Federal Diary Live

Trying to figure out your options in the 2006 Federal Employees Health Benefits Program? Looking for the best buy? Wondering if consumer-driven options and high-deductible plans with health savings accounts might be right for your family?

Walton Francis, chief author of Checkbook's 2006 Guide to Health Plans for Federal Employees, joined The Post's Stephen Barr, who writes the Federal Diary column, to take your questions and comments on FEHBP Wednesday, Nov. 16, at noon ET .

The health guide is published by the Consumers' Checkbook, a nonprofit organization that also publishes Checkbook magazine. Francis is an economist and policy analyst who has testified before Congress on FEHBP and Medicare. He has degrees from Yale and Harvard and has worked at the Office of Management and Budget and in the office of the secretary for Health and Human Services.

FEHBP's open season for 2006 enrollments runs from Nov. 14 through Dec. 12.

The transcript follows.

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Stephen Barr: Thanks to all joining in this discussion today, especially our guest, Walt Francis, who does a great job every year preparing Consumer Checkbook's FEHBP open season guide. The guide helps federal employees and retirees figure out which health plans cost the least and offer the best service. Walt, tell us how you think the 2006 open season is shaping up, please? And thanks for joining us today.

Walton Francis: It is a great Open Season for prudent buyers because there are so many great and inexpensive health plan options out there. However, it doesn't look to me as if many employees and retirees realize that the Blue Cross Standard premium jumped almost 15 percent this year and that many other plans now offer better deals that can save hundreds of dollars (not least of which is Blue Cross Basic, whose premium didn't increase a nickel).

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Baltimore, Md.: Blue Cross Blue Shield Standard (self and family) has increased by $17.53 per pay period for 2006 (employee share). That is almost $456 for the year. Why such a steep increase?

Walton Francis: Each plan has to cover the costs of the people who enroll in it, and premiums also reflect catch-ups if projections were too high or too low. Blue Cross has done a great job of controlling costs, and its premium have been rising less than average in recent years, but this year "the bills came due."

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Washington, D.C.: What is the best way to choose among health plans? I can easily compare the costs, but it is very hard to tell what is the best value given my needs (young, single, relatively healthy, but risk-averse). What should I be looking for/what should I avoid?

Walton Francis: I doubt that you can easily compare the costs. I spend an immense amount of time doing so and use computer programs it can get so complicated. It is easy to compare premiums, but not all the other intricacies. Howsomeever, you should look for a plan with a low premium and good catastrophic guarantee. All the High Deductible plans fit this model, as do most HMOs and Blue Cross Basic. The HD plans have loophole-free guarantees that are usually nominally $5000, but in fact are much less because your savings account and other things defray that cost.

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Frederick, Md.: I am a Federal retiree, over 65, with a good health plan (Blue Cross). I have a choice: to sign up for Medicare B and pay the $700-900 annual premium; or not sign up and save the $700-900. What benefit am I getting for the Medicare premium, other than having my co-pays paid for? My co-pays total much less than $700, I don't see any other significant benefit, and I conclude that it's better for me NOT to sign up for Medicare B. Could you comment on my chain of logic, please. [Medicare A is a freebie, of course, so I don't mind getting those hospitalization benefits.]

Walton Francis: You are absolutely right to question the value of Part B. It is worse than you think because the annual premium for 2006 will be about $1062. Part B has two main benefits: it will fill in holes like deductibles, particularly in fee for service plans that guarantee 100% coverage if you have Part B; and it allows you to go out of the network if you don't want to use preferred providers. This last is the main benefit in HMOs. You also reduce future uncertainty if the Congress does something bad or you have some very unusual circumstance. I won't try to argue you into it or out of it, but we estimate that very few enrollees will get even half the Part B premium cost back in reduced expense. If you don't sign up you can join later at penalty of 10% a year.

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Sacramento, Calif.: Mr. Francis, I've used your books (and more recently your online service) for many years. They have proven to be an extremely useful tool helping me understand the FEHB program.

I'm curious about the methodology you use in developing cost estimates for prescription drugs. Do you use the same list of drugs to determine costs for each plan? Do you assume that a certain percentage of drugs will be generic? In the case of plans (such as Blue Cross Blue Shield Basic) that have a third tier that charges significantly more for certain brand name drugs, do you assume that if a prescription is needed for a drug that falls into the most expensive tier, a drug that falls into a less expensive tier will be substituted?

