2009 Changes in Federal Benefits

Open Season: Do the Homework and More

The 2008 Federal Benefits Open Season for Health (FEHBP) and Dental and Vision (FEDVIP) will run from Nov. 10 through Dec. 8 for active-duty employees and through Dec. 31 for federal retirees.

In making a decision to stay in your current health plan or to change to another plan or option, consider both premium costs and benefit changes, such as increased co-payments for office visits and mail-order prescriptions.  If you have a serious health condition, such as anemia, hepatitis C, multiple sclerosis, rheumatoid arthritis or certain kinds of cancer, find out what you will have to pay for certain “specialty” drugs. If you have Medicare B, consider how a plan or a plan option coordinates payments with Medicare.  If your plan is leaving FEHBP or reducing its service area, you will have to choose another plan in order to continue health coverage. (If this is the case, you will be notified by your plan and the Office of Personnel Management).

There are a number of tools you can use to help you make your decision.  AFSA is offering its retiree members access to the Consumer Checkbook Guide to Health Plans again this year on our Web site at www.afsa.org/retiree/. 

The Retirement Office will send you the 2009 Guide to Federal Employees Health Benefits Plans for Federal Retirees and Their Survivors.Open season guides and plan brochures are available on the Office of Personnel Management Web site at www.opm.gov/insure/health.  In addition OPM will roll out a tool for plan comparison on that site in early November.

2009 FEHB Premiums

On Sept. 25 the Office of Personnel Management announced the 2009 premium rates for the Federal Employees Health Benefits program.  The 2009 premium hike for FEHBP marks the largest since 2005.

An average enrollee’s share of the premium will increase 7.9 percent, according to the agency.  Enrollees with self-only coverage will pay about $4.83 more each pay period (about $125 per year): family coverage will cost about $11.12 more per pay period (about $280 per year).   Nonetheless, 20 percent of FEHB enrollees will see their share of premiums rise by less than 5 percent.

Enrollees in the Blue Cross Blue Shield Standard Option, the most popular FEHB plan choice, will see their bimonthly share of the premium increase $8.08 for self-only coverage, and $19.44 for self and family coverage ($17.40 and $42.12 monthly).

Enrollees in the Foreign Service Benefit Plan will see their share of the premiums decrease again this year by $0.17 for self-only coverage and $4.86 for self and family coverage biweekly ($0.37 and $10.54 monthly).

To change your FEHB enrollment, submit a completed Health Benefits Registration Form SF-2809 to: Department of State Office of Retirement, HR/RET, Room H-620, SA-1, Washington, DC  20522-0108,  FAX: (202) 261-8988. SF-2809 can be downloaded from the AFSA Web site at http://www.afsa.org/retiree/

FEDVID: Vision and Dental

FEDVIP dental and vision insurance program premiums will increase by 5.7 percent on average among dental plans and 1.1 percent among vision plans. Several dental carriers are improving benefits by eliminating certain waiting periods or deductibles and by adding coverage.

The open season is an opportunity to join or change coverage under either or both dental and vision plans. As with FEHB, if no change is made during open season, coverage carries over to the next plan year. Open season guides and plan brochures are available on the Office of Personnel Management Web site at www.opm.gov/insure/health. 

2009 COLA Will Be 5.8 Percent

The next cost-of-living adjustment for millions of retired and disabled Americans will be 5.8 percent, the largest since March 1982.

Social Security beneficiaries, as well as most Foreign Service and military retirees, will be among those receiving the adjustment in their January 2009 benefit payments. 

Foreign Service Pension System annuitants age 62 and over and FSPS survivors and disability retirees will receive a full Social Security COLA, but the adjustment in their FSPS annuity will be 4.8 percent.  This is due to the fact that the FSPS COLA formula differs from that used for FFSRDS retirees, whose federal service did not earn them Social Security coverage. 

While the 5.8 percent is designed to maintain retirees’ purchasing power, it will serve as a tempting target to some lawmakers next year as they try to cut federal spending.  Congress has reduced or delayed the COLA a dozen times in recent years.

