By: AnnaMarie Mock, CFP®
Medical open enrollment allows individuals to start, stop, or modify their health insurance during a specified time, which applies to employer-provided plans, Medicare, and plans through the marketplace, i.e., heatlhcare.gov.
Open enrollment timeframes can vary between medical insurance types. For example, open enrollment for Medicare is October 15th to December 7th, while the national marketplace enrollment is typically from November 1st to December 15th. Open enrollment for employer-provided plans is determined by the company's plan year, but all employees should be notified in advance for the coming year.
Please note there may be some significant plan changes for the 2021 marketplace plan depending on your state of residency. Fifteen states are currently not using healthcare.gov as their centralized marketplace for medical coverage. New Jersey and Pennsylvania are new to the list, starting for plan year 2021, where each state will administer the health care coverage for individuals, families, and small businesses. The deadline for open enrollment for New Jersey and Pennsylvania has been extended past December 15th.
It's far too common that people select insurance based on the premium alone; however, other important factors should be considered during the selection. It is also easier to compare options by organizing them into a chart based on each plan's quantitative figures.
In-network medical care providers accept the insurance plan and contract to provide the highest savings levels for the services rendered. Confirm that your existing doctors are in-network before joining a new medical plan. Let's look at the chart below to compare two hypothetical plans.
If we only look at the premium, Option 1 seems like the most reasonable choice since it is $4,000 less than Option 2, which may be the appropriate selection for an individual with low medical needs. But what if utilization is high and the full deductible is met? The deductible for Option 1 is 167% more than Option 2! This means that in a high utilization year, the total cost of Option 1, which is the summation of the premium and deductible, would cost $1,000 more than Option 2. Option 1 may be an optimal solution for individuals that do not frequent doctors regularly or do not expect more than $4,000 in medical costs.
The annual out-of-pocket is the ceiling for your share of covered healthcare costs, including deductibles, copays, and coinsurance, while excluding premiums. The insurance company will pay 100% of the medical expenses after the annual out-of-pocket is reached, but this is usually a significant amount for the insured to satisfy. In a high medical utilization year where the annual out-of-pocket is fulfilled, Option 2 would now be the most economical as it is $1,500 less. Many insured will never reach the annual out-of-pocket figure, so although this is an important metric to know and understand, it may not be as persuasive as the total premium and deductible figure.
The optimal plan is based on your situation and what you anticipate for the year ahead. Also, be sure to take a deeper dive into the plan's additional features to ensure it jives with your health needs. Please do not hesitate to reach out to the HIGHLAND team with questions.
Author’s Bio
AnnaMarie Mock is a CERTIFIED FINANCIAL PLANNER™ and Partner at HIGHLAND Financial Advisors, LLC, a Fee-Only financial planning firm that offers comprehensive financial planning, retirement planning, employer retirement planning, and investment management. AnnaMarie graduated from Montclair State University with a degree in finance and management and successfully passed the CFP® national exam in 2016. She has been working at Highland Financial Advisors since 2013 as a fee-only, fiduciary Wealth Advisor and is a member of NAPFA.