Thanks so much for answering our questions today.

Walton Francis: We have to make simplifying estimates in comparing plans. We assume that half your prescriptions are generic, and that you will always use a preferred name brand drug. It is almost always sensible to make those choices when you can. But if you have some extreme situation, such as drug that costs thousands of dollars and is not on the formulary in most plans, you will have to do some extra homework rather than rely on our estimates. We deal with high and low expense years, but necessarily deal with averages, not exceptions.

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Reston, Va.: As a retired Federal employee, I have used GEHA for years, applicable to just me and my wife. This year the monthly cost for the High Level is about $122 more per month than Blue Cross and the co-payments for prescription drugs appear to be much higher than Blue Cross. We also have Medicare. Would you recommend we switch to Blue Cross?

Walton Francis: If you have GEHA high option my recommendation is LEAVE THAT OPTION. It is a bad buy because its premium is so high, and its benefits not appreciably better than most other plans. I would first consider joining GEHA Standard option. With Medicare A and B 100% of your hospital and doctor costs are covered and you save $3000 (yes, three thousand) in premium. Your drug coverage in Standard is not as good as in most other plans, so you could consider another such as NALC, APWU, or Blue Cross Standard. But you will pay a lot more premium. Another option is to join GEHA Standard and sign up for a Medicare Part D drug plan. You can get virtually 100% coverage for about $150-$200 a year. This is just about the ONLY case where a retiree should sign up for Part D (unless they qualify for low income help).

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Rockville, Md.: I would like to know if there is a health plan for retirees that's basically a MediGap policy. Do you have to pay for a comprehensive FEHB plan, plus enroll in Medicare Part A & B?

Walton Francis: Once you reach age 65, and sign up for either Medicare Part A (free) or A and B (extra $1062 next year for Part B premium) every single FEHBP plan works in effect as a Medigap policy. But you don't have to sign up for Part B, because every FEHBP plan is a comprehensive policy with or without Medicare. See my answer to a previous question.

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Washington, D.C.: What do you think the best plan is for a young, fairly healthy but not high income married couple with lots of prescription drug needs? We would normally consider one of the HMOs, but having been with an HMO for the last eight months, I don't have the time and energy to deal with the bureaucracy. Do any of the PPO plans have good prescription coverage?

Walton Francis: Almost all PPO/Fee for service plans have good drug coverage, usually just about the same as in HMOs. Typically, you have a low copay for generic drugs, a modest copay for "preferred" name brand drugs, and pay a lot more for other name brand drugs. However, you will pay a lot more in premium. Why don't you consider switching to another HMO. Usually, getting drugs is pretty easy so you may have had an unusual experience.

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Fairfax, Va.: You have a Web site?

Walton Francis: We sure do. You can go to http://www.checkbook.org/newhig2/hig.cfm to purchase a subscription to our plan comparisons. But before you buy, check on the home page to see if you are in one of the many, many departments and agencies that have bought a subscription for all employees. CHECKBOOK's Guide to Health Plans may already be on your desktop!

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Arlington, Va.: Thanks for hosting this discussion. I think one of the most interesting plans this year is Aetna's HDHP. What I find remarkable is that the premium is around $82 a month, but they put $125 into your HSA every month, and then the HSA earns interest. Of course there is a high deductible, so for those individuals in relatively good health this shouldn't be a problem. Plus they pay %100 for preventative care such as physicals and dental checkups.

Walton Francis: Yes, we rate the Aetna High Deductible plan as a very good buy. But all the High Deductible plans are rated high. And these plans are good buys for almost everyone, not just the young and healthy. They all provide "free" physicals and savings accounts, though Aetna's is the largest. They have excellent catastrophic guarantees for self-only and good guarantees for families (but not as good as Blue Cross for families).

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Arlington, Va.: I signed up for the BC/BS Basic and I love it. The only problem is that there is an important drug I was prescribed that isn't on it's formulary list. They have an alternative that is -very- dangerous, and my doctors and I are reluctant to try it. I petitioned BC/BS to get it covered, and I've been ignored. Is there anything else I can do? I just don't make enough to pay for this drug.

Walton Francis: There are very few drugs that Blue Cross doesn't cover. I recommend that you go online to the formulary of a number of alternatives, such as NALC and APWU to see if you can find a better situation. I would also not give up on Blue Cross. Move up the hierarchy. It is just a bureaucracy and Feds know how to deal with those! Also, ask your physician what plans cover this drug.

