Picking a health insurance plan requires more than choosing between two or three options.
For many people, the process feels like visiting a new country where you don’t understand the language.
In fact, the Society for Human Resource Management found that 49 percent of employees describe making decisions about their health insurance as “very stressful.”
The good news is it doesn’t have to be that way. Here’s how you can navigate the open enrollment process like a pro.
How to take the stress out of health insurance open enrollment
If your company’s efforts to simplify the open enrollment process aren’t helpful, use these steps to make it less painful.
1. Brush up on your terminology
Unless you work in the health care industry, it’s likely that open enrollment season is the only time you spend reading health insurance jargon. Of course, that doesn’t mean you understand it.
To help you prepare for what’s to come, here are some definitions of basic terms you’ll come across.
Copay: This is what you pay every time you visit the doctor or emergency room, if applicable. There can be different copays for different types of doctors, so if you regularly see a specialist, double-check what you’ll pay.
Deductible: This is the amount you pay before your insurance kicks in. Typically, copays don’t count toward your deductible. Also, there might be a deductible for each person on the plan as well as a family deductible for everyone together.
Coinsurance: Once you’ve reached your deductible, you’re not out of the woods quite yet. The insurance company typically requires that you pay coinsurance at that point. A common coinsurance figure is 80/20, meaning you pay 20 percent of the bill and the insurance company pays the remaining 80 percent.
Out-of-pocket maximum: This is the maximum amount the insurance company requires you to pay for health care-related expenses for the year. Once you reach this number, the insurer pays 100 percent of your medical bills.
2. Know what changes are coming
It’s unlikely that your health insurance plan will always stay the same. As health care costs rise, insurance companies might make changes to premiums, deductibles, or coverage.
In other cases, your human resources (HR) department might switch the company’s benefits provider, which can result in better terms.
Your HR department typically sends information about available plans for the upcoming year before open enrollment begins. Read through the available plans so you know what’s changing and how those changes might affect you.
Also, don’t hesitate to set up a one-on-one discussion with an HR representative so you can fully understand your options.
3. Evaluate your current plan
It’s possible you have either too much or not enough coverage on your current plan.
Review how you’ve used your insurance over the last year and how much you’re paying monthly. Are you getting your money’s worth?
For example, if you and your dependents rarely go to the doctor but you have the most expensive plan, you might be able to save money by downgrading. On the flip side, it might be worth upgrading your plan if you or a family member on your plan has a lot of health issues.
4. Consider your future needs
Since the plan you’re choosing during open enrollment is for the coming year, basing your choice on the current year’s needs doesn’t make sense.
For example, if you’re expecting to get pregnant or planning to undergo a postponed surgery, you should consider getting better coverage for those events.
Also, don’t assume your health plan will cover what you need. Check for limitations or exclusions so you know what to expect.
5. Consider other options to save
There are a couple of ways to save money without skimping on coverage. Some employers offer a flexible spending account (FSA) or health savings account (HSA), which can help you save money when you know you’ll have a lot of health-related expenses.
Contributions to these accounts are made pre-tax, so the savings are immediate. For example, say you elect to contribute $2,000 to one of these accounts over the course of the year. If your effective tax rate is 20 percent, your tax savings on those contributions will be $400.
Just remember: You typically can use funds from these accounts only for health-related expenses. Also, you can contribute to only one type of account at a time.
Other health benefits to consider during open enrollment
Health insurance isn’t the only benefit you might have to consider during open enrollment.
Depending on your employer’s benefits package, you also might be able to opt in to the following health benefits:
- Dental insurance
- Vision insurance
- Short-term disability insurance
- Long-term disability insurance
- Life insurance
In many cases, you don’t get choices to compare with these other benefits. You either elect coverage or decline it.
Still, some might require due diligence, so make sure you know what your options are. And don’t be afraid to ask an HR representative at your company if you’re not sure about something.
Plan ahead for open enrollment
Proper preparation can give you the confidence to make the right choices about your health and other insurance plans.
Now that you know what to do, put these steps into action as soon as you get information about next year’s employee benefits package. You’ll not only feel less stress and confusion, but you’ll also ensure that you get the best plan available to you.
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