PODCAST: Making Wise Choices During Open Enrollment

photo of open enrollment decision-making

(Image credit: Getty Images)

published 17 November 2020

David Muhlbaum: It's time for an annual process about as important as your regular physical, and related, too. We're going to talk about open enrollment for health care benefits. What's new, what's different, what's exciting on the insurance front. Sandy and I will also talk about how the stock market is handling the election results, as well as the upcoming ski season. That's all ahead on this episode of Your Money's Worth. Stick around.

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David Muhlbaum: Yeah. Yeah. It's quite something. However, it does seem like a pretty big constituency in the United States has concluded that Joe Biden will take office for sure in January. I'm not talking about the voters, I'm talking about the stock market. I mean, I know the market didn't vote for one candidate or the other., and it's highly debatable which one it preferred, but Mr. Market seems to like the outcome.

Sandy Block: Yeah. Mr. Market likes clear outcomes. Mr. Market does not like uncertainty. And the strong performance of the stock market in the last week is, to some extent, a verdict on the election that says we have a known president-elect, a Democrat, and we have the likelihood of continued Republican control of the Senate. That may not make you happy if you're on either side, but divided government is something that the markets have typically liked very much.

Sandy Block: Yeah. Definitions. But I'll quote, buzzwords and all, from Canaccord Genuity equity strategist Tony Dwyer. I can't say that more than one time! This is what he said. "The election outcome has likely neutralized the far left and far right tail risk of the political spectrum, which could allow a more centrist view instead of policy initiatives," he says. "The results suggest there is no major mandate or majority that would go right to work on big policy changes. That means investors can, again, focus on the most powerful influence in the market, historically accommodative fed and global central banks."

David Muhlbaum: For our main segment today, we're joined by Lisa Gerstner, a contributing editor for Kiplinger's personal finance magazine, and someone who knows a lot about a lot. In this case, healthcare coverage. And the reason she's here this week is because we are in the thick of open enrollment season, the time in which employees and others have the opportunity to make changes to their health care coverage. Welcome, Lisa.

David Muhlbaum: Yeah, well, okay. So healthcare is a big sprawling topic because in part everyone needs it or should have it. So in order to keep us down to a reasonable time, let me just say right off the bat that we're not going to talk about Medicare. And my apologies if that is where you get your coverage. But before you punch out totally, please go down to the show notes and see the links we've included. They've got information about this year's Medicare enrollment.

David Muhlbaum: Right. No falling. Okay, Lisa, another way of shaping our conversation today, so open enrollment is a thing for employees -- and that's how you start out your article this year. But it's also a process for people who are getting coverage in the individual marketplace. And frankly, I'm thinking about people who in, as I like to call it, our blessed year 2020, have lost their jobs and their healthcare coverage as a result. And they have had to scramble. So they may have already signed up for new coverage only a few months ago. What do they have to do now?

Lisa Gerstner: Yeah. So I think it's important that even if you signed up for 2020 insurance in the individual market pretty recently because you lost your job, you'll want to go back in there, review your options, and just make any changes if you need to for your 2021 plan. For healthcare.gov, open enrollment is from November 1st through December 15th. So you still have a little time, a few more weeks to get that in. And I would say, even if you want to keep the same plan for next year and just let it renew, it's still a good idea to go in there and you'll update your income and your hospital information. Just make sure everything's really squared away for 2021 for that plan.

Lisa Gerstner: Yeah. Yeah. It should be a little easier. You should already have an account. You just have to go in, and if you want to change something, you can do that. If not, just roll with it. But yeah, even if you're new to this whole process, it's pretty simple. You just go to healthcare.gov. You click on a link to apply for insurance. And then you pick your state. And then from there, you'll either be directed to your state's marketplace that has one, or you'll go through healthcare.gov directly to the federal website if not.

Lisa Gerstner: Yeah. That subsidy's kind of a big deal because if your income is below certain levels, you'll qualify for a tax credit that reduces the premium you're going to pay on the health insurance plan. So essentially, if you have lost your job recently, your income is a lot lower than it used to be, you may well qualify now for a subsidy, and then maybe you wouldn't have in the past. So that's definitely something to keep in mind as you're enrolling.

Lisa Gerstner: Yeah, it should reduce your premium. You have to estimate what your income's going to be for the year. If that ends up being a little off, then that'll be reflected later when you file your tax return is how that works. So give it your best estimate. If your income ends up changing next year, you will want to go back in and update that information just so everything's as even as it can be later. So yeah, that's a good point.

Lisa Gerstner: So the big trend lately we're seeing has been that employers are actually reintroducing more types of plans for employees to choose from. And that's good news for employees. More choice is better. A few years ago, the trend was that employers were actually only offering high deductible health plans with health savings accounts. That was the only choice you had. So that can be a cost effective option if you're healthy and you don't use much healthcare because the premiums tend to be lower with those plans.

Lisa Gerstner: But especially if you do have health conditions, and you're seeing a lot of specialists, that's not necessarily the best option for you. So sometimes you're just going through and considering your plans. That high deductible, again, may be a good option if you're pretty healthy, you're not using a lot of health services. But another option you might see on your menu of health benefits is that standard preferred provider organization, or PPO plan. So compared with the high deductible plan, PPOs typically come with a lower deductible, but a higher monthly premium. So if you do fall into that category where you're using a lot of healthcare, a PPO could be the better choice for you. PPOs also tend to cover even out of network here to some degree, although that coverage is not going to be as robust as it is within network here.

