Navigating Health Insurance: Your Guide to Open Enrollment
Join host Kate Welker on Money Roots as she demystifies the complexities of health insurance during the crucial open enrollment period. This episode focuses on understanding employer-sponsored plans, including HMOs, PPOs, and HDHPs with HSAs, providing listeners with essential insights to make informed decisions. Kate offers practical advice on comparing deductibles, co-pays, and network options, ensuring you find the coverage that best meets your needs. Additionally, she explores the healthcare exchange for those without employer coverage, guiding you through the process of selecting the right plan. Tune in to maximize your plan's potential and ensure a thriving financial future with your health insurance choices.
Takeaways:
- Understanding the different types of health insurance plans is crucial during open enrollment.
- When comparing health plans, analyze deductibles, co-pays, and network coverage options thoroughly.
- Utilizing Health Savings Accounts (HSAs) can provide significant tax benefits and savings opportunities.
- It's important to evaluate your healthcare usage to choose the best plan for your needs.
- Always check if your preferred providers are in-network to avoid unexpected costs.
- Estimating your income accurately on the healthcare exchange is vital to avoid penalties later.
Health insurance can be a complex landscape, particularly during open enrollment. Kate Welker offers an essential guide to navigating this process effectively. She starts by dissecting employer-sponsored plans, including HMOs, PPOs, and HDHPs that can be paired with HSAs. With a clear explanation of each plan type, Kate articulates the importance of comparing deductibles, co-pays, and provider networks, encouraging listeners to create a side-by-side comparison to understand their options better.
Moreover, Kate delves into the advantages of HSAs and FSAs, explaining how these accounts can serve as valuable tools for managing healthcare expenses. She highlights how employers may contribute to these accounts, which can significantly enhance savings. By illustrating how to evaluate prescription drug coverage and the necessity of confirming network status with healthcare providers, Kate equips her audience with the knowledge needed to make informed decisions about their health insurance.
For those not enrolled in employer-sponsored plans, the episode transitions into an exploration of the healthcare exchange. Kate emphasizes the importance of accurately estimating income as it relates to premium tax credits, providing guidance on how to avoid common pitfalls that can lead to back charges or overpayment. By analyzing the various metal tier plans available on the exchange, she helps listeners understand the balance between premium costs and coverage quality. Throughout the episode, Kate urges her listeners to utilize available resources, ensuring they feel supported in their quest for effective health insurance solutions.
Resources:
- Kate Welker’s episodes and blog articles at Rooted Planning Group: Rooted Planning Group
Through this episode, listeners are encouraged to grasp the intricacies of health insurance thoughtfully. Be sure to tune in to the full episode of Money Roots for a comprehensive understanding and more expert advice from Kate Welker. Stay informed and continue to sow the seeds of financial knowledge for a robust financial future
Transcript
Welcome to Money Roots, the podcast where personal finance gets personal.
Amy:Each week, Amy and her guests dig deep into the world of finance, making it more approachable and understandable for everyone.
Amy:No matter where you are on your financial journey, from savings and investments to budgeting and planning, well bring you practical advice, inspiring stories, and expert insights.
Amy:We believe that everyone has the potential to grow a healthy financial future, and we're here to help you nurture it.
Amy:So whether you're a financial guru or just starting to plant the seeds of your financial knowledge, this is the place for you.
Amy:Get ready to uncover the tools and strategies that can help you thrive financially.
Amy:So without further ado, let's dive into today's episode of Money Roots.
Kate Welker:Hello and welcome to this episode of Money Roots.
Kate Welker:This is Kate Welker back again with you today.
Kate Welker:And today I am solo.
Kate Welker:So good to just hear me chat a little bit about health insurance.
Kate Welker:We are in the middle of open enrollment season for many people and we thought it would be helpful to spend a few minutes talking about health insurance and how you might go about shopping for health insurance or comparing the options.
Kate Welker:So I'm going to start with employer sponsored plan at the beginning, and then at the end I'll talk about a little bit about if you are on the insurance exchange instead.
Kate Welker:And for this episode, we are going to focus on those under age 65.
