As open enrollment packages for healthcare coverage roll in, you might be tempted to tune out and default to whatever you elected for 2023.
That would be a shame, because health insurance varies widely from year to year and so too might your healthcare needs. That said, unraveling the choices can be crazy making, because there are so many variables that comprise the total annual cost of insurance.
The big one that grabs your attention is the premium, which is the amount that you pay an insurer to participate in a health plan. But then there’s also the deductible, which is the annual sum you have to pay out of pocket before the health insurer starts to pay for services.
But wait, don’t forget about co-pays, the flat dollar fees you pay when you visit a doctor and co-insurance, which is a percentage of health costs that you share with the insurer. All of the pieces add up to a lot of money, which is why spending some time with your options could pay off in savings.
Employer-based coverage
For the 153 million Americans who purchase coverage through workplace plans, costs have been rising steadily for decades.
The good news is that the past five years has not been too bad, at least by the broad numbers. According to the Kaiser Family Foundation, “over the last five years, the average premium for family coverage has increased by 22% compared to an 27% increase in workers’ wages and 21% inflation.”
To start the process of choosing the best option, create a list of your doctors and prescriptions and determine whether they are still covered under your current plan. If not, move on and start comparing the alternative plans.
Notably, many more companies are offering High Deductible Health Plans (HDHP), which have lower premiums in exchange for higher annual deductibles.
These plans are paired with tax-advantaged Health Savings Accounts (HSAs), which can be an efficient way to save for current, as well as future health care expenses. For many, an HSA can serve as another retirement savings vehicle, because money in it can be used to offset costs of medical care after retirement. Annual HSA contribution limits for 2024 for self-only coverage will be $4,150 and for family coverage, the HSA contribution limit will be $8,300. If you are 55 or older, you can contribute an extra $1,000 to their HSAs.
Affordable Care Act (ACA)
The open enrollment period for the ACA runs through January 15, 2023, and offers four different types of plans. The main difference among them is that each has a different method for sharing costs. The government notes that “plan categories have nothing to do with quality of care.”
Costs vary depending on the plan you choose and your state of residence. You may qualify for help from the government in the form of tax credits and/or the ability to minimize out of pocket expenses. When you enroll and enter your income, you will be prompted to receive either type of assistance.
Medicare
If you are over 65, Medicare open enrollment has started – and it concludes December 7. (Married couples: remember that each of you must be 65 to qualify for Medicare!)
During this period, you can join, switch, or drop a plan. Because insurance companies often change what they cover from year to year, it behooves enrollees to update coverage.
Using the same analysis mentioned above, go to Medicare.gov to compare plans and select what’s right for you. If you need financial assistance to help pay for coverage, consider Medicare Savings Programs, which are administered through state Medicaid agencies.
Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com.
