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Your Guide to Health Care Open Enrollment at Work

5 things to consider in choosing an employer-based plan

Hand holding open enrollment healthcare benefits forms with a medical doctor in the background.

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En español | It's open enrollment season at many companies, which means if you get health insurance through your employer, now is the time to review your current plan and consider any adjustments for next year. Here are a few things to keep in mind.

Study your options

Not everybody has a choice among health insurance plans — in fact, only about half of workers do, says Paul Fronstin, director of the health research program at the Employee Benefit Research Institute. If you are not happy with your employer's plan and have a working spouse with access to different coverage, it might make sense to join that policy during the open enrollment period.

If your employer offers a few plans, think about whether your current plan works for you, Fronstin says. “And if it doesn't, why?” he says. “Is that because the deductible is too high? Is it because the premiums are too high? Is it because your doctor is not in the network or a drug you need is not on the formulary? Those are the things to think about.”

Premium vs. deductible

The biggest differences among employer-based plan options often come down to the premium (the price you pay each month) versus the deductible (what you pay out of pocket when you access care). Shelling out less each month for health insurance has its appeal, especially considering the rising costs of premiums, which reached an average of $7,188 a year for single coverage and $20,576 a year for family coverage in 2019, according to an annual Kaiser Family Foundation survey.

But Fronstin says there's a trade-off to paying lower premiums: “If and when you need health care, you're going to pay more out of pocket.” If you opt for a lower premium, be sure to leave room in your budget for uncovered medical expenses throughout the year.

It's also important to consider the unexpected, says Trudy Lieberman, a journalist who covered health insurance at Consumer Reports for decades. After surviving a near-death experience that brought unimaginable medical bills, she encourages people to think about how they would pay for care in case of a catastrophic event. That may mean selecting a plan with a higher premium.

"We don't think about what insurance is for, and it's for that unexpected, terrible event that almost no one can pay for on their own,” Lieberman says. “The cost of having it is high; the cost of not having it is even worse.”


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HMO vs. PPO

If you have a choice between a preferred provider organization (PPO) and a health maintenance organization (HMO), think about how and where you access health care. HMOs work within networks and generally have more limitations on the doctors you can see. A PPO, on the other hand, has a wider network of providers, and thus may work better for someone who travels often and wants broader access to physicians and specialists, Fronstin says. It might also make sense for someone who seeks specialized care out of state. There is a cost difference: Premiums and out-of-pocket expenses are generally higher in PPOs than in HMOs.

Spending accounts

Need new glasses? Anticipating dental work? If your employer offers a flexible spending account (FSA), you could save on these and other out-of-pocket costs by paying with pretax money from your paycheck. Just beware of the details.

When it comes to an FSA, Fronstin recommends not maxing out your contributions unless you are sure you will spend it all. These accounts typically don't roll over, he explains. And if they do, they only roll over a limited amount. “You might be in a plan where you lose what you don't use. And you're better off putting in too little than putting in too much,” he adds.

Health savings accounts (HSAs) are similar accounts for pretax health care expenditures not covered by insurance, but are only for people enrolled in insurance plans with high deductibles (HSA-eligible plans). Unlike with FSAs, the money invested in HSAs rolls over from year to year.

Don't forget dental and vision

Don't forget about dental and vision coverage, which may be offered in your benefits package. Compare the monthly premiums with what's included, Fronstin says. It could be that you don't need them.

And if you have questions about your insurance, take advantage of any tools available, including scheduling a meeting with someone in your benefits department.

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