When open enrollment comes around, it’s easy to feel overwhelmed by the pressure to lock in a choice about your health insurance for the coming year. “I think too often employees tend to make benefit decisions operating out of fear rather than common sense,” says Brian Lynch, of Lynch Insurance Group.
He has a simple solution: Instead of worrying about ways to reduce your out-of-pocket costs, which are difficult to estimate, pay more attention to how much you can afford to spend on the monthly premium.
This approach works best for healthy individuals and families. If you’re looking for more details or regularly seek health care, follow these tips during open enrollment to make sure you get the best health coverage available for your needs.
Simplify Your Approach
To get a rough estimate of what you might pay in a year, multiply your monthly premiums by 12 and add your out-of-pocket maximum to get your worst-case scenario, Lynch says. Then take away the out-of-pocket maximum, leaving just the annual premiums, and that represents your best-case scenario. “Compare those two figures across plans, and your decision should become much clearer.”
If your employer offers a Flexible Spending Account or Health Savings Account, the numbers will be a little different. Out-of-pocket costs taken from those accounts will decrease your tax burden, but with an FSA, you may lose money at the end of the year if you haven’t spent all the money you put in.
Plan as much as you can, but remember health insurance is intended to cover unexpected illnesses or accidents, says Sally Poblete, CEO of Wellthie. Look at your costs from the past year and choose a plan that has an optimal balance of premium and out-of-pocket costs for these needs.
Look Beyond Premiums
While the amount you have to pay for your health insurance is often a big factor in which option you pick, there are other things you should consider. For example, look at whether the doctors you want to see are in the provided network, Poblete says. If they aren’t, and you don’t want to switch doctors, you will need to budget for out-of-network fees, which can add up quickly.
Watch Your Deadlines
Part of the stress of open enrollment can come from knowing you have to make a decision by a certain day. Make note of the deadline and ensure you give yourself enough time to review all the materials before you have to commit.
“You need to purchase before the end of open enrollment, or you may have to wait until next year,” Poblete says. Certain qualifying life events — such as moving out of state, changing jobs, having a baby or changing your marital status — can allow you to change your benefits, but otherwise, you’re stuck with your choices until the next open enrollment period rolls around.
Research Voluntary Benefits
As you consider your options, look into any voluntary benefits your employer offers. These could help fill gaps in your health coverage, Lynch says. Employees may pay monthly premiums for voluntary benefits, including expanded dental or vision coverage, extra health benefits, short- or long-term disability insurance, life insurance and other coverage.
“Supplemental benefits like critical illness coverage, disability and life insurance can be lifesavers,” Lynch says. “These add-on products can make sure you still maintain financial stability while dealing with any medical issue that may arise.”