Medicare B Premiums

The good news is that the base Medicare Part B monthly premium will not increase in 2009. It remains $96.40 a month or $1,156.80 a year. About 95 percent of enrollees will pay this base amount.
The other 5 percent of enrollees, however, will pay higher premiums based on their annual income. In 2009 the threshold for higher premiums is $85,000 for an individual filing a separate tax return  and $170,000 for an individual filing a joint return. Income for this purpose is the amount  of modified adjusted gross income reported in the enrollee’s 2007 tax return.
Medicare B beneficiaries who file individual tax returns with income greater than $85,000 and less than or equal to $107,000,  as well as beneficiaries who file joint returns with income greater than $170,000 and less than or equal to $214,000 will pay a monthly premium of $134.90. Beneficiaries who file individual  returns with income greater than $107,000 and less than or equal to $160,000, and beneficiaries who file joint returns with income greater than $214,000 and less than or equal to $320,000 will pay a monthly premium of $192.70.
Beneficiaries who file individual returns with income greater than $160,000 and less than or equal to $213,000, and individuals who file joint returns with income greater than $320,000 and less than or equal to $426,000, will pay a monthly premium of  $250.50.  Beneficiaries who file an individual return with income greater than $213,000, and beneficiaries who file joint returns with income greater than  $426,000 will file a monthly premiums of $308.30.
There is a slightly different schedule of premiums for married enrollees who have lived with their spouses during the taxable year but file separate returns.

Social Security

Earnings subject to the 6.2 percent Social Security withholding tax will rise from $102,000 to $106,800 in 2009. (The 1.45 percent Medicare tax has no similar cutoff).

Employees in the Foreign Service Pension System and the Foreign Service Retirement and Disability System Offset pay Social Security taxes. (While the withholding cuts off for FSPS employees at the $106,800 level, FSRDS Offset employees continue to pay withholding, with the money going into the retirement, rather than into the Social Security fund).

The earnings test or limitation for Social Security beneficiaries  age 62 through full retirement age (66 in 2009) will increase from $13,560 ($1,130/month) to $14,160 ($1,180/month). Those beneficiaries below the full retirement age will lose $1 in Social Security benefits for every $2 in earnings above the limitation.

A separate earnings test applies only to earnings for the months in the year in which a beneficiary reaches full retirement age: one dollar in benefits will be withheld for every $3 in earnings above $37,680. There is no limit on earnings once a beneficiary reaches full retirement age.

The amount of earnings required in order to receive a quarter of coverage will increase from $1,050 to $1,090 for 2009. Workers who earn at least $4,360 in Social Security-covered employment or self-employment during 2009 will receive the maximum four coverage credits for the year.  

Congressional News

WAE Waiver Extension

President Bush signed into law P.L. 110-321, which extends until October 2010 State Department authority to rehire foreign service annuitants without an offset between their salary and their annuities for positions in consular posts with substantial visa application backlogs, or in Iraq or Afghanistan. The waiver does not apply to the 1,040-hour limitation

Retirement Proposals Stall

Although it cleared a House committee, there has been no further progress on a premium conversion proposal to allow retirees to pay federal health premiums with pre-tax money.

Two other retirement proposals that would repeal or soften the Windfall Elimination Provision and Government Pension Offset provisions of Social Security law did not even reach committee votes. These offsets primarily affect FSRDS retirees who also are eligible for Social Security benefits.

Some progress was made on a proposal to give FERS and FSPS employees credit toward retirement for unused sick leave. The House passed that provision as part of an unrelated tobacco policy bill which, however, faces a threatened White House veto based on other issues.

TSP Proposals

The tobacco bill provides for automatically enrolling new employees in TSP and beginning immediate employer matching contributions; adding a Roth account option; and giving authority to the a TSP panel to permit participants to invest in mutual funds outside the funds currently offered by the plan.  Companion legislation would have to be adopted by the Senate and signed by the president for these provisions to go into effect.

Medicare B and FEHB Coordination: The Basics

Q:   I recently enrolled in Medicare B.  Will Medicare reimburse my doctor for his usual charges for services?

A. This depends on whether your doctor has agreed to accept the Medicare schedule of approved amounts as payment in full for his services.  Doctors fall into three categories in this regard, each with different financial consequences:

First, if your doctor agrees to accept the Medicare-approved amount as payment in full — called accepting assignment — Medicare will pay 80 percent of this approved amount.  You will be responsible for the other 20 percent.  Your doctor cannot charge you any more than the Medicare-approved amount.

Second, if your doctor does not accept the Medicare-approved amount as payment in full (or does not accept assignment), but nevertheless treats Medicare patients, he can charge up to 15 percent more for his services than the Medicare-approved amount.  He can also request full payment up front from you.  Medicare will reimburse him for 80 percent of the Medicare-approved amount.  You will be responsible for the other 20 percent plus whatever the doctor charges (up to 15 percent more) above the Medicare-approved amount.

Third, if your doctor opts out of Medicare entirely, he is not subject to the Medicare limits on charges and cannot submit claims to Medicare on your behalf.  In this situation, your doctor will ask you to sign a private contract in which you affirm that you are responsible for the full cost of the services and that you will not seek reimbursement from Medicare.  If you sign this contract, Medicare will not pay for any portionof the services you receive.

