At Action, our open enrollment is coming up January 1st. Open enrollment is the one time of year when you can make changes to your benefits, enroll in new plans, add dependents to your coverage, and much more. To make sure you get the most out of your company benefits, here are some things to consider:
Know the words
Sometimes it feels like you need to learn a new language in order to understand what HR is saying during your open enrollment meetings, but it might be easier than you think to follow along with the insurance-lingo. Just remember these definitions:
- A preventative visit or exam is a visit to your doctor’s office when nothing is wrong. You typically have one preventative visit each year – your annual check-up. The purpose of this visit is to make sure that you are healthy.
- A diagnostic visit or exam is a visit to your doctor’s office to figure out what’s wrong. For example, if you have a sore knee, you may go to your doctor for an exam and an x-ray to find out what is causing the soreness.
- A treatment visit or procedure is meant to fix what’s wrong. For example, if the way to fix your sore knee is with a knee surgery, the surgery and any follow up visits, such as physical therapy, would be your treatment.
- A copay is a fixed amount that you pay for a service – typically a diagnostic visit or prescription medications.
- A deductible is the amount you have to cover before the medical insurance starts paying for claims. Deductibles are typically applied to treatments. For example, if the total cost for your knee surgery is $3,000, and your plan have a $1,000 deductible, you would have to pay the first $1,000 of the surgery cost. You have to pay the deductible once every plan year, not once for every claim.
- A coinsurance is a cost-sharing between you and the insurance company. Coinsurances are typically applied to treatments after you had met your deductible. For example, if your plan has a 20% coinsurance, you have to pay 20% of the cost of the claim after you have paid your deductible. Your total bill for the knee surgery would be $1,000 (deductible) + $400 (20% of the remaining $2,000), with the insurance paying $1,600 (80% of $2,000).
- The out-of-pocket maximum is the highest amount you will pay in a plan year – everything that you pay (copays, deductible, coinsurance) contributes to your out-of-pocket maximum. Once you have reached the max, the insurance will pay 100% of all claims for the rest of the plan year.
Choosing the right plan
Most companies have more than one medical insurance plan to choose from. Which plan is right for you is going to depend on two main factors: 1) How much you think you are going to use the plan, and 2) how much risk you are willing to take on. With most insurances, you are going to pay either in your monthly premium or when you use the plan, since plans with lower out of pocket costs typically have a higher per-paycheck deduction and vice versa. If you frequently go to the doctor outside of your annual check-up, fill multiple prescriptions every month, or know that you have a major surgery or medical procedure scheduled in the next year, you’ll probably want to consider a plan with copays and lower out-of-pocket costs. Even though you’ll be paying more out of your paycheck, the lower cost of your claims can make up for it. On the other hand, if you usually get your annual check-up and not much else, you may want to consider a high deductible plan. This is where the risk comes in – you will pay less monthly, but if something unexpected happens, such as an accident or illness diagnosis, you could end up with high out of pocket costs for your medical services. Just remember that the most expensive plan is not always the bestfor you.
Find the Tax Savings
A Flexible Spending Account (FSA) offers you a chance to put money aside pre-tax that you can then use to cover the out-of-pocket expenses on your plan. Since you don’t have to pay taxes on that money, it can add up to extra savings on your medical costs. Make sure to estimate your cost – with an FSA plan, you can only roll over up to $500 from one year to the next – if you have extra unused money in the account it will be forfeited.
With a Health Savings Account (HSA) you can save even more money pre-tax, and this type of account have the benefit of never expiring – no amount is “use it or lose it”. Are you planning to expand your family in the next few years, or are you looking to save a little extra for your retirement? Your HSA can double as a long-term, tax free, savings account. The only restriction - you can only contribute to an HSA if you are enrolled in a qualified high-deductible plan.
Find the Freebies
Does your company have any free benefits or programs available? Most companies do. For example, an Employee Assistance Program can offer free counseling services (= no need to pay a copay through your insurance), financial planning, legal advice, and much more. Employee discounts can we available for services you’re already using, such as your cell phone bill. Sometimes you can even find freebies within your insurance plans. For example, you might be able to save on prescription medication by signing up for a home delivery program. Wellness benefits and competitions can be a great way to snag some freebies. For example, at Action we recently wrapped up a wellness Walking Challenge, where two employees won apple watches – completely free!
Most companies offer the standard medical-dental-vision insurance benefits, but employers with a more robust benefits package usually have other insurances and plans available at a low cost. These plans can include accident insurance (think Aflac), critical illness insurance, life insurance, or short term disability insurance. Signing up for these coverages is a great way to add extra protection for you and your family, without breaking the bank.