Navigating Open Enrollment: Six Steps for Choosing the Right Health Insurance Plan

Health insurance is often a key consideration when evaluating job offers, yet few people take the time to reassess their options during the annual open enrollment period. While predicting your healthcare needs for the coming year is challenging, here are six steps you can take to select a medical coverage plan for you and your family that best aligns with your financial goals and personal needs.

1. Make a list of all health insurance options for which you and your family are eligible by considering: One or both spouses' employer-provided health insurance plans, insurance offered through a university or employer of a child under the age of 26, and Medicare or military TRICARE benefits.
   
   When evaluating plans, it is common to focus solely on the monthly premium. While this is important, you should also assess the plan's total cost. This might include:
• Copays: A fixed amount you pay for a covered healthcare service.
• Coinsurance: Your share of the costs of a covered healthcare service calculated as a percent of the allowed amount for the service.
• Deductible: The amount you pay for covered healthcare services before your insurance plan starts to pay.
• Out-of-pocket maximum: The most you must pay for covered services in a plan year.
1. For each eligible health insurance plan, create a chart listing the total premium cost over 12 months and the maximum out-of-pocket expense for one individual and the family. Also, note if prescriptions count toward your deductible.
2. Determine your best- and worst-case scenarios. If you elect health insurance and do not use it during the year, what is the premium you paid over 12 months? Now, calculate the cost if one or more people in your family require surgery, hospitalization or ongoing prescription drugs. How much would you pay before health insurance kicks in 100%? This exercise will demonstrate the advantages and disadvantages of each plan and help you determine your level of comfort and ability to navigate each situation within the context of your overall household budget.
3. Look at how well your insurance plan met your healthcare needs last year. Did you reach your deductible? Did you or a family member receive a recent diagnosis that requires follow-up appointments or surgery? Is one medical plan limited to care in one geographic area whereas another is nationwide?
4. Evaluate options for offsetting some health-related expenses in a tax-efficient manner. If you elect a High-Deductible Health Plan (HDHP), you can contribute to a Health Savings Account (HSA), which offers a triple tax advantage. Additionally, you own these funds, so if you don’t spend the money, you will keep the balance year after year even if you switch employers.
   
   Another option is utilizing a Flexible Spending Account (FSA), which allows you to pay for many out-of-pocket medical-related expenses with tax-free dollars. This account requires some planning at open enrollment, as any unused funds will be forfeited at the end of the year.
5. Maximize vision or dental coverage. If someone in your family needs braces or wisdom teeth removal, consider electing double dental coverage during each spouse’s open enrollment. Double coverage means having two health insurance plans that both cover the dental care costs. This can be beneficial in certain situations, such as when one plan doesn't cover all your costs or when you have a family member who needs extensive dental care.

TIP: Remember to take advantage of any wellness benefits! For example, an employer might contribute health reward dollars to your HSA by having you participate in an annual physical or blood test or by connecting a Fitbit or Apple Watch to an online app.

Health plans can change each year, so be sure to compare plans and adjust where needed at each open enrollment or qualifying life event (marriage, divorce, new baby, etc.). What worked this year might not be the best option next year. Although healthcare insurance can be complex, asking the right questions, planning ahead of open enrollment and working with a CERTIFIED FINANCIAL PLANNER® professional can eliminate some of the guesswork. Find your CFP® professional at www.LetsMakeaPlan.org.