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Annual Enrollment and Insurance Options

health insurance financial coach
Health insurance financial coach

What is Annual (Open) Enrollment?

The month of November represents the time of year for most Americans when they can add or make changes to their insurance enrollment, usually through their employer. The Medicare open enrollment period is also happening now, and runs from October 15th through December 7th. Annual enrollment is the one time each year that you are permitted to make changes to your coverage. The exceptions to this rule are Qualifying Events, which include marriage, births, loss of other coverage, or open enrollment/addition of other coverage of a spouse. These qualifying events are fairly uncommon on a year to year basis. So, usually annual enrollment is your one chance to make any changes to your plans.

What are My Annual Enrollment Options?

If you enroll in health insurance through your employer, you may have one or more options available. These options include:

  • HMO – Usually a lower cost option. You must stay “in-network” with providers (your doctor must accept that HMO plan). HMOs are also usually only work within your state, other than emergency care. Some HMOs require a referral from your primary doctor for a specialist. Other HMOs require no referral; these HMOs are known as “open access”.
  • PPO/POS – These plans are typically a little more expensive, but coverage is most often nationwide. PPOs also allow you to go out of network to see providers. However, the out-of-network copays or deductibles are much more expensive.
  • HDHP – High deductible health plans are usually more like a PPO plan, but have a much higher deductible. They are also usually much more affordable than a typical PPO plan. HDHPs can also be paired with an Health Savings Account (HSA). An HSA is a tax-deferred savings account that can be used, tax-free, to pay for things such as copays, deductibles, and other medical services. The funds in the HSA account, if unused, also rollover from year to year. This is in contrast to a Flexible Savings Account – FSA – that you either use it every year or lose it.

Some companies like to offer both an HMO and PPO (sometimes called POS) option. Some companies may offer a high deductible (HDHP) option. Your employer should provide you the information for their plans upon hire and at least annually.

What Insurance Plan Works Best for Me?

Ultimately you must make the decision as to what works best for you and your family. This is based on specific details and how you typically use your health insurance. Are you fairly healthy, and only use your insurance to get your annual woman’s wellness check, for example? Do you have a condition or conditions that require ongoing visits to a specialist and/or a lot of prescriptions? Do you have children that are still in their vaccination phase? Or are always bringing home “the icks” from daycare or school?

High deductible plans, as an example, work well for individuals or families that are either very healthy, or very sick. If you’re healthy, once you have your HSA established, it sits there as a sort of medical emergency fund. Then, you benefit from the lower premiums throughout the year. If you’re sick, you know you will most likely hit the deductible every year anyways. Once you hit the deductible, everything after is covered, so if you can plan for the amount up to the deductible with the HSA. So you also save a ton on the back end.

If you fall into more of the middle, HDHPs may not be the best option for you. You may need to do a little more math to see what works best. Take a look at what you spent in the past year on items such as copays, medical bills, and prescriptions. Then, look at the amount you would save annually between the two plans. Also, factor in the amount of the deductible you would have to cover before insurance would cover 100%.

Get Help on Making a Decision

If you need help working through the numbers, this is an area that I walk through with my clients. I would love to help you as well. Schedule a time on my calendar to see how I can help you with this important part of your defense plan!

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