NU Online News Service, April 21, 2004, 1:33 p.m. EDT – The U.S. Office of Personnel Management wants health carriers to help it set up a high-deductible health plan program for federal employees.[@@]

Officials are mainly interested in adding a health savings account option to the Federal Employees Health Benefits Program, but the program must include alternative benefits for older federal workers, according to the annual OPM call letter.

Benefit program proposals for 2005 are due June 1.

President Bush brought HSAs to life Dec. 8, 2003, when he signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003. One MPDIMA section lets eligible taxpayers who buy high-deductible health insurance policies exclude HSA contributions from taxable income and spend HSA cash on qualified expenses without paying income taxes on the distributions.

The high-deductible health insurance policies can offer special low-deductible coverage for certain types of preventive care.

One challenge for employers that are setting up HSA programs is that workers who are eligible for Medicare are not eligible to set up HSAs.

To protect the interests of federal workers who are age 65 and older, HSA benefit program proposals must include an HRA benefit of equivalent value or other benefits of equivalent value for workers who are ineligible for the HSA program, Abby Block, a deputy associate director at the OPM, and Frank Titus, the agency’s assistant director for insurance services, write in FEHB Program Carrier Letter 2004-04.

The federal HSA program must offer participants access to a network of providers who have agreed to accept pre-negotiated rates, and the trustee that manages the savings accounts must have a high rating from a financial rating service, the officials write.

“We also expect the proposal will include sophisticated health education and consumer education components,” the officials write.

The OPM has posted the call letter at http://www.opm.gov/carrier/carrier_letters/2004/2004-04.asp