What To Review During Open Enrollment

Plan Ahead for Your Health Coverage

A couple speak with an HR rep about the open enrollment period for benefits
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Changes to health insurance coverage typically can be completed only during a specified period of time each year. There are exceptions, but the open enrollment period allows covered individuals a period of a few weeks or so to review changes to their coverage for the upcoming year and any changes to the costs for that coverage as well. They can then decide whether or not they want to make changes to their policies.

The open enrollment period for the Health Insurance Marketplace, which was created under the provisions of the Affordable Care Act (ACA), or "Obamacare," generally begins in November each year. However, enrollment periods for employer-sponsored plans, private insurance, Medicare, or any other form of coverage all have different dates.

Key Takeaways

  • During an open enrollment period, employees have the option to enroll in benefits for the first time, change their current plans or coverage amounts, or drop coverage completely.
  • Outside of specific qualifying life events, open enrollment is the only time during the year when you can make changes to your health insurance.
  • Things to consider during open enrollment include changes to coverage and cost as well as alternative options.
  • Review changes to policy coverages and costs carefully to make sure you are choosing your best option for the upcoming year.

What Is Open Enrollment?

During open enrollment, employees have the option to enroll in benefits for the first time, change their current plans or coverage amounts, or drop coverage completely. These decisions have a significant financial impact, so it’s important to weigh your options carefully.

Why Open Enrollment Is Important

With most types of benefits, once you select an option, you are bound to that option for an entire year unless you meet a few exceptions. Each year during the open enrollment period, you are making a commitment to the coverages you choose and to the cost of those coverages. You will be unable to change that plan until your next open enrollment period or a major qualifying event.

There are three main categories of qualifying events:

  • Loss of health coverage
  • Changes in household
  • Changes in residence

Loss of health coverage includes such circumstances as losing a job and access to its employer-sponsored plan, losing eligibility for Medicare or Medicaid, or reaching age 26 and losing coverage through a parent's plan.

Changes in household might include getting married or divorced, having a child, or suffering a death in the family.

Changes in residence generally involve moving to a new ZIP code or county. There can be several other circumstances that meet the definition of a qualifying life event, so it is important to review your policy and consult with human resources if it is an employer-sponsored plan.

When Is Open Enrollment?

Your employer's open enrollment usually lasts a few weeks, typically at the end of the year. During that period of time, employees can make changes to their various benefit plans. These changes usually cover benefits such as health insurance, vision plans, dental plans, and life insurance. You also may have benefits, such as disability and health savings accounts, that would be eligible for changes during the open enrollment period.

Things To Consider During Open Enrollment

For most people, the largest component of their benefits package is health insurance. Even if you don't anticipate any changes in your personal situation or your insurance needs, the coverage itself may be changing. Be sure to review all details carefully. Here are some important issues to consider.

Changes to Coverage

Take the time to compare your current coverage to what is available for the upcoming year. For example, coverage for things like physical therapy on your health insurance or braces on your dental insurance might change from one year to the next. Especially if this coverage you or your family members need, you don't want to be surprised.

Changes to Cost

Cost increases can occur in multiple ways. Your premiums can go up, which means your take-home pay will be reduced if the cost is deducted from your paycheck. In addition, deductibles and co-pays can also increase.

Alternative Options

If you and your spouse each have employers that offer health insurance, your open enrollment periods are a good time to compare your best options. If cost or coverage is changing, it might make sense for each of you to stay with your own employer's plan, or for both of you to be on the same plan depending on which plan works best for you and your family. If you have children, this is also a good time to compare policies to determine which offers the best coverage at the best rates.

Other Considerations—HSAs and FSAs

A health savings account (HSA) can be a good way to help offset some of the higher costs of health care. With an HSA, you’re allowed to put pre-tax money into a separate, interest-bearing account that can be used to pay for medical expenses.

To qualify for an HSA, you'll need to be enrolled in a high-deductible health plan (HDHP). If you're unsure whether your current plan qualifies, that's something you'll want to consider before the start of open enrollment. If your employer offers an HDHP with an HSA, check to see if it offers employer contributions to match the money you're saving in your account.

HSAs offer triple tax benefits: contributions are tax-deductible, they grow tax-deferred, and withdrawals are tax-free when used for eligible health care expenses.

A flexible spending account (FSA) also allows employees to set aside pre-tax dollars for medical expenses. FSAs are a simpler option than HSAs, because contributions typically do not roll over. However, if, for example, you know you will be spending $1,000 on out-of-pocket on prescription drugs and other co-pays. it makes sense to have that much money taken out of your paycheck over the course of the year. Doing so reduces your taxable income by $1,000.

Medicaid and Medicare Open Enrollment

Enrollment in Medicaid is available any time your income drops below the modified adjusted gross income (MAGI) required to qualify.

For Medicare, the initial enrollment period is whenever you turn 65 or otherwise become eligible. After that, there is usually an open enrollment period every year from Oct. 15 through Dec. 7 during which you can make changes to your existing Medicare coverage.

During this time, you can also enroll in a Medicare Advantage (Part C) as long as you have Parts A and B; or you can enroll in a Part D (prescription drug plan) if you have Part A or Part B. There's also a Medicare Advantage open enrollment period from Jan. 1 through March 31 each year. During this period, you can drop or switch your existing Medicare Advantage plan.

In September 2021, the Biden-Harris Administration, through the Centers for Medicare & Medicaid Services (CMS), issued a final rule, giving consumers an extra 30 days to review and choose health plans through Open Enrollment, which will run from November 1, 2021 through January 15, 2022, on HealthCare.gov.

A Good Time for a Financial Check-In

While not necessary, the open enrollment period also can be a good time to review other financial considerations, such as your tax withholding. A significant change to your insurance costs could be a reason to increase or decrease the amount withheld from your paycheck for state and federal taxes.

It's also a good time to review your retirement plan, such as a 401(k). If investing in an HSA is a change you make during open enrollment, for example, you might want to revisit your retirement contributions.