of desired plan brochures through your benefits coordinator. If you don’t know who that is talk with your supervisor.
  • Download plan brochures from the OPM website.
  • Request copies direct from plan providers. I typically request and receive brochures direct from GEHA and Blue Cross Blue Shield weeks before they are available on the OPM site.

Annuitants (Retirees)

  • Sign up for FEHB Open Season Online – This site is devoted to federal annuitants. Request plan brochures to be mailed to your home address or you can download brochures to your computer. You must register in early November of each year to use this site and annuitants can change enrollments online.
  • Download plan brochures from the OPM website.
  • Request copies direct from plan providers.

Determine Plan Costs – 2022 FEHB Plan Rates (All rates are now posted online).

Compare Plans – Use OPM’s FEHB Plan Comparison Tool and Consumers’ Checkbook 2022 Guide to Health Plans to find the best FEHB plan for your needs. The Consumers’ Checkbook Guide is available in print and online formats. Federal Retirement readers can pre-ordered their guide at Guidetohealthplans.org and save 20% by entering promo code FEDRETIRE at checkout. The Guide will be released online no later than the first day of Open Season November 8th. Print books will be mailed the week prior to the start of Open Season.

Checkbook’s Guide to FEHB Health Plans helps active and retired federal employees find the best FEHB plan for themselves and their families. By answering a few questions, you’ll see a personalized total cost estimate for each plan, which is the premium plus expected out-of-pocket costs for someone like you, and you’ll understand which plans save you the most money or provide the most coverage.

For retirees, the Checkbook 2022 Guide shows a yearly cost estimate for every FEHB plan with Medicare Part A only and a separate estimate for the FEHB plans with Medicare parts A and B. This allows users to see which plans coordinate best with Medicare, the cost reduction of adding Medicare Part B, and whether the FEHB plan offers Medicare Part B premium rebates.

Use these two excellent tools to drill down to and find the best plan for your personal situation. Compare costs and benefits of up to 4 plans side-by-side. These comparison tools are easy to use and will show you the differences between plans with only a few keystrokes. Before making your final enrollment decision, always refer to the individual FEHB brochures. Each plan’s FEHB brochure is the official statement of benefits.

Changing Enrollment

Annuitants (Retirees)

  • Annuitants can change plans online at FEHB Open Season Online. The online service is easy to use and you can track your change submissions.
  • Call Open Season Express 1-800-332-9798. (Available early November of each year)
  • Send regular mail (Postmarked no later than final date of Open Season) to:

Office of Personnel Management
Open Season Processing Center
P.O. Box 5000
Lawrence, KS 66046-0500

When sending requests by mail clearly state your Open Season request. If you are making an enrollment change, be sure to tell OPM the plan you want, the type of coverage (Self Only, Self Plus One or Family), and the enrollment code. You must include your annuity claim number and social security number on your request. If you are choosing Self Plus One or Family coverage, OPM will also need your dependent and other insurance information.

Federal Employees

Federal Employees Dental and Vision Insurance Program (FEDVIP)

Dental and vision benefits are available to eligible Federal and Postal employees, retirees, and their eligible family members on an enrollee-pay-all basis. Enrollment takes place during the annual Federal Benefits Open Season in November and December. New and newly eligible employees can enroll within the 60 days after they become eligible.

Register online at www.BENEFEDS.com to review and download plan brochures, use their plan comparison tool, and to initiate a change or cancel enrollment. If you aren’t a registered user sign up now. You will be able to review your Dental, Vision, Long Term Care and Flexible Spending accounts. Enrollees can initiate changes during open season, when there is a life event change, or to cancel coverage at any time.

For enrollment/premium questions regarding dental and vision insurance, contact BENEFEDS at 1(877) 888-3337.

Medicare Impact on FEHB Plans

Review the following articles that describe the impact Medicare has on your FEHB provider payments.

