Open Enrollment: Looking Backward to Plan Forward

When the autumn leaves fall and the weather turns cooler, we know it’s time to start thinking of open enrollment. Open enrollment season can be a confusing time. As you begin your research into which plan to choose or even how much to contribute to your Health Savings Account (HSA), consider evaluating how you used your health plan last year. Looking backward can help you plan forward to make the most of your health care dollars for the coming year.  Here’s what you need to know about your workplace benefits to maximize them:

1).  Know the Open Enrollment Dates

It is up to you to make sure you take advantage of the open enrollment period. Be sure you know when your company has open enrollment because it can be your only time to adjust benefits for the coming year.

2).  Evaluate Your Current Benefits

Before open enrollment starts, review the benefits you currently are receiving. Your pay stub can be an excellent resource to find this information; you should be able to find the benefits you are paying for under the deductions or withdrawals section.  Standard deductions might include medical insurance, dental insurance, 401(k) contributions, life insurance, vision insurance, long- term disability insurance, health savings account or flexible spending account contributions, and accidental death and dismemberment insurance.  Review those deductions to make sure you know what you’re paying for and whether you actually used the benefits.

3).  Ask These Questions to Decide What Benefits You Need

Everyone’s situation is different, but most employees should have at least medical, dental and vision insurance and make contributions to a 401(k) or similar workplace retirement savings account.

When evaluating your benefits package, consider what your needs will be or what life changes you can expect for the coming year:

• Do you have a medical condition that requires ongoing care such as diabetes or heart disease?
• Are you trying to get pregnant or are expecting a baby?
• Are you getting married (or divorced)?
• Is your child turning 26 and can no longer be covered under your health insurance?
• Does your significant other have coverage, or will you need to include your partner in your health coverage?
• Are you on track for retirement, or do you need to save more? Don’t forget to take advantage of your company match in your retirement account. This is free money for the future.

All of these are essential questions to ask yourself during the open enrollment season because they can make a difference in what benefits you choose to elect.  As you browse the different options, analyze the type of treatment and the amount of treatment you have received in the past. You cannot foresee every expense but focusing on the trends will help you make a sound decision.

4). Compare Out-of-Pocket Cost

Much like health networks, out-of-pocket costs are crucial when choosing the right plan for you and your family. Most health benefits summaries should highlight the amount you will pay in out-of-pocket expenses, including the pocket limit.

Your goal in comparing out-of-pocket costs is to narrow down the plans that pay a higher percentage of your medical expenses and offer higher monthly premiums. These types of plans are suitable for you if:

• You need emergency care frequently
• You are planning to have surgery soon
• You often see a primary care physician
• You have a pre-existing condition or have been diagnosed with a chronic disease like cancer or diabetes
• Your household income is sufficient to cover the monthly premiums

5).  Do the Math

People focus on the monthly premium, but you also need to look at the deductible. For instance, if you have a choice between a lower silver plan premium of $345 a month for a plan with a $5,500 deductible, and a higher gold plan premium at $465 a month with a $1,750 deductible, you’re better off with the second plan if you anticipate needing more than $1,500 in medical care. With the second plan, your total annual cost for the premium and deductible comes to $7,330, a $2,310 savings over the lower premium plan.

6).  Look at Out-of-Pocket Costs

The deductible is just one out-of-pocket expense; you also have copayments and coinsurance. The three together are your maximum out-of-pocket costs. Under the Affordable Care Act, the maximum out-of-pocket limit is $8,550 for a single person and $17,100 for a family policy.

7).  Utilize Tax-Free Benefits

Flexible spending accounts (FSAs), health savings accounts (HSAs), and dependent care spending accounts provide wonderful tax advantages because contributions are made with before-tax income.  They can be used to pay for deductibles, prescriptions and health-related costs that are not covered by your insurance (braces, eyeglasses, etc.). At the end of the year, you lose any money left over in your FSA so it’s important to plan carefully and not put more money in your FSA that you think you’ll spend.  However, with an HSA, funds roll over from year to year which makes it a great way to save for future medical costs.

8).  Review the Provider List

Most health plans today have “in-network” providers. If you see those doctors and visit those hospitals, you pay less out of pocket than if you go outside the network. So, if you want to keep your own doctor and go to a certain hospital, make sure they’re on the provider list.

When it comes to choosing the best workplace benefits plan for you, education is your most significant defense against making substantial financial mistakes, including not taking full advantage of your employer’s benefits.  If you have questions about any of the benefits offered, ask your HR department for help or clarification.  And remember, looking backward on your past habits and expenses can be an important tool to help you plan forward for next year.