Gov Career

By Phil Piemonte

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It could be worse (seriously)

Unlike some people out here in the private sector, I don't think that your federal benefits should be changed to be more like mine. That's because I don't envy you your benefits—I admire the fact that you have them. I think most non-feds would rather their benefits looked more like yours.

And in fact, many years ago, our benefits were like yours. But out here in the private sector, change happens more easily. And it can come quickly, too, depending on the vote of a corporate board, or the snap of the boss's fingers. In the federal workplace, on the other hand, it literally takes an act of Congress to change many of the benefits enjoyed by federal employees.

Out here, the profit motive tends to complicate matters—it has a propensity to incite operational changes, reorganizations, mergers and acquisitions, all of which can cause sudden shifts in employee benefits.

Example: Of the half-dozen major companies that I have worked for during my career, four were acquired by larger companies while I was there, three of them by large international conglomerates. And each time, benefits changed. All of them. As in clean slate, start from scratch.

You think things are getting dicey when it comes to your benefits? Let's look at one benefit, health insurance, as an example. First, consider for a moment the Federal Employees Health Benefits Program plan you currently have—then step into the private sector and imagine this scenario ...

One day your spouse comes home from work and announces that his/her place of employment has been acquired by some big outfit from out of town, and that all of his/her benefits—including the self and family health insurance that you share—will change in two weeks. That's two weeks.

Life insurance, health insurance, dental and vision plans, short- and long-term disability, flexible spending account, 401(k) plan, educational allotment—everything—will change in 14 days.

Imagine that several days after receiving this news, an express envelope arrives in the mail, detailing the new benefit options.

So now you have just over one week to make your decisions.

Now, finally, imagine that the new parent company's fancy benefits brochure, which is full of pictures of smiling, happy employees, which tells you that employees are the company's most important resource and that's why they want to take such good care of you, also reveals that the company offers a single high-deductible health plan—with a $7,000 in-network family deductible—as its one and only health insurance option.

Now imagine that you're not imagining.

OK. There is nothing wrong with high-deductible health plans. In fact, as of January 2013, 15.5 million people had them, according a census from the AHIP Center for Policy and Research. And the numbers are growing. HDHPs (once more commonly known as "catastrophic coverage") may be the perfect option for some people, especially the young and healthy who don't require much doctoring, those who don't mind absorbing some costs along the way on the chance that expenses during the plan year will be lower than a traditional plan's higher premiums, or folks who can't afford to pay much for insurance, but want to make sure it's there in an emergency.

But many people don't fall into those categories. That is why you, as federal employees, have the FEHB to provide you with a range of options to suit your individual or family needs. You get choices.

But guess what? Are you sitting down? According to the Kaiser Family Foundation's 2013 Annual Survey of health plans, 87 percent of companies offer only one type of plan. Eighty-seven percent. Only 12 percent of all firms offer two plan types, and a mere 2 percent offer three or more types of plans.

But as it turns out, bigger is better. The bigger the firm one works for, the greater chance one has of choosing from more than one plan. According to the same survey, only 32 percent of the largest firms—those with 5,000 or more employees—offered just one plan. Forty-eight percent of those largest companies offered two plans and 20 percent offered three or more plan types.

So when it comes to health insurance, critical mass is important. And with a couple million employees, give or take, that's something the federal government has.

The fact is, you are among the elite when it comes to health insurance choices. But a growing number of us schmucks out here in the cold, harsh private sector—like the person in the example above—have only one health insurance choice: It's called Take It, Or Leave It.

And we haven't even gotten to talking about wages and retirement plans.

The moral of all this? Here it is: Relax. Be glad you're a federal employee. Things could be much, much worse. At least where insurance is concerned.

(P.S. In the hypothetical case above, the hypothetical spouse's hypothetical spouse luckily also had access to company-sponsored health insurance through their employer—insurance that featured a mix of HMO and PPO choices. So for him [or her] things could have been worse, too!)

Posted by Phil Piemonte on Jun 02, 2014 at 1:49 PM


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Edward A. Zurndorfer Certified Financial Planner
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