Kate Welker:Shopping for a Medicare plan is a little bit more complicated or nuanced potentially, and we're going to spend some time in another episode to discuss that.
Kate Welker:So if you are ready to dive in and learn more about health insurance or think about how to shop and compare, we'll get started.
Kate Welker:So your employer will likely send out a brochure this time of year or a summary explaining your options.
Kate Welker:And under this options, it will list the available health insurance plans.
Kate Welker:Many employers have several types of plans and I like to personally compare them kind of side by side.
Kate Welker:So I have a spreadsheet I use, but you may want to just use a piece of notebook paper or they may vary well.
Kate Welker:And more brochures do.
Kate Welker:This now is lay them outside by side for you.
Kate Welker:The first thing is to look at what type of insurance arrangement it is.
Kate Welker:Is this a plan under an HMO?
Kate Welker:Is it a pPo or is it an HSA?
Kate Welker:Those are a lot of letters, so let me back up a little bit.
Kate Welker:So an HMO, this is a health maintenance organization.
Kate Welker:If you are under this plan, you are only going to find coverage at a provider within that organization.
Kate Welker:So they have to be part of that HMO to get coverage outside of that organization.
Kate Welker:There is not coverage.
Kate Welker:PPO.
Kate Welker:A PPO is a preferred provider organization.
Kate Welker:With a preferred provider organization, you have coverage in network, or you could choose to go out of network and find coverage.
Kate Welker:If you go in network, these are the preferred providers.
Kate Welker:In network, you are going to find that your co pays are lower, your out of pocket cost is lower, your maximum out of pocket.
Kate Welker:Any deductibles, those are all going to be lower under the preferred provider.
Kate Welker:The reason being this is who your insurance company wants you to work with.
Kate Welker:But there is that safety net of out of network options.
Kate Welker:So if you had something come up and you wanted to go out of network for whatever reason, you could.
Kate Welker:You have the option to do that.
Kate Welker:Your insurance will still pay something, but not everything.
Kate Welker:It'll be a little bit more than if you went with someone that's in their network.
Kate Welker:This is a little more, you know, people are more familiar with this one.
Kate Welker:It's seen as some of the traditional insurance.
Kate Welker:And then the last option I mentioned was the HSA.
Kate Welker:So this is a high deductible health plan.
Kate Welker:Actually, I should say high deductible health plan versus an HSA.
Kate Welker:It's a high deductible health plan with an HSA available, and you may see it as HDHP on your printout.
Kate Welker:So under this plan, you pay a high deductible, but you are also allowed to have an HSA, which is a health savings arrangement along with this or health savings account along with this plan.
Kate Welker:This plan will have a high deductible.
Kate Welker:The IR's sets limits for how high that deductible has to be.
Kate Welker:And as a refresher, deductible is how much money you are paying out of pocket before your insurance kicks in.
Kate Welker:Now, quite often preventative care is covered at no cost to you.
Kate Welker:But if you had to go to urgent care, you weren't feeling feeling well and the bill was $250 to go to urgent care and you had not yet hit your deductible.
Kate Welker:You're going to pay that $250 out of pocket because you have not hit the x number of dollars the plan has stated you have to spend after you hit the deductible.
Kate Welker:Then you will go into a copay situation and it could be a flat dollar amount or a percentage amount.
Kate Welker:So under a high deductible health plan, you want to make sure you look at how much is that deductible to know what you'd have to pay out of pocket and just kind of think through your utilization a little bit.
Kate Welker:So when you're looking between the three options, how do you go about deciding?
Kate Welker:So if you are looking at an HMO, one thing to consider is, is this network popular in your area?
Kate Welker:Do you feel comfortable that you could find providers there?
Kate Welker:If not, you may want to look at the PPO, the preferred provider organization, or the HDHP, the high deductible health plan arrangement, because it would give you more flexibility and more providers potentially.
Kate Welker:And then the next thing you want to do is to start looking at those limits.
Kate Welker:So the first thing is your deductible.
Kate Welker:I just talked about the deductible on a high deductible plan, but other plans can also have deductibles.
