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Tales from the Wallet: Tips for Open Enrollment

Tips for Open Enrollment | CorporetteAs we’re coming up on the end of the year, I thought it might be interesting to talk about benefits — and specifically tips for the open enrollment period.  (One of our guest posters got into this a few years ago when she talked about using your benefits package at work to save $10K.) Interestingly, studies have found that people spend less than two minutes on benefit selection — but it really can make a difference (particularly if you’re thinking about getting pregnant or otherwise planning some health changes). (Pictured: the extremely well-reviewed Hobo’Sadie’ Wallet, $108-$118 at Nordstrom.)

To get some expert tips for navigating open enrollment, Kate talked to Shannon McLay, a financial planner and the founder and president of The Financial Gym, a company that offers classes on personal finance as well as one-on-one conversations with financial trainers. (Shannon previously gave us advice on finding a financial planner.) Here’s what she suggests:

Corporette: What are the most important things to reassess during the open enrollment period?

Shannon McLay: During your open enrollment period, it’s important to look back and assess how beneficial your previous year’s coverage was; for example, did you have to pay more in doctor co-pays because you developed an illness, or did you run out of funds in your flex spending account or HSA? Sometimes paying more per month in benefits for a better plan, especially because they are taken out pre-tax, may help save you money over the course of the year. You should also make sure that you are taking advantage of all of the benefits offered to you by your employer. Most people focus just on the healthcare benefits; however, you can also review other insurance benefits like life insurance or disability insurance.

C: If you’ve gotten a big salary increase during the year, how should you look at your benefits differently, and what should you change?

SM: [I]t makes sense to try to take advantage of more benefits as they help offset your taxable income. If you have a high-deductible health insurance plan, you should absolutely make sure that you are maxing out your HSA (healthcare savings account) option. I view the HSA as a healthcare IRA, and unlike the flexible savings account (FSA), your balances remaining at the end of the year rollover to the next year, you can invest the funds in the account, and if you leave your employer, you can bring your HSA with you.

C: Do you have any general tips that you think we should share?

SM: From my perspective, I think the biggest missed opportunity during open enrollment is in the other insurance benefits provided, of either life insurance or disability insurance. The rates offered on both of these through your employer are significantly lower than what you could purchase on your own, and I believe that both should be part of a well thought out financial plan, especially if you have a family.

Ladies, do you plan to make any changes in this year’s open enrollment period? Have you made changes in the past that had a big impact (or were a mistake)?  How do you plan to use the rest of your FSA and more from your 2015 benefits? 

Further reading:

  • Tips to make wise health benefit choices in open enrollment [Chicago Tribune]
  • 10 Open Enrollment Mistakes to Avoid [Practical Money Tips]
  • 8 Benefits to Consider During Open Enrollment [Kiplinger]
  • Using a health savings account for medical costs — and retirement [LA Times]
  • Flexible Spending Account: What Is It and Should I Get One? [NerdWallet]

 

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Comments

  1. Perfect post for this morning! I’m considering different plans – one of which is a Cigna Choice Fund with HSA.

    Question: my husband is seeing a psychiatrist that is Out of Network for Cigna. However Cigna will cover 70% of UCR (usual, customary, reasonable). This psychiatrist is expensive but my husband is finally getting help so I don’t want to make him switch. What do I need to ask the psychiatrist about his costs so that we can figure out our budget? Are there specific terms that I need to know / use so things are clear?

    My other option is Kaiser which is super cheap… But I’m guessing it’s not the right option for someone who needs to see a specialist once a month.

    • Allergies :

      I just started on Kaiser this year and it is really wonderful for seeing specialists.

      I came down with a bad allergy-like comdition this year and I saw an allergist, a dermatologist, and an endocrinologist all wihin the same month. My out of pocket for each on the HSA HDHP was only $100. I was surprised it was so reasonable. I didn’t have any issues getting referrals to specialists from my doctors either.

      • In my experience, far fewer psychiatrists take in-network rates compared to other specialists.

        • Meg Murry :

          Not sure about Kaiser, but in my area it is also a problem that the few psychiatrists that do take the common insurance plans in the area have months long waiting lists for a first appointment, if they are taking new patients at all. I finally just found a new mental health practice that has a nurse practitioner that can prescribe and a therapist I actually like – after quite a bit of searching.