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Arlington, Va.: Thank you for taking my question. I am trying to get educated on the options I have during this open season. I too am a single, healthy individual who currently has BC/BS Standard. I believe I will switch to Basic for the reasons you mention. Can you advise about the value of signing up for the flexible spending account along with Blue Cross vs. switching to another plan with the Health Savings Account, which Blue Cross does not offer? THANK YOU.

Walton Francis: Basic is a much better buy, but don't forget you are limited to preferred providers. You can sign up for a Flexible Spending Account (FSA) when you join any plan (partial exception for High Deductible plans). EVERY Federal employee should create an FSA this Open Season. It gives you an automatic tax preference and about one-third saving on your predictable expenses, including things your plan doesn't cover like dental and vision. But it is "use or lose" so you have to estimate carefully.

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Baltimore, Md.: I notice that more plans are offering "just dental" plans at a low monthly premium, but are they any better than the dental plans offered as part of your regular health plan?

Walton Francis: Yes, none of the plans offer a really good dental benefit as part of the official plan. GEHA, Mail Handlers, and Blue Cross all offer separate dental plans that you can join no matter what plan you enroll in. You pay a few hundred in premium, and get large discounts. These plans offer the best deals if you use "preferred" dentists, so check them out carefully. You might ask your dentist if he participates in any of them.

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Washington, D.C.: I have been a federal employee for over five years and during each open season, I ponder whether or not to switch from the one plan I have had the entire time I have been employed with the government : Aetna's Basic Open Access plan. Given that cost is very important to me, I always create a spreadsheet detailing my normal annual health expenses (2 doctor visits, 2 dental visits, bi-weekly premium, eye doctor visit, a pair of glasses, and a year's supply of bcp). Aetna always wins for my needs with from a cost perspective, but I feel they are always frowned upon by other co-workers for just about everything else. Is there a cheap (although clearly not cheaper) plan out there that gives better service?

Walton Francis: Don't worry about what your co-workers say. You have the last laugh because you are saving lots of money in that plan, which is a very good buy. If you like the service you are getting (or can tolerate it) do not consider switching. Since you are already calculating expenses, set up an FSA for the few dollars out of pocket that you are spending. And laugh all the way to the bank!

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Washington, D.C.: I just retired in November and am thinking about renting a place in the UK for six months next year. Is there a health plan that would cover me overseas when renting? If we decided to stay and buy a house there is there a health plan that would cover us? Thanks.

Walton Francis: Every FEHBP plan covers you in emergencies abroad. All the national plans cover you for routine care abroad. But some do so better than others. The Foreign Service plan is best and if you are in any agency with functions abroad (not just State but many others) you may be able to join (not sure since you are already retired). But GEHA and Blue Cross pride themselves in good coverage abroad, so consider those two plans' Standard options.

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Vienna, Va.: My wife and I are over 65, qualify for Medicare, and are covered by her FEHB policy. She is in FERS. When we both retire does the FEHB coverage convert to a medigap, should we shop elsewhere for one of the 10 standard packages, and how do our premiums change if we stay with FEHB and our BC/BS package? Thanks.

Walton Francis: Just to be crystal clear. "Medigap" is a technical term for a defined site of standard packages. No Federal retiree should ever join any Medigap plan. They are bad buys and you pay the entire premium. The FEHBP itself is the world's best Medicare supplement. The premiums stay the same and the national plans (with the main exception of Blue Cross Basic) give you 100 percent coverage for hospital and doctor if you have Medicare A and B. However, if you look at the earlier responses you will see that signing up for Part B is not necessarily a sensible purchasing decision.

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Arlington, Va.: Thanks for helping people through the maze.

Retiring end of the year, moving to eastern North Carolina, so I'll have to change to a national plan. I'm thinking of just doing Blue Cross standard at least for next year while I find new doctors. At this point, I don't have a lot of medical service needs or many prescriptions.

Is this reasonable?

Also, is there someone in the D.C. area who is particularly knowledge about FSAs.

Thanks again.

Walton Francis: Alas, none of the HMOs cover the ocean shore in North Carolina. Sure, enrolling in BC Standard is a very sensible decision, since it lets you check out the local providers before making a fine-tuning decision. Three cheers for Open Season! You can get great advice on FSAs from the OPM Web site. But remember retirees can't create them.

