PICK YOUR PLAN
Tips for navigating open enrollment for employer-provided insurance
HEALTH BENEFITS| ADVICE
More than half of Americans under age 65 receive health insurance coverage through an employer.
For many of those millions, the annual open enrollment period — when people can make changes to their health insurance selections — is set to begin.
Health insurance is confusing. But if you receive insurance through an employer, open enrollment is the time to sit down and figure out which plan actually works best for you and your family. The decisions you make now can impact your healthcare — and your finances — for the rest of the year.
Here’s where to start.
Basics of open enrollment
For employer-provided insurance, the exact dates of open enrollment vary from one company to the next.
In general, though, open enrollment is in the fall, often beginning around Nov. 1 and lasting a few weeks.
If you’re eligible for employer-provided insurance, you should receive a digital or physical booklet explaining your options for the upcoming year.
That booklet should include information on the updated premium costs, as well as coverage and deductibles. Many employers offer a few different health insurance plans, which range in monthly cost and in coverage.
Key health plan components
There are a few different aspects to any health insurance plan.
First, there are the monthly premiums. This is the amount that you will pay each month to be enrolled in a plan. Many employers will automatically deduct the premium from your paychecks.
There’s more to healthcare costs than just the premium, though.
You should also look at each plan’s copays. The copay is the fixed amount you’ll pay each time you use a certain service. For instance, a plan may have a $20 copay for seeing a non-specialist doctor, which means you’ll pay $20 at each appointment. Your plan may also have a copay for prescriptions.
You should also look at each plan’s deductible, which is the amount that you have to pay out-of-pocket before your health plan kicks in and begins shouldering some of the cost. For example, if your deductible is $2,000, then you’ll need to pay $2,000 in qualifying medical expenses before your health insurance begins to cover these services.
In general, preventive care is covered at 100% from the time the plan starts. Your premiums and copays typically do not count toward your deductible.
After you meet your deductible for the year, your plan’s coinsurance rates kick in, if applicable. Coinsurance is the percentage of a service you will pay for after you’ve met your deductible, versus how much your health plan will cover. For instance, if you’ve met your deductible and you undergo a surgery that costs $2,000, a 20% coinsurance rate would leave you paying $400.
Plans also will specify an out — of-pocket maximum. That is the maximum amount you’d be required to pay for qualifying healthcare services. This is different from a deductible.
Once you hit the out-of-pocket maximum through eligible services, your plan will usually pay 100% of additional covered healthcare services.
Weighing the options
Health insurance plans can have a lot of different components, and it’s not always immediately obvious which plan would be the best fit for you and your family.
Claire York, a vice president at Blue Cross and Blue Shield of Texas, recommends sitting down and tallying your healthcare costs from the prior year. This will give you a sense of how you use your health insurance and how much you spend on your medical care.
“You really do need to go back and take a look and add things up,” York said. “I think a lot of times as consumers, when it comes to healthcare, we don’t do that.”
Add up all of your costs from the most recent year — including your premiums, copays, coinsurance payments and out-of-pocket costs. If you expect to use your health plan similarly in the upcoming year, you can then calculate how much you would pay for the same utilization under the various plan options in the upcoming year.
The plan with the lowest premium may not actually be the least expensive option for you, once you add up the other costs.
“If managing your cost is important to you,” York said, “you have to understand that it’s a combination of your monthly premium you’re paying but also those out-of-pocket costs that you’re going to experience throughout the year.”
If your health plan covers multiple people with chronic conditions who regularly go to the doctor, you might be better served by choosing a plan with a higher monthly premium but lower copays or deductible.
If you typically only use your healthcare plan for preventive care, it might be less expensive to opt for a low premium, high deductible plan.
With any plan choice, though, you should double check the deductible and the out-of-pocket maximum, to make sure you could pay those costs in the case of unexpected or emergency medical care.
“If you’re not prepared to pay something upfront,” York said, “you might want to consider a plan that works a little bit differently than that.”
As you’re considering the options, don’t forget to include any new costs you expect in the upcoming year. That may include an upcoming surgery, an expected childbirth or regular therapy sessions.