    • If the psychiatrist is out-of-network, s/he will likely ask for payment upfront – likely on a monthly basis, not each appointment – and give your husband a claim form to submit for reimbursement. 70% of UCR is likely a small dent in the actual fees. Find out from your benefits department if there’s a limit on behavioral health outpatient visits, because you may max out quickly.

      Also, ask the psychiatrist if s/he offers a sliding scale for out of network patients.

    • Lorelai Gilmore :

      You may want to do the math on whether Kaiser + out-of-pocket for the psychiatrist is cheaper than Cigna + out of Network for the psychiatrist. Kaiser is notoriously terrible for mental health, but I think they’re great for other health issues.

      • jumpingjack :

        Agreed. I love Kaiser (DC and CA), but their mental health coverage is terrible.
        .
        I see an out of network psychologist. I’ve have UnitedHealthCare for years, and UHC always pays its out of network percentage for the full fee. I’ve never heard of them using a lower amount for the UCR. I do know, however, that it’s nearly impossible to confirm this ahead of time – I tried to find out what the UCR was and UHC refused to tell me.

    • Ask if the psychiatrist is part of a physician practice group. DH sees one for his adult ADHD and we were so upset initially when insurance changed and Dr. Joe Smith was not covered. But, we found out (after a painful process with a not helpful hospital or insurance provider) that Dr. Smith is also captured under the umbrella for Hospital Name Physicians Group, which WAS covered. We were told this can be common with psychiatrists and other specialists. Now, we play a monthly game with Dr. Smith’s office to make sure they submit the paperwork under Name Physicians Group, and not Dr. Joe Smith, because if they aren’t paying attention they won’t naturally do it that way.

    • Not sure what area you are in, Kaiser is very different based on region. I’m in NorCal and won’t leave Kaiser. A while back I needed mental health services on Kaiser including psychiatry and they covered everything. I had regular therapy, a psychiatrist for medication supervision, and did a 12 week supported program with a group. It may mean your husband needs to change to a Dr that’s part of their program though, so I’d do more research on your particular area.

      Our experience of having coverage + care together with one organization has been really good. We don’t have to worry much about the coverage part and we’ve always had access to specialists when needed. We have 2 kids and various minor things going on so relatively frequent visits. Kaiser formats and networks do vary by region though.

      • Amy – hoping you’ll see this message. I am in NorCal (South Bay area). Do you happen to have any psychiatrists that you recommend? Also, can you give me an idea of how hard it was to get appointments with Primary Care physicians and how agreeable they are to write specialist referrals? Thanks!

        • I was in the South Bay when I used psychiatry services, but I’ve been in the East Bay for about 10 years now so I don’t really remember specific doctors. So sorry I’m not a ton of help on that question. When I got help I called in to the mental health line directly and told them my situation and got a direct appointment for an assessment. IIRC I had a phone assessment then an in person appointment with a specialist.

          More recently I’ve needed referrals for other kinds of specialists (mostly ENT for me and my son) and my PCP and his Ped have been very easy to work with on that. I’m sure it somewhat depends on the PCP, but my experience has been that since they are all “on the same team” if the PCP sees a need they do the referral right at the appointment. They don’t really have any incentive to do specialist work. I had an ear issue and needed an eval, then audiology tests, then follow up treatment and appointments. Once I started with the Head and Neck Surgery dept it was all done directly through them until they decided I was done with treatment.

          Hope that helps!

        • Allergies :

          FYI, I am in the South Bay too. I can usually see my primary doctor the same day orwithin a day or two. I can usually get a same day telephone appointment or response to email. When I needed to see him for an urgent condition, and he wasn’t available, I was scheduled with another primary for an appointment within 2 hours.

  2. Good information. I’m trying to figure out if a high-deductible plan with HSA makes sense for us. Running the calculators, it seems like yes. No chronic conditions, no regular prescriptions, healthy family of three. The only factor that gives me slight pause is that we have a young child who tends to need stitches every other year. It seems like the smart thing to do is to put an amount roughly the same as what our premiums would be into the HSA and see how we come out this first year. Thoughts?

    • Is there an out-of-pocket max for the plan and will your employer contribute any amount to it? I would take that into consideration if you decide to go with the high-deductible plan. It will be easier after the first year since you will have a reserve of cash built up. I had an unexpected hospital stay while on a HDHP and they were very willing to work out an interest-free payment plan which I would pay with my monthly contribution to my HSA too.