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION, WELLNESS / HEALTH

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Posted on Friday, 29th October 2021 by

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There are many things to consider when reviewing your FEHB health care plans during open season.  Plan premiums and benefits change year to year. Without a thorough review and comparison between plans you could unintentionally pass up a better deal.  I know this firsthand, as a federal employee for 36 years and a retiree these past 17 years, it is much easier to simply do nothing and continue on with a plan that may not fully meet your family’s needs.

The only way to avoid this is to review plans of interest to determine if you are receiving the maximum benefit for the lowest cost. It’s easy to become overwhelmed with all of the selections you have at hand and the sheer volume of reading material available. Don’t let this stop you. There are tools available to streamline your search and do comparisons with a few computer keystrokes.

Please forward this to others that may benefit from this information.

Another consideration today that should spur those over 65 to compare plans is that many now reimburse some of your Part B premiums. This could save annuitants a considerable amount each year. Consumer’s Checkbook “Guide to Health Plans for Federal Employees” online format actually does this comparison for you. By answering a few questions, you’ll see a personalized total cost estimate for each plan, which is the premium plus expected out-of-pocket for someone like you, and you’ll understand which plans save you the most money or provide the most coverage.

For retirees, the Guide shows a yearly cost estimate for every FEHB plan with Medicare Part A only and a separate estimate for the FEHB plans with Medicare parts A and B. This allows users to see which plans coordinate best with Medicare, the cost reduction of adding Medicare Part B, and whether the FEHB plan offers Medicare Part B premium rebates.

The Consumer’s Checkbook Guide to Health Plans for Federal Employees is available in print and online formats. Federal Retirement readers can pre-order the Guide at GuidetoHealthPlans.org and save 20% by entering promo code FEDRETIRE at checkout. The Guide will be released online no later than the first day of Open Season November 8th. Print books will be mailed shortly after the start of Open Season.

Pre-Order Checkbook’s “Guide to Health Plans”

Here are some important tips to consider as Open Season approaches:

  • Don’t assume your plan is unchanged. The premiums and benefits almost certainly will change. Your doctors may have left the plan. An expensive drug may no longer be on formulary. I ran into this with an asthma drug I take. My plan removed it from their formulary list and I now pay $325 for a prescription that cost just $60 when it was covered. I had negative reactions to the alternative drugs they recommended. Even if you don’t anticipate switching plans, it makes sense to see how your plan has changed every Open Season.
  • Check if there are newer plan choices that might be better buys. There are high deductible plans (HDHP) with health reimbursement arrangements that have good catastrophic coverage and can provide big savings. Remember: Higher premium plans do not always have better benefits. They may simply reflect the expensive enrollees they attract.
  • Retirees need to consider Medicare Advantage (MA). Aetna, Kaiser, and UnitedHealthcare offer special Medicare Advantage plans for retirees. Some of these plans reimburse almost the entire Medicare Part B premium and waive all doctor and hospital expenses. By doing so, some of these plans have the lowest estimated yearly cost for retirees. In order to join one of the new MA plans, retirees must sign up for the regular version of the FEHB plan, be signed up for both Medicare Parts A and B, and then sign up for the MA plan with their carrier.
  • Read the plan brochure. They are long and not fun to go through, but they offer the clearest view of what life is like in a plan. Start by review the section titled “How We Have Changed,” then section 7 “General Exclusions – Things We Don’t Cover.” Retirees should go to Section 9 to see if there are any Medicare coordination changes in their current plan.
  • Review important benefits. If there is a benefit that’s important to you, look up that benefit in the plan brochures to see which one gives you the best deal. Checkbook’s guide does this for you. Make sure to check the plan brochure for that benefit for additional information. Everyone enrolled in a plan should request a brochure each year because it outlines the entire plan and can be consulted throughout the year when a benefit question arises.
  • Consider your dental and vision needs. The standalone FEDVIP plans are good buys for many, but not all. Remember that some FEHB plans offer modest dental and vision benefits that don’t require you to pay a separate premium. Also, some FEHB plans offer dental and vision discount programs as part of their “non-FEHB” benefits. The Checkbook Guide will show you how all your available choices stack up under low, average, or high dental expense years. Hint: If you have low dental expenses, you might be better off in an FEHB plan that offers some dental benefits vs paying a FEDVIP premium. Also, consider that your needs may change year to year. For example, my wife had cataract surgery last year and I knew it was scheduled but neglected to add vison care for her last year to cover the eyeglasses she now requires. I’ll add it this open season.
  • Wellness benefits. Did you know certain FEHB plans reimburse gym membership or pay you to complete an annual health assessment? Some plans have tobacco cessation and weight management programs at no additional cost to the member. There is even a Medicare Advantage plan that has a meal delivery program of up to 84 home-delivered meals following an inpatient hospital stay. These benefits can be found at the back of the FEHB brochure and are often overlooked. The most important of these wellness benefits are now displayed in the online Guide to Health Plans for Federal Employees for every FEHB plan. Consider these benefits before enrolling in a plan, especially if you’re having a hard time deciding between two plans.

