Open enrollment is right around the corner, or for many of us, it has already started. Open enrollment is a perfect time to review your health insurance considerations. Not just because it’s required, but because healthcare costs are a top expense for many US households. Finding the best health insurance plan for yourself or your family could save you money, time and finally grant you peace of mind for all your health expenses.
Health Insurance Plan Basics
Health insurance plans seem to grow year over year – PPO, HMO, HDHP compounded with tiers, networks, and varying deductibles. It’s not just you, making a health insurance plan choice is getting more complicated. So let’s start with the basics.
- PPO (Preferred Provider Organization) – offers a network of healthcare providers you can choose from. You get more choice with your healthcare to pick the care providers or specialists you want. It’s a personalized healthcare option. There are cost differences based on in vs. out-of-network providers so double check your current providers to see if they are part of your PPO network.
- HMO (Health Maintenance Organization) – you either love them or hate them! With a selected primary care provider and a full-service offering of medical and health services, HMOs create a one-stop shop for all health services. This can be both convenient or limiting, depending on how you look at it.
- HDHPs (High Deductible Health Plans) tend to have lower monthly premiums (when compared to traditional PPO, HMO or high coverage options) and as stated, higher deductibles. They are however wonderfully flexible and direct when it comes to their offering. They tend not to have additional costs once you reach your deductible.
Health Insurance Plan Nuances
Don’t worry, we brought a full tool chest so we can dig into this more. Below the surface, there can be a few things that can change the value of your plan. More on that now.
- Tiers – bronze, silver, gold, platinum, should you just pick your favorite metal? No! Don’t just choose your favorite color, review the plans based on cost and benefits balance. Higher tier plans often offer the best benefits but at the highest cost. Understanding your health profile and expected usage is important when selecting your plan for the year.
- Networks – healthcare companies work with providers to create a network of qualified and licensed professionals (of which they often have contracted rates). This allows PPO plan enrollees to bypass referrals, but they will likely see higher rates for out-of-network providers. Please note most, HMOs don’t offer out-of-network coverage, except in case of emergencies.
- HSA eligible plans that qualify must have minimum deductibles of $1,300 or more for an individual and $2,600 for a family and there can be no copays or coinsurance prior to hitting those deductibles (no cost for preventative care). They also must have annual out-of-pocket maximums of $6,550 or less for an individual and $13,100 or less for a family. HDHPs are the most common HSA eligible plans, but others can qualify as well, so keep an eye out.
Health Insurance Plan Considerations
A few more considerations to keep in mind as your evaluate your healthcare plans during open enrollment.
- Premiums – the most common healthcare cost. No matter if they are scheduled from your payroll deductions or debited from your bank account. You see these costs monthly (or more) and are the most common input in healthcare cost considerations. These costs are direct, regular and predictable.
- Out-of-Pocket Maximums – the least understood healthcare costs are long-term liabilities that come with out-of-pocket maximums. We hope you never encounter these and the expected high-cost health procedures that likely come with them, but if you do, keep in mind these can overwhelm your financial future. Healthcare plans vary, please read the fine print to understand if your plan has an out-of-pocket maximum and how in vs. out-of-network providers affect these costs.
- Employer Contributions – don’t forget about these. Talk to your benefits manager or HR representative to understand the cost of your healthcare premiums. Look even deeper to discover the costs for an individual or a family. The true cost of your premiums might just be lower than you thought.
- Long-Term Savings – HSAs are the only benefits offering that allows individuals and families to save dedicated health dollars. HSA allow you to make automated contributions to save and pay for medical expenses with tax-free dollars, effectively lowering the cost of your medical expenses.
Health Insurance Plans – Final Thought
Balancing your short-term health costs with long-term health savings is an important consideration during open enrollment season. Find the plan(s) that work best for you or your family so you can afford healthcare today, get the coverage you need, and build health savings for years to come.
In a perfect world, we could maximize our healthcare coverage for today and maximize our health savings tomorrow. This perfect balance might not be here yet, but we are getting closer when you couple an HSA with an HDHP.
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.