      • Employer puts in the first $500 of HSA funding. No monthly premiums for plan. Out of pocket max/deductible is slightly more than what we would pay in monthly premiums under a regular plan, say $5000 vs. $4000.

    • Meg Murry :

      When considering a HDHP with HSA (and concerned with the potential cost with young kids) a friend gave me this advice which I thought was good:

      For the first year, plan to max out your HSA contribution (as much as possible within your family’s budget) to at least your deductible, preferably all the way to the out-of-pocket max, or the max allowed pre-tax by law. That way, as long as you don’t have a disaster of a year, you know you at least have the full deductible amount set aside for the next year.

      The first year is moderately stressful, seeing high bills come in for routine care that would have only cost a co-pay on a PPO plan – but the money for the bill comes out of a separate bank account, so it actually makes budgeting easier. And if you can manage not to have any disasters that year, it is nice to have a couple thousand dollars in what is essentially an emergency fund that you can only use for medical expenses.

      My son requires specific medical equipment to treat a health condition, but its not covered by insurance. He has the equipment now, but it is coming up on year 3 – and it usually only has a 3-5 year lifespan, often shorter with kids. I am very happy we have money in our HSA sitting earmarked for that equipment when his current one stops working, but the money can roll over if we don’t wind up needing it this year. And when my husband needed a trip to the ER last month, it was also good to know that while it wasn’t going to be a cheap trip, at least we had the money set aside to pay for it. It also gave me some security when I was between jobs and ended up buying a super cheap very high deductible plan on the exchange to have that HSA money set aside.

      Now thay I’ve had both, I far prefer HDHP + HSA over PPO + FSA, when they are comparable annual cost. With an FSA we wound up with the “I have 600 left in my FSA and 1 month to spend it, guess I’m buying new glasses I don’t necessarily need in order to not waste the money” mess, because we way overestimated how much my husband’s dental work was going to be that year.

      • Thanks, this is helpful. My FSA experience was completely frustrating as well trying to guess at costs.

      • Do you find an HSA easier to work with than an FSA? I used an FSA this year and it was a total nightmare, having to prove every single purchase, including things that were OBVIOUSLY medical costs (payment at various doctors offices), and then getting a notification that they didn’t like the proof of eligibility I sent (which was listed as an acceptable item) and they instead wanted some other documentation. I am having a baby in the spring and would love to put away some tax exempt funds, but I don’t think I can deal with the headache of proving eligibility on top of a newborn.

        • Meg Murry :

          I’m guessing it depends on who administers the HSA how difficult it will/wont be. Mine from a previous employer is through Fidelity, and other than having to jump through some hoops to get a 2nd debit card (for my husband), I haven’t had any problems with reimbursements. In fact, when we set up the account, we were given a checkbook, and told we could just write ourselves a check to do a reimbursement – but to keep the receipts with your taxes, because if you get audited, part of what would be scrutinized is your HSA reimbursements, especially for ones where you wrote yourself a check. We also paid doctor’s bills directly with the checkbook or debit card and haven’t had a problem.

          The HSA debit card doesn’t work everywhere, but it does at most Dr, dentist and pharmacies I’ve been to. I also used it back before breast pumps were free at our local hospital lactation center to buy my pump, extra parts and nursing bras – since at the time “lactation supplies” were HSA eligible, but there was no further details as to what that meant.

          My FSA from the past and now my HSA at my current job are administered by small companies I’ve never heard of with mediocre websites, but so far I haven’t had anything rejected, although it was a bit of a learning curve to figure out how to submit to them.

        • Totally depends on the FSA administrator. I’ve had some that were really easy to claim with and others with clunky sites. Mine and my husbands are different levels of annoying. I do think the regulations in the last few years have gotten tighter so more receipts are required.

    • This is interesting, but our firm does NOT give us any choice in our medical plan’s. We all are in the same HMO, and the firm pay’s our premium’s for us. We do have to pay EVERY time we visit a doctor, and it is ALWAYS $15, even if we have to go back for follow up visit’s. FOOEY! Others may have different experences, but I think we should NOT have to pay $15 every time we see the doctor, b/c sometimes all we have to do is check in with a nurse.

    • Maddie Ross :

      I’ve been surprised that stitches at non-ER facilities run less than $300.

