- The Washington Times - Tuesday, July 2, 2002

Federal and postal retirees will take a small step forward and a giant step backward in January, when they try to pay for double-digit increases in health premiums with a tiny cost-of-living adjustment.
There are still four months to go in the process which, using the consumer price index, determines how much the January annuity COLA will be. And it will be late August or early September before the 9 million people covered by the federal employee health benefits program (FEHBP) find out how much premiums are going up.
But it doesn't take a rocket scientist to figure that health premiums which are increasing for everybody lucky enough to work for a company that offers insurance are going up while living costs are virtually flat.
The higher premiums, coupled with an apparently low COLA for federal retirees, could drive many of them into HMOs (health maintenance organizations).
HMOs are increasingly popular with federal workers, especially younger employees and new families. That's because of their emphasis on preventive medicine, generally low premiums and lack of paperwork.
But retirees have shied away from HMOs. That's partly because they don't like, trust or understand managed care. Also, HMOs don't work for retirees who live part of the year in one area and part of it either traveling or living elsewhere.

Premium relief
Congress can't do anything about higher health care premiums for federal or postal workers, or retirees. But it could offer retirees some relief by giving them the same tax break that's already available to active duty feds and many private-sector workers.
That break is called premium conversion. It means you can elect to pay your portion of health premiums with pretax dollars. That lowers your taxable income and that in turn lowers your federal tax bite.
It's estimated that retirees would pay anywhere from $200 to $400 a year less in taxes, if they had the premium conversion option. That doesn't sound like a lot of money, but it would permit many lower-income retirees (often the oldest people in the program) to continue to afford the kind of insurance they need.

Long-term care
The open season when feds and retirees can enroll in the Federal Long Term Care Insurance program began yesterday.
For many people, the government-backed program, underwritten by two insurance giants, will be a good deal. But for younger employees, better deals can be had by purchasing a policy outside the program.
One thing is certain: Everybody (regardless of age) should check out the federal LTC program and LTC coverage in general.
This is not just an older person's problem. Anybody can have an accident or illness that requires home or nursing-home help that is not covered by the regular federal health insurance program or by Medicare.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide