What You Should Know About Open Enrollment
You may have more health insurance options. But you’ll need to work harder to find the one that’s right for you.
When your employer rolls out its menu of health insurance benefits this fall, don’t be surprised if you have more options than you did last year. As companies try to cater to workers’ diverse needs, they’re dishing out a broader selection of plans. Employers say that offering or expanding benefit choices is their highest priority over the next three years, according to a survey from consultant Willis Towers Watson. To help keep your premiums and their own costs down, companies have been adding high-deductible plans linked to a health savings account—or even dropping traditional plans from their menu and making a high-deductible plan the only option. But among large employers, the number of organizations offering only a high-deductible plan will fall to 25% in 2020, according to a survey by the National Business Group on Health, compared with 30% in 2019 and 39% in 2018.
Weigh the Choices
Greater choice is a good thing—but you’ll have to study up to ensure that your plan meets your medical needs at the lowest cost. In 2020, employers expect the cost of health care benefits to rise by 5%, according to the NBGH survey. The projected total cost per employee (including any family members on the plan) next year is $15,375, compared with $14,642 in 2019. The NBGH didn’t estimate average premiums and out-of-pocket expenses for 2020, but in 2019, workers at large companies picked up nearly $4,500 of the tab in premiums and out-of-pocket expenses, and employers shouldered the rest.
More than half of employers offer tools, such as online calculators, to help workers decide which plan to pick. And within the next three years, 75% of employers will make it a priority to provide such tools, according to Willis Towers Watson. Using a benefits calculator led Chicagoans Lori and Matthew Murphy to reconsider whether a high-deductible health plan paired with a health savings account is still the best option for them and their two daughters. Lori works for a technology company that was recently bought out.
Under the previous owner, the high-deductible plan “was a slam-dunk decision,” says Matthew, who is self-employed. With the new owner’s policy offerings, the Murphy family’s total for premiums and out-of-pocket expenses would be nearly the same for basic preventive care whether they choose a high-deductible plan or a standard preferred provider organization (PPO) policy. When they factor in possible visits to a specialist or the emergency room, the PPO option would be about $700 less for the year. But they’re also weighing the advantages of building long-term savings in an HSA. “We’re on the fence, but it’s likely we will go with the PPO,” says Matthew.
Employers are further incorporating technology—and cutting costs—with virtual health services. Plans are providing remote care for everything from management of diabetes, high blood pressure and other chronic conditions to problems such as arthritis and back pain. You may attend a physical therapy session through a videoconference, for example. Colds, flu and dermatological issues, such as acne or a rash, may be treated virtually, too, at a typical price of $10 to $40 per “visit,” says Tracy Watts, senior partner at benefits consultant Mercer.
Pick Your Plan
If you and your family members are healthy, a high-deductible policy may be the least-expensive option because it typically comes with a lower premium than other plans. If it’s your first time considering such a plan, review the explanation of benefits or ask your medical providers for the full cost of office visits, says Cassandra Weaver, director of human resources for Benefit Resource. Check prices for your prescription drugs, too.
Make sure you have enough cash saved to meet a high deductible, which will be at least $1,400 for an individual and $2,800 for a family in 2020. Take advantage of an HSA if it’s available. You’ll get a triple tax benefit: Contributions are pretax (or tax-deductible, if your HSA is not from an employer), the funds grow tax-free, and withdrawals for qualified medical expenses aren’t taxed. Plus, you can stack up savings for the future (for more on HSAs, see How to Lower Your Health Care Costs). Your employer may help fund your account, too. Consider stashing in the account the extra money you would spend on premiums if you had a plan with a lower deductible.
A PPO plan with a lower deductible and higher premium may be a good choice if you have a condition that requires you to visit health care providers frequently. (Recently, however, 14 treatments and services for various chronic illnesses—such as statins for heart disease and insulin for diabetes—became eligible as preventive-care benefits for those who have a high-deductible plan with an HSA. So you may not have to meet the deductible before receiving coverage for those items.) A health maintenance organization (HMO) plan may have a lower premium, but you’ll likely receive little to no coverage for out-of-network care or for specialists you visit without a referral from your primary doctor.