    • You should know that many urgent care places do a flat fee for stitches. I went to one earlier this year and paid about $200, that covered the stitching (9 in my finger, with nerve blocks), a 2-day infection check, and stitches removal, all with actual MDs, not RNs or LPs. I told them I didn’t have insurance and just paid the cash rate out of my HSA. It was way cheaper that way!

      • It’s good information for the future. Hopefully our next encounter will not require facial sutures like the last two did. Yay for plastic surgeons and office hours though.

  3. Allergies :

    For those with chronic issues requiring expensive pharmaceuticals, how do you evaluate the HMO or HDHP decision?

    I have a hard time getting an estimate from Kaiser about my total costs for a $$$$ medication I just started and have not yet been billed for. The claims person I spoke to insisted I would only be charged $20.

    I have a choice between an HMO with a $250 pharma deductible and $35 copay or an HDHP with a $3500/year out of pocket max. The drug is on the formulary but I worry about hidden costs and balance billing from a previous experience with an HMO plan.

    • That estimate of $20 may be correct. Check your employer’s plan paperwork for your pharma copay with Kaiser. For me all prescriptions have the same copay, something like $15 or $20. I personally like the predictability of that, getting stuck with a $100+ prescription bill would piss me off.

  4. Oh great question! How about if I am trying to get preggers? Currently have an HSA and very few medical costs – should I switch?

    • Anonymous :

      I hate the word preggers.

    • Oh, same question here. What should I do? I’m going to do an FSA, which I haven’t done in the past. Anything else to keep an eye out for to include in coverage?

      • Look to see if your plan has a deductible for your hospital stay. I didn’t research this and luckily mine does not but I have friends who ended up paying $1000-$3000 for their deliveries even though they were ‘covered.’
        Also, if you want to deliver at a particular hospital or your doctor is associated with a hospital and you want to keep that doctor, make sure your insurance approves the hospital.

        • Also: talk to both insurance and your doctor about how they handle copays. You want to make sure you’re not going to be paying a copay for each visit b/c you will be going a LOT.

        • In House Lobbyist :

          As to deductibles – I was surprised the baby had separate charges at the hospital where I delivered – which also meant another deductible until we met the family deductible.

    • I had a HDHP and an HSA and had a baby last year. My husband and I both had individual insurance through our work, no family plan or anything like that.

      Here’s what you should plan for:
      Your OBGYN visits
      Your hospital labor/delivery costs
      Your baby’s medical costs

      If you get pregnant in January and have the baby that year, I think a HDHP + HSA is great, because you only have to meet your deductible once. If your deductible re-sets every January, it might not be quite so great if you get pregnant in October and have to meet your deductible two different calendar years.

      A lot of your pregnancy visits will be 100% covered since they’re considered to be like well visits. I actually loved having the HDHP +HSA because I knew there would be a cap to how much I was going to spend on my medical expenses, and I knew what that cap was going to be. I also enjoyed the ease of having it in a separate account and having the HSA debit card I could use for those expenses.

      Something I was not prepared for (just because I didn’t realize this is how it works) was that once my child was born and added to my plan, she had her own separate deductible to be met. So we basically paid out of pocket for all her medical expenses from when she was born, because the amount I had put in my HSA was limited to my deductible but we ended up switching to a parent + dependent insurance plan, which doubled our deductible. But by that point, it was too late in the year to add much to the HSA account. So that was an unpleasant surprise.

      That said, going forward I’ve kept the HDHP and the HSA, which I am maxing out this year. My husband and I can’t itemize on our tax return, [and FWIW the vast majority of people don’t get any tax benefit from itemizing medical expenses anyway], so I love that the money I’m putting in the HSA is lowing my taxable income.

      Also, if you can, totally do the FSA for dependent care expenses. This year I’m putting $5,000 in my HSA and $5,000 in my dependent care FSA, so I’m lowing my taxable income by $10,000.

      • Meg Murry :

        Yes to dependent care FSA! I wish my job now had one. It took a little while to figure out the most efficient way to get mine processed, but once I figured it out it has been great. Don’t forget you can use it for summer day camps and after school care too for older kids, not just daycare. I only wish it was more than $5000, as we hit that in mere months when we had 2 in daycare.

  5. Sydney Bristow :

    Just went through all of this for my new job. Trying to compare my health insurance with my husband’s was really difficult. We ended up going with mine since it is a PPO versus his HMO. We both need to see specialists occasionally so it is easier if we can just make those appointments ourselves instead of going through the process to get a referral.

