If you’re like most Americans out there this time of year, it’s Open Enrollment season for choosing your healthcare plan. Maybe you’re fortunate enough to have your employer sponsor a plan, which means they’ll probably offer a few plans, or you may be getting insurance through the open marketplace, and may have a few plans to choose from, depending on your location. Simply put, it’s a confusing decision to make, especially for young professionals. Many of us probably only minimally use our healthcare plans and so it may feel like something we don’t really need to worry about. Looking through plans probably feels like a tough exercise for us, and picking one is an even more difficult task! Here are a few things to look out for and to help you think through choosing a healthcare plan.
Think through your current healthcare needs, and what this year may hold
Although it’s impossible to predict the future, you can certainly use the past as an indication to your healthcare needs. Take some time and look over the past few years to gauge how much healthcare you consumed. How many times did you go to a primary care doctor? Specialist? Did you have any emergencies that resulted in a trip to the ER? How many times did you get sick and need a prescription? Any surgeries or therapies? Try to ball park these estimates and if possible, come up with a dollar amount of the charges (if you have saved the receipts, which you should). Also, give some thought to future needs that might come up in the next year. Have you been putting off surgery that you probably
will end up getting this year? Thinking about having a baby? Tired of contacts and planning lasik? Armed with this knowledge, you should be able to pick a plan that meets your needs based on your past healthcare usage. If you’re risk averse, add a little padding to your cost and leave room for unexpected things that might come up.
Compare plans apples to apples
The plans that are offered to you (either through the marketplace or your employer) should all be laid out in a similar fashion: cost per month/bi-weekly (premium), deductible, co-pays, co-insurance and in-network/out of network costs. Read through each option carefully and armed with the knowledge from step 1, try to calculate and see what would the best plan for you. For a quick refresher: deductible is the amount that you must pay before insurance will pay, co-pays are typically small amounts always paid when you consume healthcare and co-insurance is a % amount that the insurance company splits with you (even after a deductible), i.e. the pay 90%, you pay 10%. Depending on your situation and how much you plan to use healthcare in the coming year, it may make sense to get a plan with a low ded
uctible (if you’re using healthcare), or a higher deductible (if you don’t often use healthcare). With the costs you figured out from your past experiences, take a scenario through each plan and see how much you’d end up paying. For example, let’s say you use $5,000 in healthcare costs each year; take that thru a plan with a $500 deductible and 10% co-insurance and then take it through a plan with a $1,500 deductible and a 0% co-insurance, also comparing the annual premiums of each plan. Although it’s impossible to predict the future, gauging your own situation and coming up with a figure to use as an example with each plan will help you find the right plan for you.
Be smart with taxes
Most plans today will offer a HSA or FSA option included. Check out my article on it for more detail, but to keep it simple, HSA/FSA plans offer you the chance to put aside money before paying taxes on it, and let’s you use it for your healthcare needs. HSAs can be rolled over year to year, while a FSA is use it or lose it. Most plans only offer one so if you get a FSA, be sure you’re estimating the money you’ll spend wisely. Healthcare is a part of life for many of us, so might as well use tax-free money to pay for it!
For many of us, signing up for healthcare feels like a chore, but doing a little homework and research can help avoid a financial crisis if an emergency arose, and can help save us money over the course of the year. Take a little time before clicking ‘submit’ and make sure you’re getting the best plan for you!