Open Enrollment: Why I Should Be Concerned About Open Enrollment?
While the transition of the calendar from October to November in some people’s minds strikes thoughts of holiday ham, shopping, and crisp autumn air. It’s also the perfect time to start thinking about open enrollment for various insurance and employer-sponsored benefits. I know it’s not the sexiest topic to think about, but let’s face it…it’s definitely important! For just a few minutes before you get fully engulfed by the upcoming holiday season, below are arguably the top 4 things to consider as we enter the open enrollment period.
What is open enrollment, and why should I care? Each year, open enrollment is designated as the official period for you to enroll in new health insurance plans or make changes to an existing enrollment. If you are currently enrolled in any form of health insurance plan. The open enrollment period is the only time you can change your plan that is not related to qualifying life events (i.e., marriage, birth or adoption of a child, change in employment status, etc.). Suppose you’ve previously enrolled in a health plan and have experienced changes that require an update to your selected plan. In that case, open enrollment is the time to make that adjustment. The open enrollment period typically runs from November 1 until December 15 for the individual market; however, the dates may shift depending on where it is offered. For example, the Federal Employee Health Benefits plan offers an open enrollment period from November 8, 2021, until December 13, 2021.
What significant factors should I consider when comparing my options during open enrollment?
Plan and network types – There are four different types of health insurance plans: Exclusive Provider Organizations (EPOs), Health Maintenance Organizations (HMOs), Point of Service (POS), and Preferred Provider Organizations (PPOs). If you have access to more than one network type. You should be aware of their differences and decide which is best for you and your personal situation. While there are marked differences between the HMO and PPO plan types, the EPO and POS plan types are somewhat of a hybrid between the two. Below is a quick summary of the differences as well as the pros and cons of each.
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General Description
An HMO is a type of health insurance plan that limits care to medical professionals who work directly for or contract with the HMO. The HMO may only be available to you if you live or work in its specified geographic location.
Pros
Participants have a primary care provider (PCP) that oversees overall healthcare plan for patient.
Generally lower monthly premiums and lower out of pockets costs.
Cons
Patient choice is limited to providers operating within the network.
Participants must receive referrals from PCP prior to visiting any other doctor.
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General Description
A managed care plan that requires exclusive use of medical professionals in the plan’s network.
Pros
Participants have the option to select specialists without need for a PCP referral.
Generally, have lower cost in premiums and out of pocket costs than PPO.
Cons
Limits care to providers within the plan’s network.
May require preauthorization to obtain certain elective services and tests.
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General Description
A type of coverage that allows participants to receive discounted health care services through providers within the network. A primary care physician is usually not required, and participants have the flexibility to choose doctors, hospitals, and the specialists that they prefer. Participants still have the option to access out-of-network providers, but usually at a higher cost.
Pros
Costs are low when utilizing in network providers.
Participants have greater choice in selecting a provider.
Participants do not have to maintain a primary care physician.
Annual out of pocket costs are limited.
Cons
Out of network treatment is more expensive.
Copayments are usually higher than that of an HMO.
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General Description
A plan allowing less expensive care for use of medical professionals within the plan’s network.
Pros
Similar to a PPO, allows participants to obtain care at lower costs through in network providers.
Cons
Requires referrals from PCP in order to seek care from a specialist.
Plan Costs – One of the major factors to consider when comparing insurance coverage options in open enrollment is the cost. Many factors contribute to cost that you should consider, which are detailed below. When comparing various health insurance plans available, understand the difference in the following costs among different plans.
Annual deductible – The annual deductible is the out-of-pocket cost required before your insurance plan contributes toward your expenses. This amount is in addition to the premium payment required.
Annual out-of-pocket maximum – The maximum amount of cost a participant will incur in a plan year. This cost does not include monthly premiums, costs associated with out-of-network care, services not covered by your plan, or costs exceeding the maximum allowable amount for a service.
Copayment Amount – The fixed amount required for covered healthcare once the annual deductible has been satisfied.
Specialist Costs – The fixed amount required for specialist services provided once the annual deductible has been satisfied.
