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Navigating Open Enrollment 2021

Open enrollment is coming again soon and it's never too early to start thinking about how you and your family will approach it. 2020 has thrown both financial and medical curve balls to many Americans that it seems more important than ever before to pay attention to how much we are paying for health care and what exactly we are buying.

Open enrollment is the period of time each year during which a person is able to enroll in a new health insurance plan. In fact, it is ONLY during this time of the year that a person is able to enroll in a new health insurance plan for the upcoming calendar year, unless there are qualifying special circumstances in the future. During open enrollment, a person can purchase a health insurance plan, switch to a different insurance plan, add family members or remove family members from insurance plans, or apply for subsidies to help pay for health insurance. The open enrollment period is 11/1/2020 to 12/15/2020.

There are several things to starting thinking about before open enrollment in order to prepare.

  • What was your medical activity like this past year? Was it relatively quiet? Do you think you will have many office visits? Many specialist visits?

  • What do you anticipate your medical expenses to be this upcoming year? Do you anticipate a big surgery this year? Do you take a lot of medications?

  • Do you have a list of "must-have" doctors or medications or facilities? Will they be in your network?

  • What is your household income for 2021? Do you think you might qualify for subsidies? Can you afford your co-pays? How reasonable is your deductible?

  • Do you need vision insurance? How about dental coverage?

Another important question to ask and not overlook is: does your employer offer a Flexible Savings Account? A Health Reimbursement Arrangement? Might you qualify for a Health Savings Account?

How do you sign up for an insurance plan?

  • Most of us sign up through our workplace/employer. Check with your HR department to find out when open enrollment starts for you.

  • Federal marketplace.

  • State marketplace if you live in CA, CO, CT, Washington DC, ID, MD, MA, MN, NV, NY, RI, VT, WA

  • Private insurance company (like Blue Cross Blue Shield, UnitedHealthcare, Cigna)

  • Insurance broker


Let's get into this in more detail.

Once you start looking at different plans, what do all of those terms mean?

HMO Health Maintenance Organization. This plan requires you to choose a specific primary care physician (PCP) within the HMO network. If your PCP feels it is necessary to refer you to a specialist, the specialist must be within the HMO network. Services outside of the HMO network are typically not covered.

EPO Exclusive Provider Organization. This plan is similar to an HMO. You must choose a primary care physician (PCP) within the EPO network; however you do not need a referral from your PCP to see a specialist within the network. Similar to an HMO plan, there are typically no out of network benefits.

PPO Preferred Provider Organization. This plan still prefers that you use providers within the network but you do not have to coordinate your care through a single primary care physician. Services out of network may be covered but at a lower level.

HMOs offer the least flexibility but usually have the lowest monthly costs. EPOs are a bit more flexible but usually cost more than HMOs. PPOs, which offer the most flexibility, but are typically the most expensive (highest monthly premium).

HDHP High Deductible Health Plans. As you can probably guess, this plan has a high deductible but a low monthly premium. It also often offers wellness benefits to members even before the deductible is met. These plans are becoming increasingly more common. The biggest advantage of an HDHP is that they are required to be able to use HSAs (Health Savings Accounts). More on HSAs in a minute...

HRA (Health Reimbursement Arrangement or Health Reimbursement Account). An employer-funded, tax-advantaged health benefit used to reimburse employees for out-of-pocket medical expenses and personal health insurance premiums. HRAs are often linked to HDHPs but are not required to be like HSAs are. In Health Reimbursement Arrangements (HRAs), an employer decides how much pre-tax money can be reimbursed monthly to an employee for a qualifying HRA expense. The employee submits a claim for reimbursement directly to the employer.

FSA Flexible Savings Account. This is a tax-advantaged benefit plan offered by some employers to cover qualified medical or dependent care expenses. Qualified employees elect an amount of pre-tax dollars (up to a maximum set by the IRS each year -- in 2020 it was $2750) to deduct from his/her paycheck and allocate to the FSA account. Funds in this account may be used towards qualifying medical expenses and prescriptions. The list of qualifying expenses is actually quite extensive but the FSA funds must be used before the end of the year or they are lost.

HSA Health Spending Account. This is a tax-advantaged account that can only be utilized with a qualifying HDHP (High Deductible Health Plan). The employee elects an amount to be allocated tax-free (up to a maximum amount mandated by the IRS each year) into (essentially) a savings account that can be used to pay for qualifying medical expenses. The funds deposited into this account are owned by the employee and rolled over year over year, and can be transferred with the member even if he/she leaves that employment. The funds in this account accrue interest tax-free and can even be invested into other mutual funds or stocks.


Now what? Now it's time to sit down and decide. What can you reasonably afford vs. your health. Your current health. Your future health. Your family's health. Accidents. Emergencies.

I get it. It's a lot to decide. We're not talking $20 plans. These plans can cost a family thousands of dollars per year. It's a big decision. Talk to your friends. Talk to your family members and neighbors. Talk to those you trust in the medical community. Ask questions. And take advantage of the cost-savings options when you can. Flexible savings accounts, Health savings accounts can have some real, tangible advantages in the form of cost savings. Don't ignore those options.

Oh. And consider Direct Primary Care memberships.... but we'll save that for another time.

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