The Federal Employee Dental and Vision Benefits Enhancement Act of 2004 authorized the Office of Personnel Management to establish a program in which separate dental and vision insurance benefits are to be made available to federal and postal service employees, retirees, their spouses, and to their children under the age of 22.
Dental and vision insurance benefits are available to eligible federal and postal service employees, annuitants, survivor annuitants, and to their eligible family members on an enrollee-pay-all basis through the Federal Employees Dental and Vision Insurance Program (FEDVIP).
FEDVIP allows separate or both dental insurance and vision insurance to be purchased on a group basis with competitive premiums. These premiums are paid entirely by employees, annuitants and survivor annuitants, with no premium contributions made by federal and postal service agencies.
An annuitant is a retiree who is receiving either a CSRS or a FERS annuity. A survivor annuitant is a surviving family member (usually a spouse) of a deceased employee or retiree who is receiving a CSRS or FERS spousal survivor annuity.
Enrollment in FEDVIP takes place during the annual federal benefits open season which this year is taking place between Nov. 8 and Dec. 13, 2021. New and rehired employees can enroll within the first 60 days of their hire date.
For those employees, annuitants or survivor annuitants who enroll in a dental and/or vision plan within the FEDVIP or change their current 2021 FEDVIP dental and /or vision plan for 2022, coverage becomes effective on Jan. 1, 2022, with FEDVIP insurance premiums deducted from employee paychecks starting with their first pay date in January 2022.
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Annuitants and survivor annuitants have their 2022 FEDVIP insurance premiums deducted from their monthly CSRS or FERS annuity checks starting Jan. 1, 2022. Any employee, annuitant, or survivor annuitant who wishes to disenroll from their current 2021 FEDVIP enrollment must do so during the current open season.
Both enrollment and disenrollment in the FEDVIP are done by employees, annuitants and survivor annuitants by going to www.benefeds.com.
This column — in addition to discussing dental insurance offered through the FEDVIP — also discusses why employees, annuitants, and survivor annuitants are encouraged to review their options as to how to pay their dental expenses.
Among the reasons: The dental insurance industry has changed in recent years. Research by Health Services Research with respect to dental and health care spending among individuals revealed that 40 percent of total dental/health-related spending is out-of-pocket with health-care spending only comprising 11 percent. The mere fact that employees, annuitants and survivor annuitants pay the full cost of the FEDVIP dental premiums with no contribution by the federal government, and that FEDVIP dental insurance plans (like most other group-sponsored dental insurance plans) rarely come close to paying the full amount of the more expensive dental procedures, is a strong indication that employees, annuitants, and survivor annuitants need to “do their homework” before deciding to enroll either in a FEDVIP-sponsored dental plan or an individual purchased dental insurance plan.
It is important to first discuss the dental insurance program offered to federal employees, annuitants and survivor annuitants through the FEDVIP.
The FEDVIP-sponsored dental insurance plans offer more comprehensive dental coverage than what an employee’s or an annuitant’s Federal Employees Health Benefits Program (FEHBP) health insurance plan offers. Some FEHBP plans provide some basic dental coverage (for example, dental cleanings and x rays) FEDVIP provides comprehensive dental insurance with no waiting periods (except orthodontics in some plans).
There are about a dozen dental plans in the FEDVIP to choose from, each covering:
(1) routine dental exams, checkups, and cleanings;
The following is a summary of the FEDVIP dental insurance, including which employees, annuitants and survivor annuitants are eligible to enroll in a FEDVIP-sponsored dental plan, which family members can be covered, when employees and annuitants enroll, and the premium cost of FEDVIP dental insurance plans.
1. Who can enroll?
Federal employees who are eligible to enroll in the FEHBP are eligible to enroll in the FEDVIP. However, enrollment in the FEHBP is not required in order to enroll in a FEDVIP dental insurance plan. Employees who received an immediate annuity upon retiring from federal service (and not a deferred annuity) are eligible to enroll in FEDVIP dental insurance plan, regardless of FEHBP eligibility. Annuitants are not required to be enrolled in the FEDVIP during their last five years of service in order to be eligible to enroll in the FEDVIP once retired from federal service (like they are with respect to maintaining their FEHBP participation in retirement).
2. Which family members are eligible to be covered by an employee’s or an annuitant’s enrollment?
The following types of enrollments are available: (1) Self only – only an employee, annuitant or a survivor annuitant; (2) self plus one – an employee, annuitant survivor annuitant and a specified eligible family member. An eligible family member is a spouse or a dependent child under the age of 22; (3) self and family – family includes one’s spouse and all unmarried dependent children under age 22.