Lisa Gerstner: Yeah. So especially if you're an employer, it's a lot to consider. And they'll often offer you resources just to help you compare your options. There might be online calculators that help you compare your premiums and your out-of-pocket costs. So you might be able to call a consultant to help you out. So I think that's really well worth taking advantage of because there are just so many numbers and so many little factors that you have to consider.

Lisa Gerstner: Yes, exactly. And you can often go online and it'll show you, okay, here's my zip code. And here are some doctors that are within network or at least with my insurance. I know how that works. So another common plan type that you might see on your health insurance menu benefits is health maintenance organization, or HMO plan. And so compared with a PPO, you're probably going to see a lower premium and deductible. So that's always nice. But your care options are more limited usually. Out of network here is either not covered or it's very minimally covered. And you may have to get referrals from your primary care doctor to get coverage for a specialist. That's what I have to do now if I want to see anyone else besides my primary care doctor. In many situations, I have to have to go to her and get that referral. So it's an extra step you have to take.

Lisa Gerstner: Right. Yeah. So the health savings account or HSA, it really has some more long-term advantages. The money is yours to use forever. There's no limit on it. So that's really the big difference between an HSA and a flexible spending account, or FSA. With that flexible spending account, you either have until the end of your plan year, or if you have a grace period that your employer offers you, you have until March of the following year. So HSAs have really been come to seen as even a great retirement savings vehicle. I've talked to more and more financial planners who say, "Hey, this is the really the best option you have because not only can you use that money at any time, but it also has a triple tax benefit."

Lisa Gerstner: So, you can make contributions pre-tax, or tax deductible,if it's not through an employer. The contributions can grow tax deferred through investments in the account, which is kind of another nice perk. And then you can withdraw that money tax free for qualified out-of-pocket medical expenses. And that could be anything from doctor visits to eyeglasses. And now, thanks to a change in the law, you can even get pain relievers without a prescription and other over the counter meds. So really just a lot of nice advantages to that HSA.

Lisa Gerstner: Yeah. I think you really have to take a look at what you would spend on the premiums and the out of pocket cost if you get that dental or vision plan, and then compare that with what you would expect to spend if you have to pay full freight for your eyeglasses or for dental procedures and things like that. When it comes to the vision plan, if no one in your family is wearing glasses or contacts, or if you don't upgrade your glasses very often like me, you can probably get away without that extra insurance. It might cost you more than it's worth. On the other hand, if you have a whole family of glasses wearers, and y'all like to update your glasses every year, it might be worthwhile. So you really just have to run the numbers on that.

David Muhlbaum: I think in terms of running the numbers, speaking as someone who has had glasses, it behooves you to go to whoever you think is going to actually build the glasses for you, and see how their cost structure is going to fit with your insurance. Because there are times where your optician will essentially say, "Ah, we'll do it this way." And essentially whatever discounts they can offer will sometimes beat your vision coverage. So that's still a decision you can make when it comes time to buy. But it's something to keep in mind or to essentially pre-shop, if you're paying out of pocket for your optical care. And I would mention that one of our favorite retailers around here, Costco, does often have an optical department.

Lisa Gerstner: You don't have anything to worry about right now. We're not likely going to hear a verdict on that case until next June. Even then, it's pretty likely they're going to uphold most of the Affordable Care Act. There may be certain parts of it that are changed. But yeah, at least for the moment, I wouldn't worry about it. Just proceed as normal. Pick the plan as you normally would. We'll cross that bridge when we get there.

David Muhlbaum: No, no. I don't even do that now, other than make the squash. That's my dish. But no, I spent my teenage Novembers moping around waiting for it to snow so I could go skiing. I mean, I'd do some productive things, like tune, wax my skis. You can only do that so many times. And some less productive things like hanging around the local ski shop, collecting paper brochures for all the ski areas. I could tell you the vertical drop of pretty much every East Coast ski area.

David Muhlbaum: No, the mountains don't change. I mean, sometimes they run the lift a little higher or lower, but not much. But I am again wondering what kind of ski season, if any, we're going to have this year. Because skiing, at least in the Northern Hemisphere where it's dominant, is one of the few industries to really be tested by COVID. The pandemic took hold at the end of the last winter season, but it wasn't all that hard for resorts to turn off the lifts and turn out the lights a little early then because they've already booked almost all their revenue. And often the seasonal staff is running off to the next gig. But now there's another one coming up. And they need to sell passes, they need to fill rooms, and need to sell hot cocoa and private lessons. And that's going to be a big challenge.

David Muhlbaum: Well, in short, yes. The two big North American ski pass companies, Ikon and Epic, they're full speed ahead with pass sales. But significantly, they've built in contingencies and refund options in case resorts get closed, or you have a problem. Basically these are travel insurance products. They existed before, but they're more generous now, and they're COVID aware. They get that people are wary.

David Muhlbaum:Thanks. Me too. And that will just about do it for this episode of Your Money's Worth. I hope you enjoyed it. And I hope you'll sign up for more, if you haven't already, wherever you get your podcasts. When you do, or even if you already have, please give us a rating on those platforms. We've mentioned some links and content in our show. To see them, and for more great Kiplinger content on the topics we discussed on today's show, visit kiplinger.com/podcast. There are transcripts there as well. And if you're still listening, because you want to give us a piece of your mind, you can stay connected with us on Twitter, Facebook, or by emailing us at podcast@kiplinger.com. Thanks for listening.

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Block joined Kiplinger in June 2012 from USA Today, where she was a reporter and personal finance columnist for more than 15 years. Prior to that, she worked for the Akron Beacon-Journal and Dow Jones Newswires. In 1993, she was a Knight-Bagehot fellow in economics and business journalism at the Columbia University Graduate School of Journalism. She has a BA in communications from Bethany College in Bethany, W.Va.