What to Review During Open Enrollment
Plan Ahead for Your Health Coverage
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 coverages for the upcoming year and any changes to the costs for those coverages as well. They then can decide whether or not they want to make changes to their policies.
The open enrollment period for the Affordable Care Act's marketplace takes place near the end of the year, but periods for employer-sponsored plans, private insurance, Medicare, or any other form of coverage all have different dates.
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 to 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 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?
Open enrollment usually lasts a few weeks, typically at the end of the year. During this period of time, employees can make changes to their various benefit plans. These changes usually cover benefits such as health insurance, vision, dental, 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 as well.
Open enrollment for those purchasing insurance through the Affordable Care Act's marketplace begins on Nov. 1 and lasts through Dec. 15. Coverage beings on Jan. 1.
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.
Changes to coverages
Take the time to compare your current coverages 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 these are coverages you or your family members need, you don't want to be surprised.
Changes to costs
Cost increases can come in more than one way. Your premiums can go up, which means your take-home pay will be reduced if the cost is deducted from your paycheck. It's also possible deductibles and co-pays can increase.
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 costs or coverages are changing, it might make sense for each of you to stay with your own employer's plan or for each of you to be on one plan or the other. If you have children, this also is a good time to compare the policies to determine which offers the best coverage at the best rates.
Another Consideration—HSAs and FSAs
A health savings account 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. 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 a high-deductible plan 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, contributions grow tax-deferred, and withdrawals are tax-free when used for eligible health care expenses.
Flexible spending accounts also allow employees to set aside pre-tax dollars for medical expenses. FSAs are a simpler option than HSAs as contributions typically do not rollover. However, if you know you will be spending, for example, $1,000 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) that takes into account several factors.
For Medicare, the initial enrollment period is whenever you turn age 65 or otherwise become eligible. After that, there is an open enrollment period every year from Oct. 15 through Dec. 7 for Medicare parts A & B that works similarly to the open enrollment periods for employer-sponsored plans or marketplace plans. For Medicare Advantage (Part C) plans, the open enrollment period is from Jan. 1 through March 31.
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.
- Outside of specific qualifying life events, open enrollment is the only time during the year when you can make changes to your health insurance.
- Open enrollment in the Affordable Care Act's marketplace is from Nov. 1 through Dec. 15.
- Review changes to policy coverages and costs carefully to make sure you are choosing the best option for the upcoming year.
- Medicare Part C has separate open enrollment dates from Medicare Parts A & B.