Open Enrollment time is here!

 


Did you get a notification from your HR department that it’s open enrollment time? Or are you insuring yourself and you heard that the Open Enrollment Period for HealthCare.gov insurance plans are from November 1 to January 15. Or maybe you had a life event like getting married, having a baby or adopting, loss of employment or getting a new job. If so, the information you will be receiving is a lot and many people find it confusing. The decision you make now can affect your health insurance coverage for the next year and can affect your finances for years.

We are going to walk through some of the common terminology that you should be familiar with as you sign up for health insurance, discuss how these decisions can affect you financially, and offer some ideas to consider when you decide to choose the best plan for you and your family.

Understanding the Language of Health Insurance


Before you can make a confident decision, it helps to speak the same language as your insurance provider. Let’s break down the most important terms you’ll see.

  • Premium: Think of this as your monthly membership fee. It’s the amount you pay every month just to have insurance coverage, whether you use it or not. The premium is what you'll see deducted from your paycheck or pay directly each month.

  • Deductible: This is the amount you have to pay for covered medical services before your insurance company starts to pay. For example, if your deductible is $2,000, you are responsible for the first $2,000 in medical bills each year. Once you’ve paid that much, your insurance starts to kick in.

  • Copayment (Copay): A copay is a fixed amount you pay for a specific service after your deductible has been met. For example, you might have a $25 copay for a doctor's visit or a $50 copay for a specialist.

  • Coinsurance: This is your share of the cost of a covered service, and it's expressed as a percentage. For example, a plan with 80/20 coinsurance means your insurance will pay 80% of the cost for a service and you will pay the remaining 20% after you've met your deductible.

  • Out-of-Pocket Maximum: This is your financial safety net! It’s the absolute most you will have to pay for covered medical expenses in one year. Once you hit this amount, your insurance will pay for 100% of all other covered services for the rest of the year. This is a crucial number to know because it sets the upper limit on your financial risk.


Some good resources for health insurance terms

Making a Decision that Fits Your Wallet


Now that you know the terms, let's look at how they connect to your personal finances. When choosing a plan, you are essentially making a trade-off between your monthly premium and what you'll pay when you actually use healthcare services.

High Premium, Low Deductible: This type of plan is generally a good fit for families who anticipate frequent doctor visits, have chronic conditions, or expect a medical procedure in the coming year. You pay more each month, but your out-of-pocket costs for each visit are much lower. This predictable cost can be a great relief if you know you'll be using your insurance often.

Low Premium, High Deductible: This option is often best for healthy individuals or families who don't expect to need much medical care. Your monthly cost is low, which can save you a lot of money throughout the year if you stay healthy. However, if a medical emergency or a major health issue does arise, you'll be responsible for a large bill before your insurance coverage fully kicks in. This is why having an emergency fund is so important.

The best plan for you and your family is a personal choice based on your health history, expected needs, and financial situation. It's not just about finding the lowest monthly payment; it's about finding the best value.

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Tips for Choosing the Right Plan


As you review your options, here are some practical tips to help you make an informed decision:

  1. Assess Your Needs: Look back at your past year. How many times did you go to the doctor? How many prescriptions did you fill? Think about any planned surgeries or health events for the upcoming year. Your history is a powerful predictor of your future needs.

  2. Check Your Network: Make sure your current doctors, specialists, and hospitals are "in-network" for the plans you are considering. Using an out-of-network provider can result in significantly higher costs or no coverage at all.

  3. Consider the "Worst-Case Scenario": Ask yourself, "If a major health event occurred, could we afford to pay the deductible and coinsurance up to the out-of-pocket maximum?" This number is your true financial risk. Choosing a plan with a manageable out-of-pocket maximum can give you peace of mind.

  4. Don’t Forget the HSA: If you are considering a high-deductible plan, look for one that is compatible with a Health Savings Account (HSA). An HSA allows you to save money tax-free to cover qualified medical expenses. This can be a powerful tool for managing a high deductible and saving for future medical costs.

Read through the enrollment packets and don’t shy away from asking your Human Resources representative questions.  Choosing a health insurance plan can be confusing, but by understanding a few key terms and thinking about your family's unique needs, you can make a smart financial decision. You've got this!

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