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Autumn is here, which means millions of Americans are participating in open enrollment.
Taking the time to select the right health insurance coverage is always important — for both your wellbeing and your wallet. But if you typically forgo changes to your coverage or put off the decision until the open enrollment deadline, this year has provided a perfect example of the stakes that come with this yearly consideration.
“We’re all just one car accident, bike accident, or scary diagnosis away from having high medical bills,” says Juliette Cubanski, deputy director for the Program on Medicare Policy at Kaiser Family Foundation. This is a very unusual time, she says, but the ongoing coronavirus pandemic has only further highlighted how vulnerable everyone — regardless of age or underlying condition — may be.
Use this guide to ensure you enter the new year with the appropriate coverage to safeguard your finances from any unexpected health circumstances that come your way.
1. Mark Your Calendar
For the 49% of Americans covered through an employer health plan, open enrollment will likely begin soon — if you’re not already in the midst of it. Many, but not all, employers hold their open enrollment period between October and December. Look out for information about your 2021 coverage in the coming weeks.
If you’re enrolling in health coverage through a federal or state Marketplace established under the Affordable Care Act (with some state-specific exceptions), 2021 open enrollment begins Nov. 1 and ends Dec. 15.
Those enrolled in Medicaid or the Children’s Health Insurance Program (CHIP), which provide free or low-cost health coverage for eligible applicants based on income, should keep those dates in mind, too. Medicaid enrollment occurs year-round, but before the Marketplace open enrollment period ends on Dec. 15, confirm your Medicaid eligibility so you aren’t left uninsured in the new year.
Medicare beneficiaries (eligible Americans over age 65 or under 65 with a disability) can enroll in 2021 coverage between Oct. 15 to Dec. 7.
Open enrollment dates to remember:
- Employer health insurance plans – varies; often between October and December
- Health insurance Marketplace: Nov. 1 – Dec. 15
- Medicaid and CHIP: enroll anytime
- Medicare: Oct. 15 – Dec. 7
2. Evaluate Your Situation
Before enrolling in a new plan, take time to review your current benefits and how much you’ve saved or paid out-of-pocket this year.
Compare your elections in 2019 and 2020 to your reality over that time: specialist visits, surgeries, prescriptions, etc. Think about the choices you would have made if you knew how those years would play out, and find a happy medium for 2021, says Marsha Barnes, founder of The Finance Bar, a financial wellness suite offering personal finance coaching and education.
3. Plan Ahead
Plan for any major changes or events in 2021 that may factor into your coverage. For instance, if you’re planning to have a baby or finally undergo the LASIK vision procedure you’ve been putting off, account for that in your selections.
Consider how different coverage levels will affect your deductible and out-of-pocket maximums. Enroll in an FSA and begin making pre-tax contributions to help offset expected costs. For procedures that might have a longer recovery time, become familiar with your short- and long-term disability coverage.
“If you know in the coming year that these are things you want to have done, even if they haven’t been scheduled, it’s still wise to enroll in those benefits just in case,” Barnes says.
You can mitigate your risk of the unknown, too. “Specifically this year, I think a lot of people may have not gone to the doctor because of COVID and they may not be aware of where they are health-wise,” says Andrea Oliver, CFP, owner and lead advisor at North Park Financial Planning in Chicago. She recommends going for a wellness check before making your decision to get a better idea of any health issues you may face in the new year.
4. Consider All the Costs
Monthly premiums are important, but they’re not the only costs that can affect the affordability of your coverage. Deductibles, out-of-pocket costs, copays, and prescriptions can quickly add up when you actually use your plan for doctor’s visits or emergencies.
You may choose to save on monthly payments with a plan that offers low premiums and a high deductible, for instance. But if you need to visit a specialist or stay in the hospital, your overall annual costs may be greater than if you had chosen a plan with higher monthly premiums and lower deductibles or copays.
Nobody can predict the future, but these are the tradeoffs you’ll need to consider when evaluating your plan options, Cubanski says.
Start by assessing your financial health. Do you have an emergency fund that you could use to cover an unexpected medical bill? If so, you are probably in a better position to take on more risk with a lower monthly premium. If a large medical expense would force you to take on high-interest debt balances, however, you might be better off taking on a higher monthly payment in exchange for the peace of mind of a lower deductible.
Health Savings Accounts
If you’re generally healthy, a great way to save and stay covered is by choosing a qualifying high-deductible health plan with HSA access. Your deductible for any medical costs will be higher before coverage kicks in, but you can save money to cover those expenses in a tax-advantaged health savings account each pay period. Some employers even help fund your HSA. Contributions are tax deductible and withdrawn tax free for qualified health expenses; can be invested; and roll over, so any money you don’t spend annually grows over time.
5. Plan for Changes
“I don’t know anybody who hasn’t experienced significant changes in their life in 2020,” says Meredith Ryan-Reid, senior vice president and head of financial wellness and engagement at MetLife. “You really have to pay attention and make sure that what you have is appropriate.”
Look into new benefits on offer this year, as well as those you previously waived but may benefit from now due to a change in your situation. According to Ryan-Reid, many plans have added or enhanced benefits like mental health resources, legal services and estate planning, and telehealth options for 2021.
Also evaluate the benefits that no longer fit your lifestyle due to remote work changes or other effects of the pandemic. For instance, if you opted into commuter or childcare benefits when you worked from an office, but your circumstances have since changed, now is the time to adjust or eliminate those regular contributions.
6. Take Your Time
Take the time you need to evaluate all your options from a health preparedness lens as well as a financial wellness standpoint, in order to best prepare yourself for the new year. While she doesn’t believe the pandemic should be a major factor in what benefits you choose, “I do think that it was an eye-opener for us to put a closer lens on some things that we may not have thought about in the past,” Barnes says.
And remember these elections are temporary. Open enrollment comes around every year, and you may face periods of trial and error before you get better at determining what works best for you.
“Our decisions, when choosing benefits, should not be approached from a place of fear, but from a place of wanting to be financially prepared,” Barnes says. Even if you may have not gotten it exactly right, you can always scale up or scale back next year.
Health Insurance Resources
If you’re confused or have concerns about your employer’s benefits offerings, read the materials provided, reach out to a designated plan representative, or speak with your human resources department.
You can also use this period to review your benefits as a whole, including retirement accounts. You can adjust your 401(k) or IRA contributions throughout the year, but this is a great time to review your allocations and make changes for the year ahead.
If you lost your job or left your employer in 2020, federal and state Marketplaces are often the most cost-effective ways to maintain health coverage. For 2021, you’ll either enroll through HealthCare.gov or (if your state is included on this list) through your state’s Marketplace site.
This checklist from HealthCare.gov outlines all the information you need for the application process. You can also speak to a local navigator, who is trained to help guide you through your options; find navigators in your area here.
Set aside extra time to research options available to you through the Marketplace and savings you may qualify for via premium tax credits or cost-sharing reductions, especially if you’re new to the process.
“While it may be a one and done situation with your employer, where you’re able to get medical benefits, dental benefits, life insurance, pet insurance, legal assistance, mental health counselors, those in the Marketplace have to go to several different sources to get many of those things,” Barnes says. “It’s important to take that extra time to identify exactly what [you] need as opposed to just blindly choosing benefits before the enrollment period is over.”
Medicaid qualifications can widely vary from state to state, and some states recently expanded coverage based on income only, covering all households below a certain income level. HealthCare.gov provides a free tool to help you assess whether you qualify based on income.
Once enrolled, there are dozens of Medicare plan options to choose from. Use Healthcare.gov’s Medicare Plan Finder to find a plan that works best for you.