How to Navigate Open Enrollment

Open enrollment has arrived!  For many employees, you get the privilege of selecting employer-sponsored benefits for the upcoming calendar year (2017).  On the flip side, this inevitably means you need to get up-to-speed on the lingo to make an informed decision for your family.

Eligibility

Eligibility requirements vary by employer.  Spousal coverage may be limited if the spouse is eligible under his or her own employer’s plan.  Most unmarried, dependent children up to age 26 are eligible under a parent’s plan.  Qualifying life events (i.e. marriage, divorce, birth of a child, or change of employment status) provide a 31-day window to change elections made during open enrollment.

Health Plan Terminology and Considerations

Preventative Care = Annual physicals, screening, and immunizations are often covered at 100% regardless of your health care plan choice.

HDHP = High Deductible Health Plan.  These types of plans are usually beneficial for healthy families with few out-of-pocket medical costs.  Many companies promote HDHPs because the overall premium is lower, and they may incentive you to select this plan by providing a contribution into your HSA.

HSA = Health Savings Account.  You can only establish the HSA if you are enrolled in a HDHP.  You contribute pre-tax dollars to pay for eligible medical, dental, and vision expenses.  Unused account balances roll over, even if you leave the employer.  This is an additional savings tool if you max out retirement plan contributions.

PPO = Preferred Provider Organization.  These plans often carry higher premiums, but copays have clear out-of-pocket rates for a doctor and urgent care visits.  If you want to remove some guesswork or have ongoing medical issues, this could be the right plan for you.

Coinsurance = the amount you pay out-of-pocket for covered services after the deductible is met.  This is a very important metric when you compare HDHP and PPO plans.  For instance, my husband Bryan’s employer offers two different PPOs, Basic and Premier, that have either a 10% or 0% coinsurance provision.  Lower coinsurance percentages often come at a higher premium cost.

Here are some other questions to ask yourself as you evaluate health plans:

1.     How frequently does my family require medical care?

2.     Are there any prescription drugs we need on a regular basis?  If so, out-of-pocket cost for brand-name drugs can get out of control on a HDHP.

3.     If opting for the HDHP, how much is the employer contribution to my HSA plan?  How much premium savings?  Do these two benefits outweigh the costs if my family reaches its deductible in 2017?

Although the HDHP and PPO are highlighted, there are other medical plans like the HMO that have lost popularity in recent years.  This link compares the PPO to HMO and EPO. 

Dental and Vision Coverage

If your employer offers dental coverage, please consider taking it.  Your employee cost is often minimal, and uninsured people often pay far more out-of-pocket.  If you have a choice between two dental plans, check with your dentist to see if they accept both insurance plans.  Also pay attention to orthodontia provisions if your children need braces. 

Vision coverage is not quite as straightforward.  Think about how many family members need it.  Also, if you have a preferred optometrist and are unwilling to change, see if he or she is a provider.  If not, consider declining the vision insurance and pay out-of-pocket. 

Flexible Spending Accounts (FSAs)

FSAs can be valuable tax-savings vehicles because pre-tax dollars are contributed.  However, all FSAs have a “use it or lose it” provision, so you want to estimate correctly. 

Dependent care FSAs can be used for the following expenses: daycare, after school care, and care of adult dependents.  The maximum annual pre-tax contribution is $5,000 per family

The other FSAs relate to your health care plan election.  For those enrolled in the HDHP and HSA, you can also contribute to a Limited Purpose FSA – for qualified dental and vision expenses only.  If you are NOT enrolled in the HSA, you may contribute pre-tax dollars to a Health Care FSA. 

Want a Detailed Analysis?

Each family has unique circumstances.  If you are interested in a detailed analysis of your family’s open enrollment elections, please schedule a consult, email me at deb@worthynest.com or call (636) 344-0415.  If you are looking for quick guidance on one or two pressing issues, my hourly rate is $175.  However, I truly believe in ongoing financial planning relationships and encourage you to review the WorthyNest SERVICES page for more info.

Forever Faithful,

Deb Meyer, CPA, CFP®