Wabbit Open Season for Federal Employees. Each year I look at my Federal Employee Health Benefit (FEHB) choice, my Health Care Flex Spending Account (FSA) election, and my Dependent Care FSA election. Sock away too much FSA money and you’ll never get it back. Sock away too little FSA money and you’re leaving a free discount- as much as 35% in tax savings- on the table for Dependent Care and Medical expenses.
Dependent Care FSA is easy- Figure out how much in allowable tuition and fees you will spend next calendar year on your young child, then make the election. As Drew Rosenhaus would say, “Next Question”!
Next up is a much more complex choice- your FEHB plan and its associated Medical FSA. In order to figure out how much (or if) you will elect for your 2013 Health Care FSA, you first have to figure out what health plan you will use. I’ve been using the (free) PlanSmartChoice analysis tool provided to Federal Employees to compare health care plans and their associated costs. The first step is to gather the necessary data for entry.
Log in to your mint.com account and look at your spending on Health Care costs for the last 12 months:
As you can see, my family is using a 3rd party discount plan for Dental Insurance. We’re happy with all the choices it provides, but we’ve been paying a lot out of pocket for dental! Click on the ‘Transactons’ link to get a listing of how many Dentist, Doctor, and Pharmacist visits you’ve had in the last 12 months… In our case it is ~$900 in Dental Visits plus Dental Insurance Premiums (plus ~$700 in non-covered Orthodontic Devices). We’ll plug the medical and dental visits and $$ in to the PlanSmartChoice engine.
Next is to log in to the PlanSmartChoice website. Enter your personal data (don’t worry- they only email you once per year to let you know the site is ‘live’ for the next Open Season) here:
Don’t forget to enter the info (number of Doctor visits and Prescriptions) for your dependents as well.
Next up, Choose the types of plans you are interested in (HMO, HDHP, PPO etc), or leave it set to the default value (‘Any’). You’ll get the full listing of available Health Plans and what their Estimated Total Costs (Premiums Plus Out-of-Pocket) for the year are. You can sort by Total Cost, Plan Type, etc:
In my case, I scrolled down the page to compare my existing plan- Blue Cross Blue Shield Basic (Code 112) to Aetna HealthFund HDHP/HSA (Code 225), because I’m considering switching to an HSA next year:(*** IMPORTANT SIDEBAR *** You’re a Sucka if you consider any health care insurer who is not a household name. Why? If you choose the ‘Midwestern Radiological Workers Union Plan’ or ‘Health Insurance for Rural Postal Clerks’, the receptionists and billing clerks at your doctor’s office have NO CLUE how to enter the medical coding and billing info in to their database- you’re going to get hosed and spend half your waking hours fighting billing discrepancies. My family found this out the hard way- don’t be distracted by the ‘quality awards’ or ‘consumer awards’!)
On the surface, it looks like the plans are pretty equal- $4854 in Total Cost for the Aetna HDHP/HSA vs $5031 to stay with BCBS. If your choice is a ’conventional’ Health Plan (non-HDHP/HSA), you could plug this number (the Out-of-Pocket Costs) in as your Health Care FSA election.
But there are two flaws with the PlanSmartChoice comparison tool in my family’s case.
First, the comparison tool does not account for the employer’s $1500 annual HSA ‘kickback’ contribution (shown in red circle, upper right). This reduces the Total Cost of the HDHP/HSA by $1500 to $3354.
|BCBS Estimated Total Cost:||$5031|
|Aetna Healthfund Estimated Total Cost:||$3354|
|Aetna HDHP Savings:||$1677|
Second, Dental. The PlanSmartChoice Health Plan Comparison tool does not let you do an apples-to-apples comparison of dental benefits within health plans (it directs you to a separate tab to compare the purchase of separate FEHB dental plans). Well, some Health Plans (like Aetna HDHP) provide 100% preventative dental (exam, cleaning, xray) coverage, while some plans (like my current BCBS ‘Basic’ Health Plan) provide virtually nothing. Note that in the last year I paid about $900 in 3rd party Dental Insurance premiums and preventative dental treatments. If next year is anything like this year and I keep BCBS ‘Basic’ Health coverage, I’ll have to add $900 to the Estimated Total Cost of BCBS.
|BCBS Estimated Total Cost:||$5931|
|Aetna Healthfund Estimated Total Cost:||$3354|
|Aetna HDHP Savings:||$2577|
Wow. The savings in the Aetna HDHP/HSA will almost pay for Junior GubMints’ braces next year. Plus, I can do a one-time ‘Qualified Funding Distribution‘ (tax-free transfer of funds) from my existing IRA to an HSA in order to ‘pad’ the 2013 HSA account balance (up to $6450 for the year). Assuming all of our favorite doctors and providers are on the Aetna list, it looks like we’re making the switch to an HDHP/HSA next year!
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