Don't Simply Roll Over Last Year's Health Plan
If you have health benefits at work, your company provides you with 'open enrollment' forms for the company health insurance plan(s) once every year. Many people who are happy with their health insurance plans give the forms a quick skim and then immediately throw them in the trash. Unfortunately, by doing this, they may be missing out on an opportunity to provide their family with better health coverage, improve their financial situation, or both.
Don't miss the opportunity that Open Enrollment offers
The open enrollment period is the one time per year when you can make changes to your insurance plan such as adding or removing a spouse, adding children, switching from an HMO to a PPO, or changing your insurance provider all together. If you are not in the open enrollment period, making these changes would require a qualifying life event.
Qualifying Life Events
The number of life events that allow you to make changes to your health plan has grown over the years, but they are still limited. Qualifying life events include a family member losing health coverage, marriage or divorce, death, the addition of a child, moving out of your current area, and a few other major life changes. You can read about them all on this federal government webpage.
What to Do
Fortunately, most employers have similar open enrollment periods, meaning if you are married, you can make changes to both of your work health plans at the same time. Most Americans open enrollment period ends during the last quarter of the year, which means you have a short window to make changes to health plans at work.
Leading up to (or during) open enrollment, your family should discuss its healthcare needs, both now and in the coming year. Then review your options under each plan to determine the best coverage for your family at the cheapest cost. Here are some of the most promising opportunities to look for:
Lower Your Healthcare Costs
Healthcare costs may be going up at your place of employment, but that doesn't mean you have to pay more. You should look to see if another employer plan option had a lower increase or no increase at all. Married couples should also look to see if switching the entire family to one spouse's plan, or each spouse having their own single plan, saves them money.
Not all health plans increase at the same rate, and some lower their premiums (the cost of insurance) even while other plans are raising premiums. The Kaiser Family Foundation conducted an analysis of Silver Plan premium changes for 2017 in the Affordable Care Act Marketplaces. The analysis found that while some premiums were increasing by as much as 27%, other plan premiums decreased by as much as 14%.
That's a big swing. And although the data was comparing the marketplaces in different states, it demonstrates that health insurance costs do not rise in unison. Reviewing your family options can help to mitigate the financial pain of rising health insurance costs or even save you money.
Access an HSA
If your (or your spouse's) employer offers a High Deductible Health Plan (HDHP) as an option, you should investigate whether that plan is right for you. Many people shy away from HDHPs because of the expensive deductibles that come with them. Although the deductible is definitely a drawback, an HDHP gives you access to the Health Savings Account (HSA), which is one of the best investment options available.
The HSA is the only triple tax-advantaged account out there, providing you with a tax deduction now, tax-free investment growth, and tax-free withdrawals from the account if you use the money for healthcare expenses in retirement.
An HSA allows you to take a tax deduction on any money you deposit into it. If you need the money that year to pay for medical expenses (like that high deductible) take a tax deduction. You can use that same money to pay for the deductible on your health insurance that same year. Any leftover money that year can then be invested tax-free for future medical costs. To learn more about the benefits of HSAs, read "Why you need a Health Savings Account."
Look for Free Money
When an employee chooses a health plan with fewer benefits, it saves the employer thousands of dollars every year. In order to save on health insurance costs, some employers are encouraging their employees to choose cheaper health insurance options by splitting the savings with the employee.
Instead of paying money to cover you under the more expensive plan, your employer may offers you a monthly or annual payment to choose the lower cost option. Choosing the lower benefits doesn't necessarily mean you won't get the benefits. You may still be able to receive robust health benefits by adding yourself to a spouse's plan and using the incentive from your employer to pay for it. If adding yourself to your spouses plan costs an extra $30 more per month, but you receive a stipend of $50 per month, your family will actually come out ahead.
Pass the Children Back and Forth
If you have children, you should look at which plan is cheapest to cover the children on, regardless of whether or not you are married. The Affordable Care Act allows parents to cover children on their health insurance regardless of if the child lives with the parent or not. Looking to see which plan covers children for the least amount of money can help to trim a few hundred dollars from your health insurance costs.
Family Expansion Planning
If you are planning to expand your family, you will want to make sure that the health plan covering the mom-to-be is the plan that pays the most of the pregnancy and delivery costs. Adding the mom-to-be to a HMO plan may allow you to save a lot of money on the medical costs for pregnancy and delivery. Ask any of your friends who have gone through a pregnancy and they'll tell you there's a financial pain that goes right along with the labor pain.
A Few Phone Calls Can Save You Big
It may seem like a hassle, but you should use the open enrollment period each year to check the best possible prices and coverage options for you and your family. Each family member with employer-sponsored insurance should contact Human Resources or the plan administrator and ask for the premiums for every plan option and covering just themselves or the entire family. Everyone should also ask if the employer offers an incentive to forgo the expensive insurance options. Many HR departments even have pre-printed brochures that cover all of this information.
In evaluating your options, discuss any major life changes or medical procedures that might occur during the next year, such as a pregnancy or surgery that may be needed. Contact the insurance providers and ask for an estimate of the costs you might incur. They won't be able to give you a price estimate (that's up to the hospital and hospitals don't give estimates). Your insurance will be able to tell you what the co-pays and deductible would be, your percentage share of the procedure, and how much you would pay out of pocket before the insurance takes over paying the entire bill.
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