'Don't leave money on the table': 7 things to consider during open enrollment this year

When it comes to shopping for employer-sponsored health insurance for 2021, experts say that there's a lot to consider in light of the coronavirus pandemic. 

"There's been a lot of conversation about how employers are pulling back benefits and so forth. I have not seen that at all," says Kim Buckey, vice president of client services at DirectPath, a benefits consultant. 

In fact, a majority of companies, 57%, are not making any changes to their benefits, according to Mercer's 2020 National Survey of Employer-Sponsored Health Plans. Looking at the early survey responses from the over 1,000 employers Mercer surveyed, only 18% plan to implement cost-saving measures that may shift more health-care expenses to employees.

Consumers should still carefully consider their health-care options this year, experts say. Here are seven things to keep in mind.

Before you even consider what type of health insurance and benefits you're going to sign up for this year, re-familiarize yourself with what you enrolled in last year, Buckey suggests.

"So many of us, and I will include myself in this because I've done it too, will just automatically roll over elections from year to year to year," Buckey says. But it's worth asking yourself: How much of the plan did you really take advantage of? Were there extra costs that routinely fell outside of your coverage? Are you paying for more coverage than you really need?

Even though the majority of companies are not making changes to their benefits, it pays to go through each option carefully, Buckey says. Spend at least 15 minutes minimum looking through everything, she recommends.

There may be new options within the medical plan or free programs that you didn't know about. Many employers are putting resources toward behavioral health and mental health support right now.

And make sure to take advantage of any resources your employer may offer to guide you through the open enrollment process. Many Americans probably aren't going to have in-person benefit presentations this year, so make time to talk one-on-one with your HR team or the benefits manager. You can also attend a virtual presentation, Buckey says. 

When considering your health insurance options, you need to look beyond how much it will cost you each paycheck. You should also be comparing the deductible and the total out-of-pocket costs you may be responsible for paying, especially now. 

While the monthly costs, or the premiums, associated with a health-care plan are typically clearly spelled out, information on the deductible can be harder to parse. That's because some health insurance plans could have multiple deductibles — one for prescriptions and one for medical services, for example. 

The average deductible for single employees enrolled in their employer-sponsored health insurance is $1,644, according to Kaiser Family Health. That means the typical American will need to pay up to that amount before their insurance starts to pay their bills. If you don't have any major medical needs, you may pay less. 

When shopping for health insurance, it's crucial to know the out-of-pocket maximum you'll be paying, says Tracy Watts, a senior consultant with Mercer. There are a number of calculators that can help run the numbers on some of the biggest costs when comparing plans, including the monthly premium, the deductible and coinsurance rates.

About 31% of workers are enrolled in a high-deductible plan with a savings option, according to Kaiser. But with the ongoing public health crisis, many are asking, are these plans still viable? 

Typically, the lower the premium, the higher the deductible. That may be fine for some, especially if you're healthy and have no underlying conditions. But if you have unexpected medical expenses or a hospital stay, it may end up costing quite a bit out of pocket. 

That said, you shouldn't automatically disqualify these plans. If you have a chronic illness and you're taking multiple prescriptions routinely, you may want to scrutinize the overall cost, Buckey says. But if you're healthy and young, a high-deductible plan may be a good option to free up more money from your paycheck. 

"You really shouldn't run away from any type of a plan," Watts says. You need to look at all of the features, not just the deductible and not just how much comes out of your paycheck. That way, there won't be any surprises down the road.

If you are worried that a costly hospital stay will break the bank, look into hospital indemnity insurance, Buckey and Watts recommend. In fact, more employers are offering this as a voluntary benefit that you can pay for, similar to legal aid or pet insurance, Watts says.

A hospital indemnity insurance plan is not health insurance. It's a supplemental insurance that generally pays out a monetary benefit for each day you're in the hospital. If you have a high-deductible plan, you can use this type of insurance to cover your deductible or expenses. 

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"With the pandemic, if they're worried that maybe they're at a higher risk and might have to be hospitalized, those may be options that people want to consider," Watts says, adding that these plans are not very expensive. Plans can start as low as $7 a month, but the price varies based on the level of benefits. 

Everyone should be looking at long-term disability coverage options, Buckey says.

Typically, some employers will continue to pay a portion of your salary if you're out of work for a short time. But if you're out for longer periods — generally more than 10 weeks, though the timing varies by employer — you may need to rely on long-term disability to get paid, which can be an extra protective benefit that you sign up for during open enrollment.

Long-term disability plans usually provide 50% to 70% of your income for up to 24 to 36 months. 

These plans can be critical, especially now. "God forbid you get really sick," Buckey says. If you're suddenly unable to work for six months or a year, either because of initial Covid symptoms or the longer term complications, you may need income.

A health savings account or flexible spending account generally comes as an add-on benefit with health insurance, but these accounts can act as a buffer, giving you a savings cushion if you do have out-of-pocket costs, or to reduce the cost of other health expenses, such as dental and vision.

HSAs are typically offered to workers enrolled in high-deductible health insurance plans and are the more flexible of the two options. These accounts allow you to contribute up to $3,600 per year for self coverage and up to $7,200 for family coverage in 2021. 

And those funds, which you can choose to invest in mutual funds to potentially grow your savings, will roll over, year after year, if you don't spend them. Plus, your HSA stays with you. "Even if you change jobs, that money is in an account with your name on it," Watts says.

A health FSA account is offered through your employer benefits programs which you can contribute up to $2,750 in 2020, with limits expected to remain at $2,750 for 2021. You can use the money to cover qualified medical expenses.

But any money you put in this account operates under a "use it or lose it" approach: You're supposed to spend everything you put in the account within the calendar year or it disappears. Some employers will allow you to spend leftover money through the first few months of the next year or even carry forward up to $500.

Money put into these accounts is pre-tax and contributing to them can reduce your overall taxable income. If you have one, Buckey recommends setting aside "as much as you are comfortable setting aside," to help offset any health expenses. She also notes that the rules around what you can use this money for have been loosened somewhat this year. You can now buy pads, tampons and menstrual supplies using your FSA or HSA, for example. 

At the end of the day, it's important that consumers "don't leave money on the table," Buckey says. And the only way you're going to know how to take advantage of all your benefits is by carefully reading through and reviewing your open enrollment options, so make time to do it.

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