When it comes to open enrollment, it’s often a time of confusion and frustration. What plan do you choose? How do you know you’ve made the right decision for your family? How much should you contribute to your employer retirement plan? Check out these tips for navigating Open Enrollment and making the right choices for you and your family.
Consider Your Needs
When considering health coverage for your family, it’s important to answer the following questions:
- Has your family changed? (i.e., new child, marriage, divorce, etc.)
- What kind of medical needs do you have?
- How often do you need to see your family doctor, specialist, chiropractor, etc.?
- Are you currently taking prescription drugs? If so, which ones?
- Do you frequently meet your deductible or out-of-pocket maximum?
Armed with this information, you’ll be able to compare health insurance options and pick the one that will best cover the needs of you and your family.
Determine Coverage Options
Most companies offer a minimum of three health insurance plans to choose from. Take time to understand the differences between them. Beyond the premium, you’ll want to understand what the deductible is as well as what the co-payments are. You’ll also want to know if the plan makes you eligible for a Health Savings Account.
Health Savings Accounts
The option with the lowest premium is typically a Health Savings Account that pairs with a High-Deductible Health Plan (HDHP). These plans allow for a smaller monthly payment with a high deductible and the opportunity to contribute tax-free to the HSA. When you have medical expenses, you can use the money in your HSA to pay for them, and the HDHP protects you if something major happens.
Preferred Provider Organization
The second tier of health insurance plans offered is generally a Preferred Provider Organization (PPO). As with any health plan, you’ll pay a monthly premium and have a deductible and an out-of-pocket maximum. PPOs allow you to see doctors that are considered “in-network” for the greatest benefits. Still, they also allow you to see medical professionals outside of the network for a higher cost. PPO plans come with copays or coinsurance for services, and often include a mix of both.
When comparing two PPO plans, you’ll want to look at the following items:
- Monthly premium
- Total out of pocket
- Copays (specifically for doctors, specialists, and hospital)
- Coinsurance (specifically for doctors, specialists, and hospital)
Another thing to consider is the insurance provider. If you know that historically one provider has proven more reliable than another, you might choose to go with that plan based on your experience.
Exclusive Provider Organization
The Exclusive Provider Organization (EPO) is similar to the PPO, with only two differences: the monthly premiums tend to be lower and there is no coverage for service out of network.
Health Maintenance Organization
When you choose a Health Maintenance Organization Plan (HMO), you have the least freedom when it comes to choosing your health providers. You’ll visit a primary care doctor and will require a referral to see specialists. If you see a medical professional out of network, you will likely be required to pay for the entire bill.
How to Pick the Right Plan?
It can be hard to decide which plan is best for you and your family’s needs. Consider the services you use most often. For example, if you are always at the urgent care with kid’s broken bones, then you might want to compare the copay/coinsurance for those visits. If you frequent the emergency room with a spouse that has a life-threatening allergy, it might be best to compare those copay/coinsurance rates. Any regular expenses such as prescriptions or equipment should also be compared.
Note: If you find that two plans look relatively similar and that you would be happy with either, consider the following calculation for each plan:
Yearly Payment (This is your monthly payment multiplied by 12) + Total Out of Pocket = Potential Total Expense for the Year
When you know this amount, you can determine which plan might be best for you if a catastrophe happens and you max out your benefits.
Additional Insurance Needs
In addition to basic health insurance, Open Enrollment also offers you the chance to choose dental, vision, and life insurance, as well as review your contributions to your company retirement plan. Even if you don’t have these options through your employer, it’s a good time to consider putting them into place in your life. Reach out to a financial advisor for more information on how to do just that.
Dental and Vision Plans
When it comes to dental and vision plans offered through your employer, typically, there are only one or two options. Here is a good thing to consider, though. If your entire family is not on your health insurance plan, you often have the option to add them to your vision and dental plans for little to no additional cost.
It seems like common sense, but it’s amazing how many people choose not to take the “free” life insurance offered through their companies. If your company offers free life insurance (also referred to as group life), it’s a good idea to sign up for it. Sure, you’ll have to designate a beneficiary and fill out a few pages of information, but if something happens to you, your family will have that additional influx of cash.
Many companies also offer the ability to purchase additional coverage at low rates and without medical evaluations (and sometimes this applies to spouses as well!). This is a great option for those who have medical conditions and who would otherwise not be able to purchase coverage.
Whether you contribute to a retirement plan offered by your employer or have a different setup, open enrollment is a great time to review your contributions. Are you making more than you did last year? Is your spouse bringing in additional income? Have you finished paying off debt, so you have a little extra wiggle room each month? Whatever the case is, consider upping your contributions. Even a slight increase in that contribution can make a huge difference as you approach retirement.
Open Enrollment Success
Open enrollment is a great time to meet with your financial planner. We’ll walk through your financial situation and weigh the pros and cons of each option. We’ll work together to make the right decisions for you and your family long-term. Schedule your free consultation today.