24k Cadillac Stethescope

Happy January 13th!  It’s a New Year for your Federal Employee Health Benefit (FEHB) Plan. Have you put your new insurance card in your wallet yet?

The Patient Protection and Affordable Care Act (referred to by the short-hand ‘ObamaCare‘ moniker in this post) puts a lot of changes on the middle class and most Federal Employees starting this year.  Here’s a summary of how it will impact you (h/t to Paul Sisson of San Diego U-T for the summary).

 2013 Effects (High impact on Feds):

  • FSA HC Deduction reduced from $5000 to $2500.
  • Medical expense deduction threshold rises from 7.5% of AGI to 10% of AGI.  Translation: Federal Employees (and the rest of the middle class) have NO CHANCE to deduct medical expenses unless they migrate over to a High Deductible Health Plan(HDHP) with Health Savings Account (HSA).

 2014 Effects (Minimal impact on Feds who are Full-Time employees):

  • Employer Mandate – Employers with 50 or more employees must provide Health Insurance or pay a fine.  I thought the folks in DC rooted for the Redskins, not the 49ers?
  • Individual Mandate – If you make enough to file a tax return you must purchase health insurance, IF the cost does not exceed 8% of your income.  Penalties grow from $95/adult in 2014 to $695/adult in 2018.

 2018 Effects (Potential High Impact on Feds):

2018 is when the ‘Cadiallac’ Tax kicks in.

If the annual health care benefit provided (that’s the combination of what YOU pay in premiums, plus what your employer (FEHB) contributes in premiums) totals more than $10,200 per year for individuals or $27,500 for families, then the insurer (employer) pays a 40% tax.  Translation: FEHB benefits exceeding this level will not be provided in 2018, as the 40% tax will be charged to the taxpayer.

Is the Health Care vehicle you are presently driving destined to become a shiny new Cadillac someday? It’s possible for some FEHB plans and very likely for others depending on the rate of Health Care Inflation between now and 2018.  Note that since 1999 Health Care inflation has averaged 8.83% per year.

At a 5% Health Care inflation rate, the following FEHB plan is classified as High-Risk of becoming a Cadillac in 2018 (2018 Total Monthly premium of $850/mo. Self,  $2292/mo. Family):

  • SAMBA High Self – (Currently $661/month)

2018 Cadillacs at 8% Health Care Inflation:

  • SAMBA High Family (Currently $1558/mo.)
  • BCBS Standard Self ($599/mo.)
  • GEHA High Self ($611/mo.)
  • MHBP – Std ($622/mo.)

2018 Cadillacs at 11% Health Care Inflation:

  • BCBS Standard Family (Currently $1354/mo.)
  • Almost ALL FEHB Fee-For-Service Self Plans

As mentioned here, I’ve switched the GubMints family to a HDHP/HSA for 2013. Can a Federal Employee with a family of four save money switching to an HSA?  Stay tuned!

 

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One thought on “FEHB – It’s time to Preview the 2018 Cadillacs!

  1. Pingback: Aetna HDHP/Health Savings Account (HSA) - January Costs | GubMints

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