If you’re like a third of the population, you probably feel a mixture of annoyance and dread as open-enrollment season draws near. And that makes sense. Under normal, non-pandemic circumstances, health insurance documents can be confusing and that makes it difficult to feel confident in your plan choices. Now, there are so many unknowns around Covid and its after-effects and health insurance companies keep changing their policies on which Covid-related expenses are covered pre-deductible.
On top of this, many are still working remotely, and will be for the foreseeable future, which means the information you typically receive about your benefits choices from HR may be coming to you digitally, which can be more difficult to navigate.
But fear not, Lively is here to make sure you can get the answers you need. We’ve put together five tips that will make sure you’re prepared for open enrollment so that you can make the best selection for you and your family.
Tip #1: Plan for it
The only way to make the best decision for you and your family when it comes to your benefits is to take the time to understand your options. Make sure you know when open enrollment starts and ends, and then set an alarm. Give yourself enough time to review the materials about your benefit options and ask questions from your human resources team and your benefits providers if they are available.
Tip #2: Make sure you know what’s changed
Even if the name of the health plan and its administrator are the same, the details of the plan could have changed. Possible changes include:
- Cost (i.e. deductible, premium, co-pay, etc.)
- Network (i.e. doctors who are considered in-network and whose care is covered more completely)
- Prescription drug coverage
Before you can compare a new plan to your current one, you have to know how your “current” plan for next year stacks up against your current plan. One major change that many employers are making is a reduction in the percentage of cost they cover for dependents. So if dependent coverage is important to you, make sure you know what your responsibility will be. If the materials you receive don’t make this clear, ask for a specific breakdown in changes including the associated costs.
If your company is offering new health plans, make sure you understand how they function, the total associated costs, which healthcare providers are in-network, and how they treat costs associated with Covid (both during the active illness and the aftermath).
Tip #3: Get clear on what you need from your health insurance this year
How did you and your family use the health system last year? Was it minimal? Do you or a dependent have a chronic issue that requires regular prescriptions or specialist visits? Do you anticipate any changes to this in the coming year?
The goal isn’t to have the most comprehensive coverage possible just in case a catastrophic event occurs. That wouldn’t be cost-effective. The idea is to have the right amount of coverage for your needs.
A good way to assess what your actual needs are is to review your receipts from medical providers from the previous year. Most providers now send digital receipts right to your email, but if yours didn’t and you don’t have the paper receipts, look over past bank or credit card statements. You’ll quickly see whether or not you had the right amount of coverage or whether you paid too much out of pocket.
Tip #4: Look for a plan that might better suit your needs
Now that you know what you need, look at your options. Is there a plan that offers better coverage? A wider network of doctors you want access to? A plan that offers lower premiums but adequate coverage?
If you’re looking to lower your monthly cost for health insurance and want a way to pay for your out-of-pocket medical expenses pre-tax, consider a High Deductible Health Plan (HDHP) paired with a Health Savings Account (HSA).
The HDHP might not be labeled as such, but as of 2021, long as the deductible is at least $1,400 for individuals and $2,800 for families and the max out-of-pocket expenses are no more than $7,050 for individuals and $14,100 for families, the IRS considers the health plan an HSA-eligible HDHP.
Tip #5: Consider benefits that support financial wellness or reduce costs
If your company offers a 401k, IRA, or an HDHP/HSA combination, these are all ways you can start saving for the future. Traditional retirement accounts like 401ks and IRAs take pre-tax money from your paycheck (thus lowering your tax burden) and put it into an investment account. You can start accessing this money when you’re 59 ½ years old. You will pay the appropriate income tax rate on your disbursements at this time.
HSAs function a little differently. You still deposit the money pre-tax, you can still invest said money, but you can access it tax-free to pay for qualified medical expenses at any time you want. Once you turn 65, you can use the money on whatever you want and any money used for something other than medical expenses will be subject to the appropriate income tax rate. Money used for qualified medical expenses remains tax-free.
Other benefits that might reduce costs are wellness programs. Some companies offer a reduction in health insurance premiums as an incentive to participate in a fitness challenge or to quit smoking, or something similar. So if that’s something you’re interested in, ask your HR department about your options.
Open enrollment doesn’t need to be a time of trepidation. It’s actually a time of opportunity! It’s the opportunity to get better health coverage. The opportunity to refine your plan for the future. The opportunity to get a better handle on your budget. Just make sure you make a plan and do the research so you can make the choices that make the most sense for you and your family.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.