Accidents happen at the most unexpected times, so it is essential to have health insurance that covers the costs of treatment or studies to be performed on the injured party. A great option in the country is the IRS health allowance program, which millions of American workers and their families use.
This health insurance program, better known as FEHB (Federal Employees Health Benefits), is available in most U.S. territories. It is rated as one of the best health insurance because of the diversity of healthcare services and plans for the whole family.
What is the FEHB IRS health allowance program?
The FEHB IRS Health Benefits Program is a specific program within the Federal Employees Health Benefits (FEHB) Program that is specifically tailored to federal employees, retirees, and their families, who have access to a predetermined amount of money, called a health allowance to help them cover the cost of their health care expenses.
This IRS health allowance program is intended to offset some of the premium costs associated with enrolment in an FEHB health allowance program. This program allows IRS employees to choose from different health coverages, i.e., they have a wide range of plans available to suit the diverse needs of the enrollees.
Types of IRS health allowance programs
IRS health care payment plans are used to obtain and pay for health care in different ways, depending on the needs of patients. The health care payment plans offered by the IRS may be Fee-For-Service (FFS) plans, which, in turn, may have a Preferred Provider Organization (PPO), Health Maintenance Organization (HMO), and may or may not offer a Point-Of-Service (POS) product.
On the other hand, there are also Consumer Driven Health Plans (CDHP) and High Deductible Health Plans (HDHP), which may be a Reimbursement Arrangement (HRA) or Savings Account (HSA). Next, let’s look at the differences between each.
Fee-For-Service (FFS) plans
Fee-for-service (FFS) plans typically use two main approaches: simple or with preferred provider organizations (PPO).
- Fee-For-Service plans (with no PPO): These plans offer the highest flexibility and choice. Employees can choose any healthcare provider or specialist without referrals with an FFS plan. They can go directly to the specialists or hospitals of their choice.
FFS plans usually involve prepayment for services and subsequent submission of claims for reimbursement. While FFS plans offer maximum flexibility, they typically require higher out-of-pocket expenses and may have higher deductibles and co-payments.
- Fee-For-Service with PPO plans: PPO plans aim to provide a balanced approach by offering versatility and cost savings. Employees can choose any healthcare provider they want with a PPO plan, but they can also take advantage of reduced costs by opting for providers within the plan’s network.
The plan’s network comprises a broad range of preferred providers who have agreed to offer lower rates, ensuring members enjoy significant savings on healthcare expenses. Although PPO plans allow members to receive care from out-of-network providers, this may result in higher charges.
Health Maintenance Organization (HMO) Plans
Health Maintenance Organization (HMO) plans are a type of health insurance plan that focuses on healthcare coordination and management. The first thing the insured must do is find a Primary Care Physician (PCP) who is on the list of doctors included in the HMO plan.
The PCP oversees the insured’s overall care, referring them to other specialists or prescribing appropriate medication. In most HMO plans, members must obtain authorization from their PCP before seeing a specialist within the HMO network. This helps control costs and ensures that care is provided efficiently and coordinated.
NOTE: Exceptions to this rule are usually limited to emergency or obstetrical and gynecological care.
HMO members pay a monthly premium and generally have fixed co-payments for doctor visits, prescription drugs, and other covered services, which may include preventive services such as screenings, immunizations, and wellness programs.
In addition, HMO plans have a selected provider network, which may include doctors, hospitals, laboratories, and other healthcare providers. To avoid paying extra expenses, the enrollee must receive medical care within the HMO program’s network coverage. Otherwise, you will be charged extra or you even may have to pay the total cost.
IMPORTANT: HMO plan features and regulations may vary by insurer and state.
HMO POS (Point of Service) Plans
HMO plans that offer a Point of Service (POS) product combine features of HMO plans with some flexibility to receive medical care outside the designated provider network. Policyholders must select a primary care physician (PCP) from the HMO network, just as in a traditional HMO plan, except they may seek care outside the provider network.
Consumer-Driven Health Plans (CDHP)
CDHPs empower consumers and give them more control over their healthcare decisions and spending. The idea is that patients receive information about costs and available options to make their own decisions about their healthcare.
In this way, stakeholders can access specific data on the actual prices and medical benefits, the drugs covered by the plan, the procedures of an operation, and much more information necessary for any patient.
High Deductible Health Plan (HDHP)
Before we start, it is worth clarifying that the information is taken from the official Office of Personnel Management (OPM) website, whose prices are not updated since 2014, so there could be a variation in the numbers.
A high excess health plan is a health insurance plan in which the member pays an excess of at least $1,250. If you wish to add a family member or take out family coverage, the price is $2,500. With this coverage, the member can pay up to $6,350 annually. For annual family membership, members will pay at most $12,700.
Despite having high deductibles, HDHPs generally offer free preventive coverage. Preventive services, such as screenings, immunizations, and health checkups, are covered without meeting the deductible.
For example, HDHPs in the FEHB program partially fund HSAs for eligible stakeholders and provide a comparable HRA for those not eligible for an HSA.
Differences between HRA and HSA
Both an HRA (Health Reimbursement Arrangement) and an HSA (Health Savings Account) are intended to help cover the healthcare expenses of U.S. citizens. HRAs and HSAs can be valuable tools for managing healthcare costs, but understanding the differences between them is crucial to choose the option that best meets your needs and preferences.
While an HRA is owned and funded solely by the employer, the individual holds a HAS, and both the individual and the employer can contribute.
One key distinction is that individuals have complete control over their HSA funds, even if they change jobs. This means they can continue using the funds for eligible medical expenses, regardless of their employment status. Additionally, they can keep unused funds in the account yearly, which can be valuable for future healthcare needs.
An HSA is portable, meaning the individual can keep the account and use the funds even if they change jobs or health insurance plans. On the other hand, an HRA is tied to the employer and may not be portable when changing jobs.
Accumulation of funds
HSA funds can accumulate yearly and grow over time, allowing the individual to save for future medical expenses. In contrast, HRAs may limit the accumulation of funds, and the employer typically holds any unused balance.
HRAs operate through a reimbursement model, where employees submit eligible medical expenses for reimbursement using account funds. On the other hand, HSAs can be used to pay qualified medical fees directly or as a reimbursement account.
While HRAs and HSAs are associated with high-deductible health plans (HDHPs), additional requirements exist. To be eligible for an HSA, it is necessary to be enrolled in an HDHP, while the employer’s health benefit plan determines eligibility for an HRA.
Available IRS health allowance program services
The IRS health allowance program offers various medical services to its members, who can access a large amount of health coverage. Among the primary benefits you can apply for are the following (although there are many more that you should consult when you need them):
- Ambulance services
- Alcohol rehab
- Doctor’s office visits
- Inpatient hospital care
- Lab tests
- Maternity care
- Mental health services
- Physical therapy
- Routine physical exams
- Specialist visits
- Stop smoking aids and drug rehabilitation
- Urgent care
- “Federal Employees Health Benefits Program (FEHB).” IRS Careers, https://www.jobs.irs.gov/resources/benefits-programs/federal-employees-health-benefits-program-fehb.
For years I have studied American finance regulations. All the information in this blog is sourced from official or contrasted sources from reliable sites.
Salesforce Certified SALES & SERVICE Cloud Consultant in February 2020, Salesforce Certified Administrator (ADM-201), and Master degree in “Business Analytics & Big Data Strategy” with more than 13 years of experience in IT consulting.