As you compare plans, review the premium, co-pays, deductible and out-of-pocket maximum. To estimate the most you’d pay for coverage, add your annual premium costs to your out-of-pocket maximum, says Myles Ma, health care expert for Policygenius. See whether your physicians are in the plan’s network, and check how much you’ll pay to see out-of-network providers. If you’re offered vision or dental insurance, consider whether you anticipate using the benefits enough to make the premium worth paying. Account for any large expenses on the horizon, such as orthodontia for a child.
And Check These Items
Look over the formulary, which lists prescription drugs included in the plan. Find out what the co-payments are for your drugs—co-pays are often broken down into several tiers, with generic medicines receiving the most insurance coverage and non-preferred, brand-name drugs and new or specialty drugs getting less coverage. Currently, about one-fourth of employers delay coverage for drugs that are new to the market for some period (say, six months) while the benefits manager evaluates their safety and effectiveness, according to the NBGH survey.
If you have a flexible spending account, which may be available no matter what type of health plan you pick, brush up on eligible expenses at fsastore.com/fsa-eligibility-list.aspx. Some employers give you until March 15 after your plan year ends to spend the funds, or you may be able to roll over up to $500 to the next plan year. Even if you don’t use all the money by your plan’s deadline, you may still come out ahead because pretax dollars go into the account. Someone who is in the 24% federal tax bracket and puts $1,000 in an FSA may save about $300 to $350 for the year in federal and state income taxes and FICA tax, says Paul Fronstin, director of health research for the Employee Benefit Research Institute.
If you’re thinking about adding your spouse to your plan, see whether it levies a spousal surcharge, which may apply if your spouse is eligible for health insurance through his or her own employer. Run the math to see whether it makes sense to put your entire family on one plan or to divvy it up—say, with only you on your employer plan and your children and spouse on your spouse’s plan. “We’re seeing more and more split coverage,” says Watts.
Check for incentives that could trim your premium or result in a higher employer contribution to your HSA. Participating in biometric screening and filling out a health-risk questionnaire are ways you may be able to earn the discount or credit, says Watts.
How to Get Individual Coverage
Good news if you’ll be shopping for a health insurance plan in the individual market: Premiums continue to stabilize after years of steep increases, and some insurers are offering their Affordable Care Act plans in more states.
Laura Davis, a financial planner who lives in Decatur, Ga., expects to see more options when she looks to the health insurance exchange this fall for a policy to cover herself, her husband and their two kids. Davis is self-employed, and for years the family relied on her husband’s employer plan. But since he became self-employed last year, they’ve been covered through COBRA, the federal law that allows workers to stay on their employer plan for up to 18 months after leaving a job. Their coverage will expire in December.
The premium for their high-deductible plan is currently less than $1,000 a month, and Davis expects to pay at least $1,700 monthly for a similar plan from the exchange, with a deductible of $7,000 or more and an out-of-pocket maximum of nearly $14,000 for in-network costs. But the new plan won’t likely include vision and dental coverage, as her current one does. “We don’t use much health care, and we’ve been able to build our HSA balance over the years,” says Davis.
Lowering the cost. Davis says her family’s income is too high to qualify for a government subsidy to lower their premiums. To be eligible, your income can’t exceed 400% of the federal poverty level, which is $49,960 for an individual, $67,640 for a couple and $103,000 for a family of four. If you can get a subsidy, a plan from the exchange is your best bet. Select your state at www.healthcare.gov/get-coverage to see your options. You can also shop for policies at eHealthInsurance.com or through a broker; find one at www.nahu.org.
Short-term health policies that don’t meet ACA standards are becoming more prevalent. Some may last up to 12 months and be renewed up to three years. Premiums for an individual may run about $125 monthly, compared with an average of $448 for an ACA plan with no subsidy, says Paul Rooney, of eHealthInsurance.com. But such short-term plans may exclude preexisting conditions and preventive or maternal care. If you’re in good health, take few prescriptions and are looking for emergency protection at an affordable price, a short-term plan can make sense, say Adam Hyers, an insurance broker in Columbus, Ohio.