Admit it: You flipped through your new Open Enrollment human resources booklet but stuffed it back into your desk after a few seconds. Or worse, you never opened it at all!
We get it — that thing’s a snoozer. Luckily, when it comes to health insurance, if you don’t have coverage through your employer, you still have until December 15 to choose a health insurance plan for 2021 through the marketplace.
It’s not a good idea to wait much longer, though! After the Open Enrollment deadline passes, you can’t get the coverage you want in 2021 unless you experience a qualifying life event (for example, maybe you’re having a baby, getting married or moving to a new state).
But wait. Before you choose, ask yourself: Are you really doing your money any favors? Take a minute and skim through three questions to ask yourself.
Ask Yourself Three Questions
Three questions. That’s all it takes to make sure you’re getting all you can from Open Enrollment. Here they are!
1. Do you have the right health insurance benefits?
Take a look at your health care spending over the past year. An easy way to do this is to log onto your health insurance website and look at the claims you filed.
- Will you need medical procedures in the coming year?
- Consider what your deductible was and when — or if — you reached it.
- Add up copays and coinsurance for physician visits and prescription drug expenses.
- Whether you or a family member have been recently diagnosed with a medical condition.
- Whether you will be adding to your family or attempting to in the next year.
If you expect to have high medical costs, a high-deductible health plan might not be right for you.
Even if you’re happy with your current health care plan, review it during open enrollment to make sure your coverage or the cost won’t change. Dive into your expenses to know what you spent on health insurance in 2020 and so you can make the best decisions during 2021.
2. Do you need to add/get rid of any benefits?
As you review changes in your life (such as having a baby), consider whether you may want to add/delete some benefits. Think broader than just health insurance, too — think about life insurance and more:
- Consider adding a dependent care flexible spending account to take advantage of tax-free childcare expenses.
- Check your beneficiaries to make sure that you’ve listed the right person.
- Check your 401(k) to make sure you’re getting the full match.
3. Are you taking the easy way out and selecting the lowest-cost plan?
Did you know that plans that charge the lowest premium typically have the highest deductibles and out-of-pocket costs.
Before making a decision, make sure that you fully understand what the plan does and doesn’t cover. Find out which hospitals you can go to and more. Of course, cost must be a factor, but it shouldn’t be the only factor.
Selecting the lowest-cost plan just because it’s the lowest-cost plan could put you in a pickle. You could pay for unnecessary expenses by not reviewing changes in your existing medical plan. It’s up to you to verify that you’re covered for medical treatment. Catch all changes so you can switch to a plan with better coverage.
4. Are you sticking to your old plan because you’re lazy? (Hey, someone had to ask!)
Did you know that HealthCare.gov organizes coverage into bronze, silver, gold and platinum categories? Bronze and silver plans are cheaper but offer less coverage. Gold and platinum plans are more expensive but… you guessed it! They provide more coverage.
You may pay more upfront with a higher premium but you could save in the long run if you require several doctor visits, prescriptions and treatments in 2021.
On the other hand, if you bought an expensive plan for 2020 and hardly used it, you may have overpaid. You should therefore consider a lower premium plan for 2021.
5. Are you thinking outside the box?
Zip back up to the No. 2 question. We’ll bring it up again, just to make sure you’re thinking about everything — not just health insurance.
- Did you “up” your 401(k) contribution? You’re losing out on money if you don’t take advantage of your 401(k) match, which encourages investing. For every dollar you contribute to your 401(k), the company will invest that same amount of money, or a percentage of every dollar — up to a set percentage of your income.
- Have you thought about identity theft insurance? It’s no joke. Identity theft insurance may repay you for stolen funds and recovery expenses. It’s really affordable, and these days, it’s really important!
- What about long-term disability insurance? Sorry to say it, but something disabling can happen in an instant. Should a disability prevent you from working, long-term disability insurance replaces a portion of your income until you can work again. Without disability insurance coverage, you may find yourself without money — and no ability to make more. Disability insurance can really save you if you can’t work.
- Will you tap into a health savings account (HSA)? HSAs help individuals and families pay for expenses before you reach your (often expensive) deductible. You can set aside money on a pre-tax basis to pay for qualified medical expenses. Perks: An HSA’s funds roll over year to year if you don’t spend the money in your HSA. An HSA may earn interest or other earnings, which are not taxable.
Does your company offer any other types of “other” items you should consider, like term life insurance options?
Research, Research, Research
You may not want to use the same health insurance that you currently have, but are you sure it’s the best move? Do some careful research when you consider switching plans so you know what will work best for you! Here’s how to do your research.
Step 1: How much will you pay?
This may be painstaking, but it’s really important to know how much you’d pay per month to your insurance company (your premium) if you switch plans, even if you won’t use medical services during any given month.
You’ll also need to find out how much you pay for out-of-pocket costs (including a deductible) when you get care from your doctor or go to the hospital. Think about both kinds of costs — recurring costs and out-of-pocket costs — when you consider switching your plan.
Ask your plan administrator for more information if you don’t understand all your costs.
Step 2: What plan types are open to you?
Will you be able to use any doctor or health care facility? Check out the variety of plan and network types, such as HMO, PPO, POS, and EPO. Read the details of each and learn which works best for your family. Some plan types, like a PPO, usually allow you to use almost any doctor or health care facility. Others limit your choices or charge you more if you use providers outside that plan type’s network.
Step 3: Find out if you can get the essential services you need at the hospitals you want.
What would happen if you got really, really sick? What hospital would you want to go to? For example, let’s say you live in Wisconsin and would prefer to go to Mayo Clinic in Rochester, Minnesota if you were to get cancer or a heart condition. Would your insurance let you go to your preferred hospital? It’s really, really important to check.
Hard Year? Consider a High-Deductible Health Plan
It’s been a tough year. Due to financial hardships, you may want to save on your health insurance premium by choosing a high-deductible health plan (HDHP). Here’s a quick overview:
- High-deductible health plans charge less for your premium than standard insurance plans.
- High-deductible health plans are really popular among individuals and families who don’t have regular medical needs but need a simple insurance type to cover major illnesses and injuries.
- The IRS defines an HDHP as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family in 2021. The total yearly out-of-pocket expenses (including deductibles, copayments and coinsurance) can’t total more than $7,000 for an individual or $14,000 for a family. (This doesn’t apply to out-of-network services.)
The downside of an HDHP? It typically doesn’t cover any medical expenses until you have reached the annual deductible. (Some plans will pay for preventive care without requiring you to meet the deductible.)
Don’t forget about an HSA! You can only get an HSA if you have a HDHP. You can contribute up to $3,600 for self-only coverage and up to $7,100 for family coverage.
Pounce on the Right Option During Open Enrollment
Instead of thinking of it as a yearly snoozefest, take the attitude that Open Enrollment is an opportunity — for wealth-building!
Join the wave of people who take this opportunity to rejigger their 401(k)s, change their beneficiaries and save tons of money with an HSA, flex spending and align fund selections with their goals.
Bio: Melissa Brock is a 12-year veteran of college admission, founder of College Money Tips and Money editor at Benzinga. She loves helping families navigate their finances and the college search process. Check out her essential timeline and checklist for the college search!
While the data from third parties is believed to be reliable, we cannot ensure the accuracy or completeness of the data provided.
Published on December 8, 2020