Kate Welker:So compare across the board.
Kate Welker:What were you going to pay out of pocket before your health insurance starts contributing, um, partially to your care after that?
Kate Welker:This is where you want to dive into.
Kate Welker:What do those co pays or coinsurance look like after you've hit your deductible?
Kate Welker:I mentioned before, they're likely a percentage or a dollar amount.
Kate Welker:It may be stated as maybe, um, $50 for urgent care, flat copay, or $85 to see a therapist.
Kate Welker:Or it might be phrased as 20%.
Kate Welker:So if you go after your deductible and the charge is $100, you're going to pay 20.
Kate Welker:Your insurance company would be $80 of that.
Kate Welker:So start looking down through and getting an idea of what would the co pays be.
Kate Welker:Also thinking about yourself and your utilization.
Kate Welker:Are you using these services regularly?
Kate Welker:What's it going to cost you?
Kate Welker:Sometimes you might find that you would be able to hit the deductible on a high deductible plan pretty quick in the year and it may end up paying off or being cheaper to have this plan.
Kate Welker:Sometimes we just don't know our utilization.
Kate Welker:So it's using best guesses and looking at what would be coming out of pocket.
Kate Welker:The next thing to look at again is that in network versus out of network number, do you have providers in your network in your area or would they be out of network?
Kate Welker:And then just making sure you're really familiar with what is covered in network versus out of network.
Kate Welker:So if you do have a situation and had to go out of network, you just be prepared in advance, understanding that if you're making a large change in insurance, something you have not been on before, I do highly recommend calling your providers.
Kate Welker:If you have very specific people you're seeing, give them a call and just say, hey, I am looking at insurance companies.
Kate Welker:I have these options do you accept this insurance?
Kate Welker:Then you know it also gives you that information.
Kate Welker:So as you're comparing them now, you can say, all right, my primary care doctor or my dermatologist is going to be in network or out of network.
Kate Welker:The next area I recommend comparing is the prescription coverage.
Kate Welker:This will be laid out in typically tier one, two, three drugs, and what the, the charges and the co pays will be for those.
Kate Welker:This is where you may need to do a little bit of research to find out, are you on medication and what are they classified as?
Kate Welker:If you don't know what they're classified as.
Kate Welker:You may need to call your pharmacy and just ask, or they actually probably won't know.
Kate Welker:They may.
Kate Welker:They may or may not know.
Kate Welker:Or you could get a prescription listing from the health insurance company that you're looking at.
Kate Welker:They'll provide you some more information.
Kate Welker:But as you look at these to understand where are your prescriptions?
Kate Welker:The other thing could be, if you are on a tier three drug, is there a generic that you could get on instead?
Kate Welker:That would be a tier one if you're getting into higher pharmaceutical expenses to look at too.
Kate Welker:And then as you go down through, what are the kind of the extra things to consider?
Kate Welker:Does your employer contribute money to an HSA?
Kate Welker:If you go with a high deductible health plan, this is becoming more and more prominent.
Kate Welker:And your employer may say, if you go on this high deductible plan, the overall cost is less.
Kate Welker:So we're going to contribute $1,000 to your HSA for you.
Kate Welker:I love an HSA as a savings vehicle.
Kate Welker:The reason being that it is not a use it and lose it situation.
Kate Welker:So after you decide on your insurance plan, you're going to have a choice between two additional ways to save.
Kate Welker:One is the HSA, the other is the FSA.
Kate Welker:The flexible savings under these, you're able to put away pre tax dollars to save to use towards medical expenses.
Kate Welker:The difference being the FSA has a smaller limit and that is use it or lose it.
Kate Welker:The FSA is tied to typically the pPO or the HMO, sometimes a lower high deductible plan where the HSA is.
Kate Welker:If your plan is high deductible and meets all the IR's limits, you can put money in the HSA instead.
Kate Welker:This is money you put away pre tax, but you don't have to use it or lose it in the year.
Kate Welker:This does roll forward.
Kate Welker:It rolls forward year to year, and it also is your money.