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Friday, 22nd October 2021 by

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First, let me start off with a correction for the COLA article sent out last week. Here is the correct link to the table of all COLAs from 1999 to the present. I generally release timely articles the day they are announced; in the rush I neglected to check the original link.

Have you been told to get vaccinated, retire or quit?
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There are many opportunities for retirees to work today and earn additional income and benefits. What makes federal retirees unique in many respects are their broad base skill sets and their ability to retire early, often in their 50s and younger. Those working in law enforcement, fire fighters, air traffic control, nuclear weapons couriers and others are able to retire with just 20 years of service. Early retirement programs also include mandatory retirement at a designated age or years of service. Plus, may feds have extensive work histories that bode well for future employers looking for a stable and knowledgeable workforce.

Today, almost every establishment you enter is hiring, many offering sign on bonus, flexible hours, and benefits. This hiring frenzy is across all occupational groups and it isn’t uncommon to negotiate starting salaries and work hours. Full and part time positions are available and many positions offer telecommuting. Millions have not returned to work for various reasons: child care, generous unemployment benefits, COVID vaccine and mask mandates, insufficient wages, and early retirements, to name a few. I was at a gas station today and half of the pumps were out of service, the attendant said they can’t get the parts and the company that repairs them can’t find employees, even though they pay $35 an hour to start.

There are many hidden benefits when returning to work after retiring. Your savings will last longer, it provides an outlet to get out and about at least part time during the week, many seek work to maintain a social outlet or to learn new skills.

Another primary reason to work in retirement is to increase your Social Security payments, over and above the annual COLA increase. As long as you continue to work, even if you are receiving benefits, you will be paying Social Security taxes on earnings. Social Security will check your record every year to see whether the additional earnings you had will increase your monthly benefit. If there is an increase, they will send you a letter telling you of your new benefit amount.

It’s important to note that your federal retirement annuity will not be reduced no matter how much you make while working in the private sector. That isn’t the case if you return to federal service as a rehired annuitant, your annuity will remain the same, however in most cases your federal salary will be offset by the amount you are paid in your annuity each month.

A Social Security beneficiary between age 62 and their full retirement age can earn up to $19,500 a year in 2022 without losing any of their Social Security benefit by working. This earnings limit is set each year and differ by age group. This limit is for beneficiaries under full retirement age. If you reach your full retirement age in 2022 the limit is $51,960/yr. After reaching full retirement age there is no limit to the amount of earnings and no loss of benefits.

If under full retirement age and earning more than the limit, $1 of benefits will be lost for each $2 of earnings over the limit. In the year you reach full retirement age and earning more than the limit, $1 of benefits will be lost for each $3 of earnings over the limit.

Wages received as an employee, and net earnings from self-employment, bonuses, commissions, fees, vacation pay, cash tips of $20 or more a month, severance pay, and earnings from all types of work count for the earnings test. Income from investments and rental property are not included and will not impact your Social Security payments at any age.

