While few things have remained certain in 2020, one event that will continue as planned is open enrollment — the period when you’re able to change your health plan for the upcoming year.
Timelines vary, but most HR departments hold open enrollment for a few weeks between October and December. During your open enrollment period, you’re able to select your health care coverage for Jan. 1 through Dec. 31, 2021. If you miss the deadline, you’ll typically remain with your current health plan until next year’s open enrollment period — that is, unless you change jobs or have what’s known as a qualifying life event, such as getting married or having a child.
While it might feel overwhelming, the choice you make can have a big impact not only on your health, but on your finances as well. Here’s what to know before open enrollment so you can make the decision that’s right for you and your family.
CONSIDER THE COSTS
There are a few terms you’ll want to become familiar with when evaluating a health care plan:
The premium, or the amount you pay each month for coverage.
The deductible, or the amount you must pay out of pocket before your insurance kicks in.
The copay, or the set rate you pay each time you visit a doctor or fill a prescription.
According to Zane Dalal, executive vice president at Benefit Programs Administration, which manages health and retirement benefits for organizations, higher premium plans typically have lower deductibles and copays, while lower premium plans are usually the opposite. “You’ll want to decide if it’s better for you financially to pay more for your coverage monthly or more when you visit the doctor,” he says.
If you or a family member has a chronic condition that requires routine visits or regular prescriptions, you’ll want to consider how the fees will add up. Make sure you fully understand when your deductible applies (copays, for example, do not typically count toward your deductible), and what happens after you meet it — just because you’ve reached your deductible doesn’t mean you won’t have additional out-of-pocket costs. “The decision will be different for each employee” Dalal says.
KNOW YOUR ACRONYMS
Health plans typically fall into three general buckets: HMO (health maintenance organization), PPO (preferred provider organization) and HDHP (high-deductible health plan). This guide offers some pros and cons of each type of plan.
When deciding which type of plan is best for you and your family, think about your anticipated medical needs and balance it with the costs. If most of your medical expenses are for preventative care, such as health screenings or shots, most plans will cover these standard services, as long as you use an in-network provider. So if you live in an area where there are multiple in-network providers to choose from, you might consider an HMO, which often has lower premiums, but a more geographically restricted list of providers.
If you receive medical care from a specific provider, you’ll need to determine if they are in network or not. If the provider is out of network, then you will likely need to pay additional costs, which can range from a percentage to the full cost of a visit. Check the plan’s list of providers to see if yours is covered and at what rate.
One thing to note with an HDHP is that you have the option of starting a health savings account (HSA) to offset the costs of the high deductible. An HSA allows you to save up for medical expenses in a tax-advantaged way, and these funds can be rolled over year after year if you don’t use them. For 2021, the annual limit on pre-tax HSA contributions is $3,600 for individual plans and $7,200 for family coverage.
NOTE EXCLUDED SERVICES
While federal law requires most plans to cover essential medical services, be sure to read the fine print for more specialized services. Common exclusions include cosmetic surgery, weight loss programs, infertility treatments, acupuncture and long-term care. And because adult dental services and eye exams are also usually not covered in medical plans, you may want to consider adding supplemental dental and vision plans to fully meet your needs. “If you are concerned about what is and isn’t covered based on an intended procedure or health care concern, make sure to ask to see the list or find it online,” Dalal says.
If you’ve thoroughly read through your benefits summary and still have questions, don’t hesitate to talk to your HR representative or call the health insurance company. Even if you’re not planning to change your plan during open enrollment, you still should review your coverage and look at your options to ensure your current plan is still meeting the needs of you and your family.