Kate Welker:If you leave your employer, you keep that money and it could roll forward indefinitely until you use it at some point in the future.
Kate Welker:It does need to be used on medical expenses, not to incur a penalty, but it could be used for a large medical bill in the future.
Kate Welker:It could be used for health insurance premiums and retirement.
Kate Welker:There's a lot of, a lot of fun things with the hsas that I could go on and on about, but they are a really neat vehicle.
Kate Welker:If they fit, if they fit you and your health insurance is an opportunity.
Kate Welker:So look to see if your employer is contributing money.
Kate Welker:If not, I would encourage you to contribute some money to that flex plan or the, or the HSA, either one that's going to be eligible to you just to reduce your taxable bill and use pre tax dollars to pay for medical expenses that come up throughout the year.
Kate Welker:If you do have the FSA, you need to make sure that you're using, deferring a sum of money that you would actually use.
Kate Welker:If you don't use a lot of services, have a lot of copays.
Kate Welker:Keep that in mind before maxing out that plan too.
Kate Welker:And then there may be some other benefits along with the plan.
Kate Welker:Read down through to see if does it include vision or dental?
Kate Welker:Typically these are separate, but sometimes there's inclusions there are there reimbursements for gym membership or physical equipment?
Kate Welker:There may be this sort of section of others on there that you want to look at as well.
Kate Welker:If you go down through and you're still really confused, reach out to your HR department.
Kate Welker:They may be able to direct you to some more information on this.
Kate Welker:Or there's a lot of research online.
Kate Welker:I know our website has some good.
Kate Welker:We have other podcasts on this and some blog articles too.
Kate Welker:Just explaining this even further, I am aware that there's a lot of acronyms and a lot of things to compare.
Kate Welker:But again, like I said, what I prefer to do is sort of lay things out next to each other and look at it and then think through realistically.
Kate Welker:How many times do I go to the doctor in a year?
Kate Welker:In an average year?
Kate Welker:Average.
Kate Welker:If it's primarily, well, visits that's going to.
Kate Welker:You're going to kind of look at your base number.
Kate Welker:What's my premium going to be out of pocket.
Kate Welker:That may be all you spend in the years if that's, if you're healthy.
Kate Welker:And then you can also look at worst case scenario on your summary will list like what's the maximum out of pocket you would spend?
Kate Welker:This is going to show you a worst case year.
Kate Welker:You've, you've utilized the plan a lot, you spent a lot.
Kate Welker:So that gives you the range of your spending on that.
Kate Welker:And if you look at your premium plus that maximum out of pocket, that is going to give you a range of where your spending can go low to high.
Kate Welker:And again, this is a number you could compare across plans just to help you make a decision for you.
Kate Welker:All right.
Kate Welker:Now, if you are not on an employer sponsored plan, you will likely need to look at the healthcare exchange.
Kate Welker:Now, this plan is different.
Kate Welker:These plans are run through our government organization and they'll either be through the federal coverage or through your individual states.
Kate Welker:So you will need to learn your state specific rules when it comes to these plans and to begin shopping here.
Kate Welker:Eventually, it's going to end up very similar to what I just went through in the beginning.
Kate Welker:But for starting purposes, you will go to your exchange and you'll need to enter your demographic information.
Kate Welker:So it's going to want to know how many people in your household, how many people are shopping for insurance, because that is important.
Kate Welker:It will ask for your county because plans are based on county as well.
Kate Welker:And then it is going to ask about your income.
Kate Welker:So I want to spend a few minutes talking about how income impacts you.
Kate Welker:On the healthcare exchange, there is a credit, it's called the premium tax credit.
Kate Welker:And this is a credit that is calculated on your tax return based on your income.
Kate Welker:And always kind of be thinking this is a little bit in reverse.
Kate Welker: on the healthcare exchange in: Kate Welker:Let me use modern numbers right now.
Kate Welker: In: Kate Welker: estimate what will happen in: Kate Welker: Because now fast forward to: Kate Welker: When you are filing that: Kate Welker:And then on the tax return, there's a calculation to figure out what your actual credit is based on your actual income and then reconcile it.