FERS retirees are eligible for Social Security benefits, unlike their Civil Service Retirement System (CSRS) counterparts. You must work 40 quarters, 10 years, in a job that pays social security taxes to qualify for a minimum benefit. CSRS employees did not pay social security taxes while working for the federal government, they contributed to their CSRS retirement system instead.

The only work that withheld Social Security contributions for me was my active-duty Air Force time, one year as a draftsman, and part time work as a teenager. Maybe 6 years, 24 quarters total. I accrued 28 years of substantial earning years when I applied for Social Security two years ago, mostly from my business that I started part time in 1985. I describe my early life including work experience in “The Early Years, A Road Less Traveled,” a memoir that was released last year.

This year my wife and I both received Social Security increases retroactive to the first of the year, and my benefit is no longer reduced by the Windfall Elimination Provision (WEP) because I reached 30 years of substantial earnings covered by Social Security taxes. Social Security doesn’t receive the previous year’s income data from the IRS until midway through the new year. They increase your monthly checks going forward and send a check to make up for the increase for the previous months.

Typically, long term CSRS employees only have a handful of substantial earning years that contribute to the minimum 40 quarters required to collect a monthly social Security check.  Many CSRS retirees can earn enough in retirement to qualify for benefits. Just be aware that WEP will reduce your monthly check by as much as $498 in 2021.

Today, you can apply just about anywhere due to severe worker shortages nationwide. Federal workers with security clearances and recent retirees who had active security clearances can search thousands of high paying private sector clearance jobs with defense employers and government contractors. Applicants will have the opportunity to support and secure complex government, defense, and intelligence projects worldwide.

Visit our jobs board for featured private sector job listings. Because so many have dropped out of the workforce, retirees have ample opportunities to showcase the knowledge, skills, and abilities they learned while working for Uncle Sam.

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Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, EMPLOYMENT OPTIONS, FINANCE / TIP, RETIREMENT CONCERNS

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Posted on Wednesday, 13th October 2021 by

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I reported in mid-September that the 2022 COLA was projected to be close to 6% or more. The Social Security Administration announced a 5.9% COLA increase on October 13th for 2022. CSRS annuitants will receive the full 5.9% this year while FERS annuitants will receive 4.9%, still a hefty increase from last year’s 1.3%. View the table of all COLAs from 1999 to the present to see how it has changed over the years.

COLA Increasing Graph

For the Federal Employees’ Retirement System (FERS) or FERS Special benefits, if the increase in the CPI is 2 percent or less, the Cost-of-Living Adjustment is equal to the CPI increase. If the CPI increase is more than 2 percent but no more than 3 percent, the Cost-of-Living Adjustment is 2 percent. If the CPI increase is more than 3 percent, the adjustment is 1 percent less than the CPI increase. The new amount is rounded down to the next whole dollar.

At first glance this seems like a windfall for retirees until you look around and realize that everything we buy today is going up in price, most of the time faster that the average inflation rate. Are we really better off? I would say yes, many private sector annuities aren’t adjusted annually for inflation. My Uncle Harold warned me when I was about to retire of just how much his annuity’s buying power had shrunk over the past 20 years. Had it not been for their Social Security annual adjustment, they would have been struggling.

Each year, I calculate how much my base annuity has increased since I retired on December 31, 2004. My annuity has increased 45% over the past 17 years! I’m grateful that our retirement is adjusted each year, even though there were three years, 2010, 2011 and 2016, where no increase was provided.

Please forward this email to other interested parties.

Annuity Projection Calculator

Everyone planning their retirement needs to know how much they will have to live on in retirement and how much their annuity and the surviving spouse’s benefit will grow over time. Unlike many private sector retirement plans, our annuities are adjusted annually – most years – with a COLA. The 45-year average COLA, from 1975 to through 2021, was 3.68%! Not bad considering many private-company plans don’t provide annual cost of living increases.