Q. In addition to Medicare B, I am also enrolled in a Federal Employees Health Benefits plan.  I understand that Medicare will provide primary coverage for me as a retiree. What will my FEHB plan pay as the secondary insurer?

A. Read the section about coordination of benefits in your FEHB plan brochure carefully.  Plans differ in their approach to coordinating benefits with Medicare; for example, some plans or plan options pay benefits only if you receive services from doctors who participate in their preferred-provider network.

 There are FEHB plans that waive the deductible and co-insurance amounts when doctors accept Medicare assignment.  Some plans may also pay the excess costs or the additional 15 percent charged by a doctor who does not accept assignment but treats Medicare patients.

If, however, your doctor has opted out of Medicare and you have signed a contract agreeing to be billed for health services, your FEHB plan will limit its payment to you to the amount it would have paid after a payment by Medicare — usually 20 percent  — and you will be responsible for the balance of the charges.

Q Medicare covers an initial physical examination — a one-time “Welcome to Medicare” physical exam — within six months of enrollment, but does not cover annual physicals.  Will my FEHB plan pay for my annual physicals and other non-Medicare covered services?

A:  Again, it is important to read your FEHB plan brochure carefully to see whether and to what extent your plan will pay for these services.  Some plans will pay for these services and waive the deductible and coinsurance.

Q:  Will I have to file Medicare claims?

A. Unless you signed a contract agreeing that you will not seek Medicare reimbursement, your doctor is required to file Medicare claims for the covered services you receive.  In instances where doctors fail to submit a claim, you may file a CMS 1490S form on your own behalf. The form can be found at www.cms.hhs.gov/cmsforms/downloads/cms1490s-english.pdf.

If your doctor accepts assignment, he will file a Medicare claim for you.  Medicare will then pay its share of the bill directly to the doctor and forward the claim electronically to your FEHB plan.

Even if your doctor does not accept Medicare assignment, he is still required to file a claim for you.  If you have paid for the services, Medicare will pay its share of the bill directly to you.  Again, if your doctor fails to submit a claim, file Form CMS 1490S.

Be aware that Medicare does not electronically send completely denied claims to FEHB plans.  Make sure that your FEHB plan receives the documents it needs to take action: the bills for services and Medicare notices of rejection.

Q. What can I do to assist in this coordination process?

A. Read the section about coordination of benefits in your FEHB plan brochure carefully. These plans — and standard and basic options offered by the same plan — can and do differ.

Talk to the financial administrator in your doctor’s office about how it processes Medicare claims.  Many practices do not understand their obligations in this regard.

Read what you sign; signing a private contract can have serious financial consequences for you.

Send a copy of your Medicare card to your FEHB plan so that it can ensure that the electronic coordination is in place for your claims.

Fund for American Diplomacy

Do you want people outside the Foreign Service to understand the critical importance of U.S. diplomacy? The Fund for American Diplomacy (Combined Federal Campaign #10646) is the arm of AFSA that reaches out to the general public through programs that demonstrate how the U.S. Foreign Service works for America.  We continually strive to show that diplomacy is our nation’s first line of defense. To make a tax-free donation, go to http://www.afsa.org/CFCFAD.cfm.

AFSA Scholarship Fund

If you would like to help make college costs more affordable for Foreign Service children, consider making a pledge to the AFSA Scholarship Fund (CFC # 11759), which provides FS children with need-based scholarships, academic awards and art merit awards. The Scholarship Fund helped 95 students in the 2008-2009 school year with aid totaling more than $180,000.

How to Make a CFC Contribution

The department will answer questions about the Combined Federal Campaign and mail CFC pledge packages to retirees who request them. The contacts points are: telephone, (202) 261-8166, and e-mail, cfc@state.gov. Retirees can donate to the CFC with a one-time contribution by check or by money order, but not through annuity deductions.

Beginning Nov. 15, tax-dependent children of Foreign Service employees can apply for AFSA academic, art merit and financial aid scholarships for the 2009-2010 school year. Visit the AFSA scholarship Web page at www.afsa.org/scholar or contact Lori Dec at dec@afsa.org or 1 (800) 704-2372, ext.504.

For job opportunities, go to the From FSI page on the AFSA Web site at
http://www.afsa.org/retiree/jobOpportunities.cfm

How to Use Consumer Checkbook

To gain access to the Consumer Guide to Health Plans, go to http://www.afsa.org/retiree/ and click on the Checkbook icon.   
      
You will be asked to log in.  Please provide your user ID, which is your AFSA membership number, and your user password, which is your last name. Then click on log in and you will be taken to the Consumer Checkbook site.

If You Changed from FSRDS to FSPS