Kate Welker:So the reason I point this out is you want to try to estimate as accurately as possible because this will reduce or increase how much you pay for tax, excuse me, how much you pay for health insurance.
Kate Welker:And if you underestimate your income, when you go to file that tax return, you are going to be back charged for the premium you should have been paying that you weren't, and that is not a pleasant surprise anybody wants to get into.
Kate Welker:On the flip side, if you overestimate your income, you end up overpaying for health insurance for a year when you may have been eligible for a different plan or a larger credit.
Kate Welker:Pinch your bills.
Kate Welker:Now, it would come back to you in the form of a credit, but you also in the meantime may have been eligible for a different plan through your state.
Kate Welker:So estimate as best as you can.
Kate Welker:Also, if you have a change in circumstances at any point in the year, please call your exchange and ask them how that impacts your plan.
Kate Welker:Because again, you don't want to get stuck with a situation the next year that you're kind of backpedaling and trying to correct.
Kate Welker:So estimate your income appropriately, as appropriately as you can.
Kate Welker:I know we don't always know exactly what's happening, but as appropriately as you can, after you do that, it is going to bring up the available plans in your area and there may be many.
Kate Welker:You will find that they are staggered by bronze, silver, gold, their metal level plans.
Kate Welker:And as these lay out, there will be differences.
Kate Welker:High deductible plans, some high deductible that are eligible for an HSA, some that are not eligible to save in the HSA.
Kate Welker:So pay attention to that.
Kate Welker:Different coverages as well as different networks.
Kate Welker:So once you start laying these out, kind of going back to the steps that I laid out initially, as in comparing the type of plan it is comparing the deductible, comparing obviously in the end the premium, you may find that you get a fairly large credit to offset the premium.
Kate Welker:If you go with one of the less expensive policies, you also will find that typically on the less expensive policies that the coverage is not as.
Kate Welker:Is not as good.
Kate Welker:So really be careful when you're reviewing those plans, do the same thing.
Kate Welker:They will provide you with really excellent links to these plans.
Kate Welker:So once you it might spit out 30 options, you can go in there and click for additional details and it will bring up a summary of the things I mentioned previously, like what is your deductible?
Kate Welker:What are the in network and out of network, out of pocket maximums, co pays, coinsurance, as well as links to just this network in general.
Kate Welker:And then you can go back and start over again and call your providers.
Kate Welker:It is a lot of work and a lot of comparison.
Kate Welker:If you do need to shop through the exchange, you may find that there is someone locally through not for profit organizations that will help you navigate these websites.
Kate Welker:This is becoming more and more popular, so I would recommend that if this is something that you are doing and you're confused, see if there's a resource locally that will help with health insurance signing up on the exchange.
Kate Welker:And then additionally, depending on your state, if your income is under certain limits, you may be eligible for free or very low cost insurance through that state as well.
Kate Welker:Example, I'm in New York state and I know we have this plan called the essential plan.
Kate Welker:It is for those that don't qualify.
Kate Welker:Their income is not low enough to qualify for Medicaid, but it's still considered too high.
Kate Welker:The state anyway considers it too high to pay for the traditional insurance.
Kate Welker:So they offered this essentials plan and last year they increased the income limits to be eligible quite substantially.
Kate Welker:So more people are eligible for that.
Kate Welker:So just take a look at what again, what's available, what's out there.
Kate Welker:If your income would qualify, they do look at household income.
Kate Welker:So note to self, make sure you are including household income even if just one person is applying.
Kate Welker:But there are two or three people in the household as well.
Kate Welker:So kind of pulling it all together to go back.
Kate Welker:First, lay out your options.
Kate Welker:I didn't add this earlier, but the other thing would be to educate yourself.
Kate Welker:If you are find yourself struggling or unfamiliar with a lot of the terms that are coming up and terms that I just used, as in maybe in network, out of network, coinsurance, copay, deductible, educate yourself a little bit.
Kate Welker:There's some really great resources online that will just search the terms and just learn a little bit more about what those are and how they impact you.