3. When to enroll, change dental plans, or to disenroll in the FEDVIP?
A newly hired or rehired employee can enroll within 60 days of their hire date. Current permanent employees (full- and part-time) and annuitants and spousal survivor annuitants (receiving a CSRS or FERS survivor annuity) can enroll during the federal benefits “open season.” All employees and annuitants when they have a “qualifying life event” (such as marriage, divorce or death of a spouse) can enroll, disenroll or change their FEDVIP dental plans.
4. What are the cost of FEDVIP dental plans cost and what percentage of the premium do employees and annuitants pay?
The federal government contributes nothing to the premium cost of an employee’s, an annuitant’s or a survivor annuitant’s FEDVIP dental plan. The premium that an employee or annuitant pays for a particular FEDVIP dental plan depends on which dental plan the employee/annuitant/survivor annuitant selects, the type of enrollment (self only, self plus one, or self and family) and where the employee/annuitant/survivor annuitant lives. There is a geographical cost factor included in determining FEDVIP dental premiums, with employees/annuitants/survivor annuitants who live in higher-cost areas paying more in premiums for a given FEDVIP dental plan compared to employees/annuitants/survivor annuitants who live in lower cost areas. Routine basic dental services such as periodic dental exams and cleanings are covered 100 percent when an employee, annuitant, survivor annuitant and family member use a network dentist. For other services, an employee or annuitant will usually pay part of the cost of out-of-pocket.
Federal employees, annuitants and survivor annuitants may want to seek alternatives to enrolling in a dental plan offered through the FEDVIP. The reason is that one has to ask the question: What is the purpose of buying any insurance? The purpose is “transfer of risk.” The insured pays a small amount of money – a premium – to an insurance company in order to protect the insured from a financial catastrophe.
A classic example is homeowner’s insurance in which for example a homeowner who owns a homeowner’s insurance policy pays an annual premium of $1,500 to $2,000 on a house worth $500,000 to $750,000. If the house were to burn down, the insurance company in most cases would pay the cost of having the house rebuilt at its fair market value just before the house got destroyed. Obviously, the insurance company would be paying a far greater amount of money than the homeowner paid in insurance premiums through the years.
Dental insurance covers far less in dental expenses compared to what traditional medical insurance covers in medical expenses. Many dental plans (and this includes FEDVIP plans) may pay for only $1,000 or $2,000 of dental expenses incurred per individual per year. Dental insurance therefore is not the “classic” insurance in the sense that it protects the insured from the “catastrophic” expenses.
With the FEDVIP, employees, annuitants and survivor annuitants pay the full cost of the premiums with no federal government contribution. It is also important to keep in mind that most FEHBP plans include coverage for routine dental care (check-ups). With that in mind, employees, annuitants and survivor annuitants when looking to buy dental insurance should keep in mind the main reason for buying any insurance, namely “transfer of risk” and protecting oneself and family as much as possible from the catastrophic expenses.
The following are some suggestions for employees, annuitants and survivor annuitants to consider during this “open season” before enrolling or re-enrolling in a FEDVIP dental plan:
• Determine what expected dental expenses they and, if appropriate, insured members of their family expect in 2022. Keep in mind that they should be potentially insuring only for the “non-routine” dental procedures such as orthodontics.
• If dental insurance is necessary for 2022, before enrolling re-enrolling in a FEDVIP dental plan, contact an independent and licensed life/health insurance agent or broker who sells individual dental insurance. Keep in mind that whether one buys through the FEDVIP or on the outside, the premiums are paid entirely by the insured. There is no government premium contribution with the FEDVIP.
• Check if there are any waiting periods with an outside dental plan as well as the annual limit on what the insurer will pay.
• Whether buying through the FEDVIP or on the outside, make sure that one’s dentist and if applicable orthodontist does accept the particular dental plan one is interested in purchasing.
• As an alternative to purchasing dental insurance altogether, consider “self-insuring.” Self-insuring includes employees setting aside a portion of gross salary into either the health care flexible spending account (HCFSA), limited expense health care flexible spending account (LEXHCFSA) and subsequently requesting tax-free distributions from HCFSA to pay for dental expenses. Go to www.fsafeds.com for more information. During 2022, a maximum $2,850 (increased from $2,750 during 2021) can be set aside via payroll deduction per employee to either the HCFSA or LEXHCFSA.
Both employees and annuitants can also make tax-free withdrawals from their Health Savings Accounts (HSAs) to pay for dental expenses.
Both employees and annuitants can withdraw from their general savings to pay for dental expenses.
Employees over age 59.5 and annuitants can withdraw from their traditional TSP and traditional IRAs penalty-free to pay for dental expenses.