    The other complicated thing for me was trying to pick a rate for long term care insurance. I think my original coverage choice was too low so I’m in the process of getting it changed.

    • This. The hardest part is comparing mine with my husband’s to decide who should cover the kids. (Both of ours have hefty spouse penalties, so we have to stay separate.) His has to be elected by Oct 31, mine isn’t available until Nov 13. So we guess at my plans, factor in the hassle of potentialy switching all the kid’s doctor info and records, and hope we made the right decisions.

  6. How very a propos. I’m currently deciding between purchasing an outside plan and going with my employer’s plan for both life and D&D. Curious about the benefits for those of us who are younger and don’t plan to stay with an employer for many years in purchasing an independent plan now, while we are young and healthy. I have qualified for the best rates externally and there isn’t much of a price differential. Do we think it makes sense to pay more now, knowing that when I switch employers my new employer may not offer coverage, and I may not qualify for the best rates on the independent market?

  7. Anonymous :

    The recommendation to look at life/disability insurance is good, but for highly paid professionals and esp women (who typically pay higher premiums than men) your employer’s program generally is cheaper for a reason– it’s one size fits all and with rare exceptions the coverage ends when you go to a different employer. Also it may not cover as much as you need– my employer’s disability plan covers 40% of salary, for example. So I sign up for the plan that is covered by my employer (ie free to me), but instead of paying more money for a policy I can’t negotiate, I bought separate personal policies that cover me for the next 30 yrs. I consider that a worthwhile financial investment as I have a toddler and am the primary breadwinner, with 2 aging parents.

    Definitely worth doing more research to figure out what meets your needs.

    White coat investor blog has a very good series on term life and disability insurance, not just for doctors but for other professionals as well.

    • If you belong to a professional organization, you might check whether they offer insurance discounts.

  8. Anonymous BigLaw Associate :

    Timely post indeed! I am going to have to make some change to my health care benefits. I am currently on my law firm’s Kaiser HMO. The issue is that I recently started to work remotely for my law firm, and Kaiser bases benefits on where my employer is, not where I am. So I can only be a “visiting member” in my current area, meaning I cannot have a primary care physician and for any procedures that Kaiser deems “significant,” I would have to travel to the region where my employer is and have those procedures there. I would have to get on a plane to get to that area, so that is obviously just not going to work.

    Luckily open enrollment is coming up! But I am baffled about what to do. My only options are fairly inexpensive plans that require a HSA or FSA or a fairly expensive PPO. I chose the Kaiser HMO because it was cheap-about 1/3 of the PPO and roughly the same as the other plans. I have never had any health problems, don’t take any prescription medications, and don’t plan to have children, so it seemed to make sense to me. The only doctor’s appointments I have gone to within the past decade are annual checkups, OBGYN visits, dental cleanings, and routine eye exams.

    So a few questions for those who know more than me:
    -I really don’t like the idea of having money tied up in an HSA or FSA, especially since my health care costs are so low. Why would this be a good option for someone like me? I am already diverting money to my 401k and am trying to save for a home in a high cost of living area.
    -My fiance’s health insurance is much less expensive than mine. We’re getting married soon. What seems to be the same PPO through his employer costs less than half of what I would have deducted to just insure myself! Has anyone declined insurance from their employer and just been on their spouse’s? Any disadvantages?

    • I did the HSA in 2014 and while it was annoying (covered nothing), my one ER visit was fully covered by my HSA ‘savings’ so I don’t feel too bad about essentially paying out of pocket.

      as for FSA, I had some money and if you know you’re going to have certain large medical expenses, I understand it’s really useful (pre tax $ so it reduces your “taxable” income) but it wouldn’t be helpful if you don’t spend much on medical FSA eligible items.

    • Yes, currently I decline medical coverage at work and go on my spouse’s plan.

      Drawbacks:
      1. Many companies are going to a “spouse penalty” where there’s a penalty for enrolling your spouse if she/he can get coverage through her/his work.

      2. If the two companies don’t have the same benefits year, then switching from one to another can involve double-coverage/double-pay for a while. For example, the company I work for uses the calendar year as a benefits year and the place he works runs July 1 – June 30. So, when I switched from my insurance to his, we had to sign up to cover me from July 1, while I was still paying at work through December 31. So, I had double-coverage for 6 months.

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