Kate Welker:Consider your family's needs.
Kate Welker:I can compare charts all day, but when it comes down to it, it's also looking at your family and comparing what you need.
Kate Welker:The other thing that I like to tell people is to make sure that you're really comfortable with the plan.
Kate Welker:I tend to like a high deductible health plan with the HSA available, and in many situations it works out better.
Kate Welker:But it can also be very uncomfortable paying for those expenses upfront.
Kate Welker:So, for example, you might pay twice as much for that PPO plan I mentioned earlier, but you walk into the doctor's office and you maybe are paying a 20 or $40 copay or no copay, depending on the plans.
Kate Welker:There's not that cash flow coming from your pocket on the high deductible plan, it's coming out of your pocket.
Kate Welker:So once out of the pay, more out of the paycheck, less out of the pocket, reverse maybe less out of your paycheck, more out of the pocket and it can just be an adjustment for a while.
Kate Welker:So be, be prepared for that and make sure it's something that you're okay with and comfortable with.
Kate Welker:Looking at those out of pocket maximums, becoming familiar with what's the maximum that I could spend in the year, and then really looking down through your network, your providers, are they covered?
Kate Welker:Are my prescriptions covered?
Kate Welker:I didn't mention a kind of lightly mentioned specialists.
Kate Welker:If you work with specialists, this is an area I would spend some time making sure that your specialist is in network on whatever plan you work with and seeing if there would be any kind of referrals needed in the future to work with specialists.
Kate Welker:If you have more advanced health needs as well, reach out for help.
Kate Welker:If you are someone that is struggling with this, reach out to resources, whether it be within your place of work, if it's a workplace plan, if it is through a not for profit organization in your area that may have some navigators to help you through these plans or educating yourself more online.
Kate Welker:Unfortunately, health insurance has become a more complicated thing and we find some people have some stress and anxiety around banking a plan, but it is necessary at this point in time to have some coverage for yourself.
Kate Welker:So learning a little bit more and then on educating yourself after you do have the plan, really educate yourself on what's available.
Kate Welker:There are really nice reimbursements now for many things we're finding wellness reimbursements if you utilize a gym or if you buy fitness equipment.
Kate Welker:Sometimes there's mental health reimbursements.
Kate Welker:If you are using a therapist or seeking out some just work to take care of your mental state, there may be a reimbursement for that.
Kate Welker:If you are of childbearing years, there are a lot of times reimbursements for either just medical equipment, breast pumps, lactation consultants, different things of that sort that would be available through your plan.
Kate Welker:So make sure you're not missing out on anything.
Kate Welker:That's the biggest thing.
Kate Welker:Take full advantage of this plan you're paying for.
Kate Welker:Learn the ins and outs and you also can always call your health insurance company.
Kate Welker:There is a phone number on the id card if you have questions about things.
Kate Welker:Once you're on it, after you've made the decision, or if you're on a plan and thinking about switching, there's a number there and customer service can answer some questions too.
Kate Welker:So don't be afraid to reach out to them as well.
Kate Welker:So I wish everyone the best of luck as you're comparing these plans.
Kate Welker:Hopefully this was helpful as an overview and a rundown of what you're looking at.
Kate Welker:Any questions?
Kate Welker:Like I said, seek for some help, seek information, and hopefully you find the best plan for you.
Amy:You've been listening to money roots, your go to podcast for making personal finance accessible and approachable.
Amy:Thanks for joining us today.
Amy:Amy and her guests have enjoyed guiding you through the roots of your financial journey.
Amy:Remember, whether you're planting new seeds of financial knowledge or nurturing the growth of your existing financial plans, money Roots is here to support you every step of the way.
Amy:Be sure to follow them on Facebook, x, LinkedIn and Instagram for more resources.
Amy:And of course, subscribe to Money Roots wherever you get your podcasts so you never miss an episode.
Amy:A big thank you to the sponsor rooted planning group for making this show possible.
Amy:At rooted planning group, they're committed to helping you cultivate a thriving financial future.
Amy:Until next time, keep growing your money roots.