Frank Cullen, a retired FAA manager and friend, developed this Calculator to estimate annual annuity increases over time. He used it when he was retiring to project his annuity and survivor’s benefit for a period of 40 years from the date he retired. Frank updated the Annuity Calculator last year and with a few minor adjustments you can adapt this to FERS as well. If the spreadsheet opens in protected mode click on enable editing. Also, some browsers are now opening the file, if this happens click on the download file button at the top of the form and use the download version, the version that opens in the browser may not let you enter data.

Retirement Report & Assistance

I entered a 2021 annuity of $52,000 as an example on the chart and selected an average 2% growth rate. After 10 years the projected annuity with survivor’s benefits grew to $63,387, $5,282 monthly. The full survivor’s benefit for CSRS would be $38,571 or $3,214 monthly in this example.  A 2% growth rate increased the annual annuity amount by $11,387 over ten years from 2021 through 2031! Not bad. You can run different scenarios on this spreadsheet with or without a survivor’s benefit.

This calculator projects your annual and monthly annuity payment with survivor benefit, without survivor benefit, and the projected survivor annuity. The projections are based on your annuity at the time you retire and a selected growth rate (COLA). All COLAs for the past 45 years, back to 1975, are listed on the spreadsheet with the average 2, 3, 5, 10 – and 42-year COLA factors that you can consider for your personal calculation.

With CSRS a full survivor’s annuity is 55% of the full annuity not 55% of what you were collecting as a couple. A CSRS full survivor’s annuity costs you just under 10% of your monthly payment however the survivor’s annuity is calculated from the full annuity prior to the survivor’s reduction. Therefore, a CSRS surviving spouse can expect to receive about 61% of what the couple was receiving prior to the annuitant’s death. Also, if an annuitant’s spouse dies, the annuitant would notify OPM and their annuity would be restored to the full amount that is listed on the spreadsheet. OPM does not refund any prior survivor annuity deductions when an annuitant’s spouse dies.

For FERS employees the projected annuity without a survivor’s benefit will be the same; just enter your annuity estimate, enter your age, year of retirement, what you consider to be a realistic growth rate, and the spreadsheet will calculate your annuity for the next 40 years! The column reserved for your projected annuity with survivor benefits will be slightly lower since the maximum spousal benefit is 50% for FERS, not the 55% for CSRS. Also, the full FERS annuity will cost the retiree a little more because FERS employees pay 10% of their annuity for a full survivor’s benefit where CSRS pay just under 10%.

To determine what your initial retirement annuity will be, request estimates from Human Resources for several target retirement dates. I requested at least a half dozen estimates two years before I retired. You can also calculate your estimated FERS annuity or CSRS annuity using the formulas we have available on our site.

All you need to do is enter the appropriate values in the four highlighted cells. The spreadsheet will do the rest for you. The spreadsheet is locked except for the 4 highlighted entry cells. This is to ensure that formulas are not inadvertently altered. The form’s password is provided on the spreadsheet so those familiar with Excel can modify the spreadsheet as desired.

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Request a 27 page Federal Retirement Report™ today.
A one hour session with a Certified Financial Planner is included.

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE

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Posted on Friday, 8th October 2021 by

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We are used to paying more for everything these days so it shouldn’t be a surprise again this year that the majority of our Federal Employee’s Health Benefits (FEHB) premiums are going up. The average total premiums for current non-Postal employees and annuitants enrolled in plans under the FEHB Program will increase 2.4 percent for 2022, the second lowest premium increase in the last 24 years. Under FEDVIP, the overall average premium for dental plans will increase by 0.81 percent, and the overall average premium for vision plans will increase by 0.95 percent.

I reviewed the 66 nationwide Plan premiums this week; 13 plans had no premium change year to year, while 44 increased and 9 decreased their premiums. Four of the national plan groups, Blue Cross and Blue Shield (BCBS), GEHA, NACL, and APWU had several plans each with no change from the prior year. Of the 44 plans that increased their premiums the largest was $66.42 monthly for the MHBP Standard Option Self + One. The two plans with the largest premium reduction of $25.74 per month are the GEHA High Self Plus one and the SAMBA High Self & Family. There are also many regional HMO plans to consider.

