Decisions, decisions. During open enrollment, many employers offer a choice of two or more health plans. How do you pick?
If choosing between two or three plans is hard, comparing 20 might make you dizzy. But if you’re looking for individual coverage through healthcare.gov or another marketplace, that’s how many options you might be juggling.
Before you give up and pop an aspirin, it’s worth spending a little time on your open enrollment. You could save a lot by really thinking about what kind of coverage you need — and what you don’t. How often do you go to the doctor or need prescriptions? Check your bills from last year, including medical, eye, and dental care. You may be surprised by how much you spend.
Once you know your situation, look for two documents at open enrollment time: the summary of benefits and coverage (SBC) and a uniform glossary of terms. Add up all costs to get the full picture (premium, deductible, and other out-of-pocket expenses). Sometimes, the right answer isn’t clear until you do the math.
Health Plan Types
HMO: health maintenance organization. Typically lower cost, more restrictions.
In an HMO plan, you need to get all your care within the network to ensure coverage. You pick a primary care provider (PCP) and go to that person for all your regular care. Your primary doctor is also a gatekeeper for specialist care and needs to give you a referral for your care to be covered. The upside of these restrictions is that HMOs tend to be a pretty good deal and involve less paperwork.
Good for: people who prefer to keep costs low and don’t mind a restricted network. Could be a good option if you’re looking for a new doctor anyway.
PPO: preferred provider organization. Typically higher cost, fewer restrictions.
In a PPO, you get the best coverage in-network and some coverage outside the network. The networks are often (but not always) bigger than HMO networks, so you may be more likely to find your current doctor in network. In PPOs, you don’t have to get a referral from your primary care doctor to see a specialist.
If you do need to go out of network, your insurance will usually cover some part of the bill, but not as much as when you stay in network. For example, a certain PPO may cover in-network at 90 percent (you pay 10 percent), but if you go out of network the coverage may drop to 70 percent (you pay 30 percent, and the total bill may be higher as well).
Good for: people who want the option to see any provider or go to specialists without referrals. If you and your family want to stay with particular doctors who are not in the offered HMO networks, this could meet your needs.
POS: point of service. An in-between option.
A hybrid model. As in an HMO, you need to have a primary care provider in your network, but like a PPO, you’re allowed to go outside the network at a higher cost. If your primary care provider refers you to an out-of-network specialist, your plan may cover that cost (always check).
Good for: people who want low-cost plans and don’t mind a restricted network for most care, but want the option of going out of network sometimes.
EPO: exclusive provider organization.
“E” stands for “exclusive.” You must stay in network for all care on these plans, but you can see an in-network specialist without a referral. EPOs were designed to combine the low cost of HMOs with a little more flexibility, but you should not confuse these plans with PPOs — if you go out of network you are not covered.
Good for: people who prefer to keep costs low and don’t mind a restricted network. Could be a good option if you’re already looking for a new doctor.
HDHP: High-deductible health plan
A high-deductible plan can be any type of network model — HMO, PPO, or POS. What matters is the large deductible (the amount before insurance starts to pay). For 2017, the IRS defines a high-deductible health plan as one with a deductible of at least $1,300 for an individual or $2,600 for a family.
On the plus side, HDHPs that meet the rules of the Affordable Care Act have lower out-of-pocket maximums than other ACA plans — for 2017, the highest you should have to pay out of pocket is $6,550 per person and $13,100 for a family. So if you do get hit with a lot of bills, you have some idea of the worst-case scenario.
Good for: people who don’t expect a lot of fixed health care expenses and are able to afford the deductible if they need it.
Catastrophic coverage plans
These are very-high-deductible plans ($6,850) with lower premiums and limited coverage for worst-case scenarios. Only people under age 30 with a hardship exemption are eligible to buy these; for most people, they don’t make financial sense because coverage doesn’t start until you pay $6,850 in bills.
Health Accounts Can Save You More
If you have the option, you’ll also want to take advantage of employer-sponsored FSAs (flexible spending accounts) and HSAs (health savings accounts) that let you put away money for health expenses before they’re taxed.
FSAs: flexible spending accounts
These aren’t linked to health plans but are separate benefits that many employers offer. The advantage is that you can set aside some money before it’s taxed, usually through a payroll deduction. Some plans will even give you special credit cards to use with the account to cut down on paperwork.
Health care FSA: For 2017, each employee can put away up to $2,550 a year and use it on certain health expenses. It can be a way to save on prescriptions, glasses, and out-of-pocket costs. You’ll need to use it all up in the plan year, though you may have a 10-week grace period or a $500 rollover (depending on what your company offers).
Dependent care FSA: You can use this for childcare for kids 13 and under — including after-school care and vacation camp — and also for caregiving expenses for any tax dependent. You can put away up to $5,000 per year per household ($2,500 if married filing separately) and it’s “use it or lose it” — you can’t roll any money over.
Good for: people with fixed or predictable health or dependent care costs.
HSAs and HRAs
If you have a high-deductible plan, there are a couple of special accounts that help you pay for your expenses.
HSA: health savings account. You can qualify for an HSA if you have a high-deductible plan (and that’s your only coverage), and you can keep it when you leave your company. You can put your own money in these accounts tax-free and spend it on certain health expenses. For 2017, you can put in $3,400 for yourself or $6,750 for a family. (If you’re 55 or over, you can put in an extra $1,000.) Some employers will also kick in money for you.
HRA: health reimbursement account. These are managed and funded by your employer. That means you can use the money while you work at your job, but you can’t take it with you. (Not to be confused with health risk assessment, sometimes part of wellness programs.)
Good for: anyone with a high-deductible plan.
Good luck with open enrollment — we hope this helps you pick some winning choices!