At the conclusion of each year, individuals have the ability to select their health insurance plans and employee benefit options for the coming year. The period, known as Open Enrollment, should trigger a review of your benefits and what changes you’d possibly like to make for health insurance effective in 2020.
Because of the importance of the event, understanding what Open Enrollment is, how health insurance works, and how to evaluate the cost of a 2020 health insurance plan will make it easier to navigate this annual period and find a plan that meets your needs.
Read below to see the five things you need to know about Open Enrollment in 2020 and how it pertains to health insurance.
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1. You May Not be Able to Buy Health Insurance Outside of Open Enrollment
In most cases, the only time you can enroll in a health plan for the following year is during the general enrollment period called Open Enrollment.
If you miss Open Enrollment for the 2020 effective policy year, you may not have the opportunity to buy a health plan absent experiencing a Qualifying Life Event. This occurs when you move states, lose your current health coverage (e.g. when you quit your job gracefully and write a farewell letter to your colleagues or your health plan period ends), get married, and have a baby or adopt a child.
In the event you experience a Qualifying Life Event, the government allows for a Special Enrollment Period to trigger and you may select health insurance outside of the formal Open Enrollment window. During this period, you can add or subtract people from your health plan or choose a new plan altogether.
However, absent a special circumstance, Open Enrollment often represents your sole opportunity to switch plans each year. These decisions will dictate your insurance coverage in 2020. Now that you have information about the choices you can make during Open Enrollment, we need to learn about the timing of it each year.
2. Open Enrollment Runs November 1–December 15
Because you may not have the ability to purchase health insurance outside of Open Enrollment, you should know when it starts and ends. Each year, Open Enrollment typically has the same 45-day window from November 1 through December 15 to select your health insurance, dental, vision, long-term disability, short-term disability, life insurance, and any other options available to you through your employer. If you have an individual plan not purchased through your employer, this 45-day window represents the time where you can choose your medical insurance plans.
Use the Open Enrollment window from November 1 through December 15 to research your options on health insurance effective in 2020. Read up on the provided documentation online through Healthcare.gov, on your state exchange, or through another portal where you can learn more about your insurance options.
Additionally, you can choose to meet with an independent and licensed agent, or contact someone working for the Health and Human Services Department to inquire about more information. Once you have answered all of your questions and addressed any concerns, you may enroll in a plan and begin paying for health insurance coverage for 2020.
3. You Should Shop Around for a Health Plan
When shopping around for health plans, you will find a variety of health plans available for your needs. However, let it be known that not all plans cover all health services.
Each health plan has a different way of sharing costs between the insured (you) and the insurance company. High deductible health plans have more of the cost burden for using medical services fall on the insured by having higher deductibles and out-of-pocket maximums. These higher cost levels occur in exchange for paying low (or none) premiums for carrying the coverage.
These plans do well for young invincibles, healthy people, or those with low on-going medical needs. On the other hand, for those with higher forecasted medical needs, low-deductible health plans offer higher guaranteed costs through larger premiums, but also lower deductibles and out-of-pocket maximums.
One advantage of a high deductible health plan comes from potential access to a health savings account (HSA), should your plan meet the minimum criteria. The funds placed into this account enjoy tax benefits and can go a long way toward building wealth and achieving financial independence.
To ensure that you buy a health plan which meets your needs and fits your personal budget, you should spend time shopping around for the best plan.
The variety of health plans available can make it overwhelming when comparing your options. As mentioned before, high deductible health plans with HSAs have proven popular with people who have less forecasted need for medical services. However, despite the advantages of HSAs, these plans do not make the best fit for everyone.
Forgoing healthcare to avoid costs can have long-term ramifications to your health and quality of life. Learning how to save money and live within your means involves knowing which costs you can avoid and not find yourself left worse off as a result.
Luckily, great online tools exist for shopping and comparing plans by yourself. To compare health plans which cover the Essential Health Benefits outlined in the Affordable Care Act, use HealthCare.gov. These plans offer good coverage and the selection on the national marketplace makes it easy to find a premium fitting your budget.