In some cases, the enrollee share of premiums for the Self Plus One enrollment type will be higher than for the Self and Family enrollment type. Enrollees who wish to cover one eligible family member are free to elect either the Self and Family or Self Plus One enrollment type. For example, the MHBP Standard Self & Family premium of $394.05 is $30.44 less that their Self Plus One plan!

OPM worked with FEHB carriers to provide COVID-19 testing and vaccines, telehealth, and mental health benefits to federal enrollees. To date, over 85% of those enrolled in the FEHB Program have access to incentives of $25 up to $100 for receiving a COVID-19 vaccination.

The 2022 FEHB rates are now posted online. My wife and I are enrolled in the Nationwide GEHA Standard Self Plus One Plan. Their premium of $291.92 remained the same.  The Nationwide Blue Cross and Blue Shield Basic Self Plus One premium increased $15.08 to $424.95 per month. HMO plans have similar price changes with some reductions, for example the Pennsylvania UPMC HMO Standard Health Plan Self Plus One UW6 enrollment code increased $76.91 to $489.49 per month!

Some brochures have already been released by providers such as Blue Cross Blue Shield. Most brochures will be released by OPM late October or early November. The providers often have the brochures available earlier, call them to request a copy.

OPM’s Plan Comparison Tool and the Consumers’ Checkbook 2022 Guide to Health Plans can be used to find the best FEHB plan for your needs. OPM’s guide will be available for 2022 plans beginning the first full week of November. Checkbook’s Guide to FEHB Health Plans helps active and retired federal employees find the best FEHB plan for themselves and their families. By answering a few questions, you’ll see a personalized total cost estimate for each plan, which is the premium plus expected out-of-pocket costs for someone like you, and you’ll understand which plans save you the most money or provide the most coverage.

For retirees, the Checkbook 2022 Guide shows a yearly cost estimate for every FEHB plan with Medicare Part A only and a separate estimate for the FEHB plans with Medicare parts A and B. This allows users to see which plans coordinate best with Medicare, the cost reduction of adding Medicare Part B, and whether the FEHB plan offers Medicare Part B premium rebates.

The Consumers’ Checkbook Guide is available in print and online formats. Federal Retirement readers can pre-order their guide at Guidetohealthplans.org  and save 20% by entering promo code FEDRETIRE at checkout. The Guide will be released online no later than the first day of Open Season November 9th. Print books will be mailed the week prior to the start of Open Season.

To reduce costs many signing up for Medicare Part B consider converting their FEHB coverage to a lower cost option. The article I wrote titled A Marriage of Convenience – Medicare & FEHB will help those approaching 65 determine what FEHB coverage will be most cost effective and provide the best coverage.

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in BENEFITS / INSURANCE, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION, WELLNESS / HEALTH

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Posted on Friday, 1st October 2021 by

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The Federal Employees Health Benefits open season is just around the corner, running from November 8th through December 13th of this year. It will not be delayed due to COVID. Federal employees and annuitants can enroll in the program, change enrollments, change to another FEHB plan or plan option or cancel an existing enrollment.

New protections will help to minimize surprise billing that has caught many off guard over the years.

One of the biggest “gotchas” in health insurance is what can happen to the unwary consumer who uses a provider that isn’t in the “preferred provider” network of the consumer’s health plan. Some plans cover out-of-network care at an increased enrollee share, but some don’t cover that care at all. And the sky can be the limit for the charges that the enrollee may face when going out of network. Even the conscientious enrollee can get trapped in this morass. For example, you may be unconscious after an accident and taken to the emergency room where either the emergency physician or the anesthesiologist may not be in your network. Or you may be taken while unconscious to the nearest hospital by ambulance (or even worse, by air ambulance), and pay an exorbitant fee for that trip. Even an astute buyer can be caught in a surprise billing trap.