Inpatient Surgical Costs – Out of pocket costs required for healthcare-associated with inpatient facilities (i.e., hospitals).
Prescription Costs – Out of pockets costs required to cover prescription drug benefits.
3. How do I know if I need to change my plan? There are a variety of reasons why you might need to consider changing your health insurance plan. Although this is not a comprehensive list, consider the following reasons:
Your ideal providers or desired services are no longer covered under your existing plan. You may have a specific doctor you want to work with or require specialty service that you find is not offered by your current coverage. When this is the case, your existing insurance may either partially cover the expense or leave you to pay 100% of the cost out of pocket.
Your plan costs have changed significantly. Health insurance costs usually vary annually. The open enrollment period is the best time to review available options. If you have access to plans with different insurance companies or different levels of coverage under your current company. Open enrollment is the time to determine if the new costs for coverage can still be managed in your current budget. Even if you intend to keep your current coverage, you should examine the anticipated cost for the upcoming year to ensure that it fits within your budget limitations.
You need a different level of care. Insurance companies frequently offer participants different levels of coverage. Often, there will be a basic, standard, and gold option, or something similar, with varying costs and levels of coverage. Your anticipated medical needs may fluctuate from year to year, and the open enrollment period is an opportunity to assess your current level of care. Then evaluate whether you should upgrade or decrease your coverage. Typically, the primary distinction between care tiers is the cost of services given. As a general rule (there are always exceptions), the higher the deductible, the lower the premium.
You have another reason to change your plan and do not have a qualifying life event. If you have access to a variety of plans through your employer or through the individual market. Open enrollment is the best time to review what options are available. You will not have any other opportunity to change your coverage outside of the open enrollment period unless you experience a life event. Marriage, the birth of a child, a change in residence that impacts your ability to obtain care are all examples of qualifying life events.
4. My health insurance is good. Should I consider anything else during this time? Other benefits outside of health insurance may be available for enrollment or adjustments during the open enrollment period. If your employer offers additional benefits other than health insurance, you might be eligible for some of the following benefits.
Flexible Spending Accounts (FSA) – Employers offering a flexible spending account or FSA allow employees to set aside pre-tax dollars to cover medical expenses incurred during the year. If you enroll in a flexible spending account, you must re-enroll every year to continue receiving the benefits. In 2022, the maximum election for FSAs is $2,750, allowing an employee to elect up to the maximum amount to be contributed tax-free. Throughout the year, the employee can then pay for medical expenses (i.e., copayments, prescription and over-the-counter medical costs, and other medical supplies). It is definitely to your advantage to contribute to a flexible spending account if it is offered and you have any out-of-pocket medical expenses. This can be a reduced tax burden for expenses you are likely already incurring.
Dependent Care Flexible Spending Account (DCFSA) – Employers offering a Dependent Care Flexible Spending Account allow employees to set aside pre-tax dollars to cover dependent care services. The DCFSA covers various expenses, including before and after school care, daycare, and summer day camp. These expenses are dedicated to a child under the age of 13 or care for a dependent adult residing with you who is physically or mentally incapable of self-care. In 2022, participants can elect up to $5,000 if married filing a joint return or up to $2,500 if married filing separate. If you have a child or children under the age of 13 or a qualifying dependent adult. It is beneficial to enroll in a DCFSA if it is offered by your employer.
Health Savings Accounts (HSA) – HSAs are pre-tax accounts utilized to pay for qualified medical expenses. These accounts are only available for those with a High Deductible Health Plan (HDHP); therefore, there is no need to worry about enrolling in an HSA unless you have an HDHP. In 2022, you can contribute $3,650 for self-only coverage and $7,300 for family coverage in an HSA. Once enrolled, an HSA can be used to pay for deductibles, coinsurance, copayments, and other medical expenses (except premium payments).
Now is an excellent opportunity to learn about the open enrollment benefits available to you. In addition to the costs, the coverage they provide, and how you can best prepare to incorporate these benefits into your overall financial plan! While this list is not all-inclusive, it’s definitely a head start for what you should consider as the open enrollment period is flying in.