Other commercial websites, like HealthCare.com, HealthMarkets, and GoHealth, have a wider selection of plans, but not all plans on these websites cover the Essential Health Benefits. When visiting these sites, pay attention to the services covered and which do not qualify for the plan.
As a note, these companies have deals with insurance companies for listing their plans, which may affect the order of search results. Therefore, the first plan may not represent your best choice and thus requires you to dig further to understand which policy meets your needs. However, these deals make the website’s services free for users.
Additionally, these sites offer visitors the opportunity to speak with a licensed insurance agent to ask questions and get assistance with the enrollment process. This free service proves especially valuable for people buying health insurance for the first time as they will likely have many questions.
As you shop around, check to see if your current healthcare providers (i.e., your primary care doctor, hospitals or specialists) would accept your new plan. Health plans have different networks of providers, therefore you should make sure your current providers will accept your new plan. Otherwise, you should feel comfortable finding new ones before switching health plans.
4. The Full Cost of a Health Plan is Not just the Monthly Premium
Focusing on the monthly cost of a health insurance plan, or premium, can feel like the most straightforward approach to compare health insurance plans for 2020. However, the full cost of a health plan includes what you must pay out-of-pocket for prescriptions, emergency room visits, and other health care services.
Look at each health plan’s premium, annual deductible and out-of-pocket maximum. Also of note, most health plans have a separate annual deductible and out-of-pocket maximum for prescriptions. Factor these costs in when comparing plans because these hidden costs can affect your total healthcare costs. As a rough rule of thumb, plans with lower deductibles and out-of-pocket maximums tend to have higher premiums.
You should also compare how the costs for copayments and coinsurance. Copayment amounts represent set amounts for each kind of health service receive and serve as a manner for sharing the cost borne from using health services between the insured and insurance company.
The other component, coinsurance, represents the percentage of the bill the insured must pay and the insurance company takes care of the rest. Insurance companies calculate coinsurance based on the insurance company’s negotiated rates with hospitals and clinics. As an example, if you receive services which cost $1,000 and you have a 20% coinsurance amount, you pay $200 while the insurer pays the balance ($800).
If one of your plans for consideration has coinsurance, you might consider checking with the insurance company and your care providers to see how the cost of health services would look under the plan. Doing so will provide you a more concrete idea of how much you will pay with coinsurance.
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5. Open Enrollment, Not Just for Health Insurance
Health insurance usually takes center stage when people discuss Open Enrollment, but you should know you can enroll in a dental plan during this time as well.
Health insurance plans only cover hospital and medical services. Therefore, having dental insurance can help make dental care more accessible and affordable.
As mentioned previously, if using open enrollment through your employer, you may have an opportunity to select other available insurance options, including short- and long-term disability, vision insurance, and life insurance.
Other Insurance Articles:
- What is Renters Insurance and How Much Do You Need?
- What is Landlord Insurance? Definition, Cost, Providers & Features
- What is an Insurance Declaration Page? All About the DEC Page
Getting Ready for Open Enrollment
Learning what common health insurance terms mean and how health insurance works will help you compare health plans to find the one that will meet your coverage needs and best fit your budget.
Enroll in a health plan between November 1 and December 15 to ensure you have health insurance for 2020.
Alice Stevens is a language enthusiast, loves history, and enjoys traveling. She manages content for BestCompany.com specializing in finance, insurance, and car warranty.
About the Site Author and Blog
In 2018, I was winding down a stint in investor relations and found myself newly equipped with a CPA, added insight on how investors behave in markets, and a load of free time. My job routinely required extended work hours, complex assignments, and tight deadlines. Seeking to maintain my momentum, I wanted to chase something ambitious.
I chose to start this financial independence blog as my next step, recognizing both the challenge and opportunity. I launched the site with encouragement from my wife as a means to lay out our financial independence journey and connect with and help others who share the same goal.
I have not been compensated by any of the companies listed in this post at the time of this writing. Any recommendations made by me are my own. Should you choose to act on them, please see my the disclaimer on my About Young and the Invested page.