Recently, one of the coauthors of this article underwent an outpatient surgical procedure. The facility was a network provider in a good FEHB health plan. It never occurred to him to check that the anesthesiologist was in network, since previous experience had been that outpatient rates covered all costs, including anesthesia, when getting outpatient medical care. He is starting negotiations over the thousand-dollar surprise anesthesia bill he received a month later.

In the FEHB program, this problem is reduced for federal annuitants, since under a 1990 law the most that any Medicare provider can charge federal annuitants is 15% more than the regular Medicare rate (this is called the “limiting charge”), and the Medicare rate is tightly controlled. This protection is available to all annuitants of any age, whether enrolled in Medicare or not. But not all providers participate in Medicare, so even this protection is not foolproof. Most Americans, however, aren’t so lucky as to have such a protection. And most FEHB enrollees aren’t retired. So, the big “surprise billing” loophole in health insurance protections has been a perennial problem for most Americans.

But lo and behold, sometimes the political system works to fix things that are broken. And surprise billing is a prime example. Last year Congress acted on a bipartisan basis to pass the “No Surprises Act”. This summer the Departments of HHS, Treasury, and Labor published a 400-page rule to implement the new law. The length of the rule was needed to deal with some of the intricacies of the law, which had to deal with many contingencies. For example, the law and rule had to deal with the amount that the out-of-network provider would be paid by the health plan, defining what counted as a medical emergency, establishing appeals procedures, and more. The law and rule take effect on January 1, 2022.

Under the new law, which applies to all group health plans, the basic model is that surprise billing is banned for emergency services, with the patient required to pay no more than what he or she would pay in coinsurance and deductibles for in-network care. The law also bans prior authorization requirements for emergency services, whether the provider is in-network or not. The law also covers the situation where for a non-emergency service the patient sees a network provider but gets care from both that provider and a non-network provider such as an anesthesiologist. The law does have a few loopholes, the biggest of which is that it doesn’t cover regular ambulance services (air ambulances are covered). Otherwise, it covers medical care delivered by a physician, hospital, or outpatient provider such as an ambulatory surgical service.

But there are still important “buyer beware” angles. If you choose a non-network provider, and are not a federal annuitant, the only sure way to protect yourself against any surprise is to agree on a price before any expensive service. For example, Medicare pays for basic cataract lens implants, but not for other kinds of lens implants that have more features and cost more. And despite the 1990 law’s legal protection, a federal annuitant should take care to make sure that he or she uses a physician who has not opted out completely from Medicare. Moreover, even the Medicare payment limit on a particular procedure may be in the thousands of dollars, a whole lot higher than that $20 or $40 copay (or no copay) that you pay now when using a network provider.

For those annuitants with Medicare, enrolling in an FEHB plan adds a layer of safety when your plan covers out-of-network providers at the same enrollee cost sharing as for in-network providers, but there is still risk if you use a provider who has completely opted out of Medicare or get a procedure that Medicare does not cover. Moreover, most plans that provide this benefit charge more than most plans that do not. Many plans offer in and out-of-network coverage. However, the out-of-network reimbursement is generally less than what in network coverage provides. So even though the law now protects health plan enrollees in both the public and private sectors against the worst kinds of true surprises, it does not eliminate the need to check carefully before undergoing any expensive procedure.

Article by Walton Francis and Dennis Damp. Walton Francis and Kevin Moss are the experts who prepare Checkbook’s Guide to Health Plans for Federal Employees for the nonprofit Center for the Study of Services. The 2022 Guide will be available on November 8 at the beginning of Open Season, and is available now for pre-ordering the Checkbook Guide online or by calling 888-596-0729. Federal Retirement readers receive a 20% discount by entering promo code FEDRETIRE at checkout.

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in BENEFITS / INSURANCE, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, WELLNESS / HEALTH

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