It’s open enrollment season again, when employers announce health benefit options for next year and provide an opportunity for employees to make changes to their plans. While choosing your health care benefits may not top your list of favorite activities -‑ nearly three quarters of employees say reading about benefits is long, complicated or stressful, according to a new report from Aflac -- it’s one of the most important financial decisions that you make.
A January study by the Kaiser Family Foundation and The New York Times found that one in five working age-American with health insurance has trouble paying their medical bills. Big bills may be unavoidable in the event of a medical catastrophe, but making a smart decision about your health insurance during open enrollment is the first step toward making sure you can afford such an event. Here’s what you should do during open enrollment this year:
1. Look at total costs. Premiums for the average employer-provided family health plan are going up 3 percent in 2017, to $18,142, according to a new recent analysis by the Kaiser Family Foundation. While that’s in line with wage growth, the cost of the average deductible is growing far faster. Kaiser estimates that the average deductible will spike 12 percent next year to nearly $1,500, with deductibles at smaller companies averaging more than $2,000.
That means it’s more important to weigh your total out-of-pocket costs, rather than just comparing the cost of premiums. Take a close look at each plan’s summary of benefits and coverage, which must explain your insurance options in plain language using a standardized format so you can easily compare plans.
2. Carefully review your benefits, even if you’re happy with your plan. It’s always a good idea to do an annual checkup of your benefits to see whether there are any major changes in price, network (make sure your preferred doctors are still covered) or the formulary (make sure your prescriptions are still covered). In addition to narrowing their networks, insurers have also been cutting the amount of financial assistance they’ll provide for out-of-network services. “There are a lot of plans now that don’t pay at all for out-of-network doctors,” says Sam Gibbs, executive director of AgileHealthInsurance.com. “If some of your doctors are no longer in-network, you’re going to have to make a tough choice about whether to change doctors or look at another plan.”
If you’ve had any major life changes such as getting married or having a baby, or if you’re experiencing (or anticipating) major health issues, you should also thoroughly review your options. If you’re confused, ask your benefits manager if you can sit down and talk through the plan before you make your decision.
3. If your employer is offering a high-deductible plan, run the numbers. A growing number of employers are offering high-deductible plans, which come with lower premiums, as a wat to cut their own costs and incentivizing workers to make more rational decisions about their health care. These plans are typically a better options for young, healthy consumers who rarely visit the doctor. But even if you’re a higher level consumer, it’s worth using an online calculator to compare your total out-of-pocket costs in a worst-case scenario. “A lot of people can save money by using a high-deductible plan, but they’re intimidated because they don’t have that deductible sitting in a savings account ready for a medical emergency,” says Jennifer Benz, founder and CEO of employee benefits consulting firm Benz Communications.
Take the sting out of the high deductible by putting as much money as possible into the health savings account that comes with a high-deductible plan. You can put money into an HSA tax-free, it grows tax-free, and then you can make tax-free withdrawals for qualified medical expenses. Next year, you can put up to $3,400 into your HSA tax-free. Unlike a flexible savings account (FSA), the money that you put into an HSA rolls over from year-to-year, and you retain ownership of the account after you leave your employer.
4. Consider outside options. If you’re married, you should review not only the plans offered by your employer but also those offered by your spouse’s to make sure that your family is getting the best possible coverage. Compare not only the family plans from both companies but also what the total costs would be if one of you got individual insurance from his or her company, or if you switched the kids to your spouse’s plan. If you have adult children under age 26 still on your plan, investigate whether they can get cheaper insurance on their own from their employer.
If you aren’t happy with your options and you don’t have a spousal plan to choose from, you can go onto the public exchanges and buy insurance for yourself. However, as long as your employer offered qualifying coverage (most do), you won’t be eligible for a federal subsidy. That means buying insurance yourself could be an extremely expensive option, since your employer won’t be contributing to the costs.
5. Use as many benefits as possible. While you’re selecting your plan, it’s worth noting the many preventative services that most insurance plans now cover for free, including annual checkups and some immunizations. Women also get additional benefits such as screenings for gestational diabetes and domestic violence, breastfeeding support, counseling and contraception. Using all of your included benefits not only makes your plan more valuable, but it could also keep your long-term health care costs down.
Many employers also now offer incentive programs which provide a deduction on your premiums or make a deposit into your HSA if you undergo a health assessment or take part in a smoking cessation program. “Not taking advantage of those offers is just leaving money on the table,” says Karen Frost, senior vice president, health strategy & solutions at Aon Hewitt.