This open enrollment period, it's more important than ever to choose the right health insurance policy for you and your family. With all of the changes that have been made to healthcare laws, it can be difficult to understand what options are available to you.
Let's discuss some tips for choosing a health insurance policy during open enrollment, cover some common health insurance terms so you can make an informed decision about what's best for you and your loved ones, and answer important questions like, "What is an FSA?"
Important Health Insurance Terms to Know
Before we dive into the deep end, let's take a look at some common health insurance terms you might come across during open enrollment:
● A Flex Savings Account (FSA): These accounts allow you to contribute a pre-tax portion of your paycheck and use it to pay for medical expenses. However, an FSA has the disadvantage of "use it or lose it." This means if you don't use all of the money in your FSA by the end of the year, you will lose it.
● A Health Savings Account (HSA): This is a special account you can put money into to pay for your out-of-pocket medical expenses. The money in this account is not taxed. This option is usually only available with high-deductible insurance plans.
● Coinsurance: This is your share of the costs of a covered medical service. You usually pay coinsurance after you've met your deductible. For example, if your coinsurance is 20%, that means you'll pay 20% of the allowed amount for covered healthcare services, and your health insurance policy will pay the other 80%.
● Network: Most health insurance policies have what is called a "network" of doctors, hospitals, and other healthcare providers agreeing to provide services to people with that particular health insurance policy.
● Out-of-network: If you see a doctor, hospital, or another healthcare provider who is not in your health insurance policy's network, you will usually have to pay more for the services.
● Out-of-pocket maximum: This is the most you will have to pay for your covered medical expenses in a year. Once you reach this amount, your health insurance policy will cover 100% of your eligible medical expenses for the rest of the year.
● Premium: This is the amount of money you have to pay every month for your health insurance policy.
Now that you have a rough understanding of these terms, it’ll be easier for you to connect them to finding a health insurance policy that works best for you and avoiding unnecessary confusion.
#1 – What’s your budget like?
When you're looking at health insurance policies, there are a few key things you'll want to keep in mind. First and foremost, What’s your budget? Obviously, this question could refer to what you expect to pay in an emergency. But have you considered the monthly health insurance premium?
Your premium scales with the benefits you receive, so a policy with a lower monthly premium will likely have higher out-of-pocket costs. Not considering your premium is a common money mistake people make.
#2 – What’s the policy’s deductible?
A deductible is the amount of money you will have to pay for your medical expenses before your health insurance policy will start to pay.
For example, if you have a $1000 deductible and $2000 in medical bills, you will be responsible for the first $1000 and your insurance will cover the remaining $1000.
This doesn't factor in coinsurance, however. Sometimes after meeting your deductible you'll still be on the hook for a percentage of the fees.
Some health insurance policies also have what's called a "family deductible." This means the total amount of the deductible has to be met by the entire family before the insurance policy will start to pay.
#3 – What are your coverage needs?
This is a question only you can answer. Do you have a chronic condition that requires regular treatment? How are your mental health and wellbeing? Are you planning on starting a family in the near future?
Your answers to these questions will help you determine what kind of coverage you need. If you're healthy and don't anticipate needing much medical care, you might be able to get away with a less-expensive health insurance policy.
On the other hand, if you have a chronic condition or are planning on starting a family, you'll likely need a health insurance policy that has more comprehensive coverage.
#4 – Are your preferred doctors or hospitals in-network?
When you're looking at health insurance policies, make sure to pay attention to the network of doctors and hospitals that are covered and which are close by to you.
Most health insurance policies have what's called a "provider network." This is a group of doctors and hospitals that have agreed to provide care at a discounted rate for patients with that particular health insurance policy.
#5 – Are your prescription drugs covered?
Another thing to keep in mind when you're looking at health insurance policies is which prescription drugs are covered.
If you take medication on a regular basis, make sure the policy you're considering covers those drugs. Otherwise, you might have to pay the full price for your prescriptions.
Some health insurance policies have what's called a "formulary." This is a list of drugs that are covered under the policy. Make sure to check the formulary to see if your medications are covered.
Which plan is right for you?
We’ve only just dipped our toes into the vast knowledge required to pick your perfect plan. Once you've factored in everything above to determine the policy that most closely fits your and your family's lifestyles, you have even more to consider.
From an FSA to an HSA, or including dental or optical coverage, it is crucial to weigh all the pros and cons of each policy in order for you to be content with what you're signing up for.
Good luck with this open enrollment period, you can do it. If you have any questions, reach out to your company's HR team or an independent insurance broker to make sure you're getting the best plan for your unique situation.
Luke Williams writes and researches for the insurance comparison site, Clearsurance.com. His passions include insurance and helping others find the best coverage possible.
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