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Alexandria, Va.: Could you address and discuss the hidden costs in the changes contained in GEHA's new prescription benefit plan. Under the existing plan, the cost to a member for a 90-day supply for non-generic medications is $50 max, with no deductible. Do I understand the proposed new changes will make it significantly more expensive? I would rather not change plans, if possible. Could you help ease the confusion? Thank you.

Walton Francis: GEHA High option has introduced some complicated and very undesirable changes to its drug benefits. Quite apart from those changes the plan's premium is way out of line. I strongly recommend that you change plans. If you like GEHA, and your drug expenses aren't into the thousands, you will save money in the Standard option. But most of the national plans are far better buys, for drugs and everything else, than GEHA High option.

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College Park, Md.: I have a long-standing relationship with a doctor I do not want to leave, who is not a member of any health plan. Is is true that Blue Cross is really my only option in terms of getting any reimbursement of his (quite high) fees?

Walton Francis: Absolutely not. You have three ways to get help with a non-preferred physician. First, all the national plans except Blue Cross Basic give you fee-for-service coverage that will generally pay about half the cost. You may have to file the claims directly with the plan. Second, you can set up a Flexible Spending Account for the amount you will spend with this physician (and other predictable costs) and get an additional one-third discount through the tax preference. Third, you can join a High Deductible plan and use your Health Savings Account to pay the physician.

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Atlanta, Ga.: My wife lost health coverage at her workplace and this will be the first year that I have to sign up for a "family" plan (just for the two of us). Do you have any advice on picking a good family plan versus an individual plan? For instance, last year I was in the Mail Handler's HDHP. But this year I'm not sure about it since I think the deductible is now 10K for a family rather than 5K for an individual.

Walton Francis: All the advice I have been giving as to good buys applies just about equally to families and individuals. The High Deductible plans generally have a self catastrophic limit of about $5 thousand and for families of about $10 thousand (not a deductible, but a guarantee that is the most you will ever be out of pocket). However, the $10 thousand isn't nearly as high as it seems (we estimate it as well below $8K in real, after-tax terms), since you can apply your Health Savings Account and even add to your account if your expenses go high, through voluntary additions. I recommend you stay with Mail Handlers, which is a fine High Deductible plan, and simply switch to family coverage.

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Washington, D.C.: I started with the BC/BS basic three years ago and it was fine since the two of us are healthy. When we wanted to have a baby, we switched to BC/BS standard since it wasn't that much more. Maternity/baby care was great with no copay or anything, but I was upset that it cost so much to go to the dentist for a cleaning ($70 as opposed to $20 under basic). I want to switch back to basic next year. We want to have another baby next year, and the only difference in maternity care is $100 for delivery with basic. I can't seem to justify $46 more every two weeks for the standard plan just to save $100 and $5 on a copay every time we have a non-baby related doctor visit. I plan to take some of the savings and put it in a HCFSA. Are there other things to consider before switching back to basic (such as if we end up having a special needs child)?

Walton Francis: As long as you are willing to use a Blue Cross preferred provider, and most hospitals and Ob/Gyns are preferred, I see no reason not to join Blue Cross Basic. In the event that something later transpires that causes you to switch plans, Open Season comes every year. Furthermore, there is no reason to think that Basic won't cover special needs as well as any other plan. In fact, if you had any reason to incur high expenses, you would always want to use a preferred provider.

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Tarboro, N.C.: Why is Medicare required once we reach age 65, even though we have other insurance? I am a Federal retiree subscribing to BC/BS standard family plan. My wife is not yet 65, does not work and we are guardians of a minor. Does either of you know of anything on the horizon to lighten this burden or, are we stuck with maintaining the two? Thank You.

Walton Francis: Medicare is NOT required (except for Part A, hospital insurance, which is free). See the previous responses.

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Washington, D.C.: Any idea why OPM does not offer a self-plus-one coverage in FEHBP? Would not childless couples benefit from that plan design? Thank you.

Walton Francis: Actually, childless couples would lose, because expenses rise steeply with age and couples without children (usually empty nesters) are older. You are advantaged by being in the same risk pool with all those young families.

Steve tells me we are out of time. Sorry I couldn't answer every question. I will be doing a seminar with Congressman Tom Davis next week, so watch Steve's column and come on out if you need more advice.

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