What is open enrollment and how does it effect you?
We are now in open enrollment on the government (39 states) or state health insurance exchanges (11 states and the District of Columbia)—so this is the time of year when consumers can buy health insurance coverage under the Affordable Care Act (ACA). If you’re not covered by an employer’s health plan, then this is your opportunity to buy your own health insurance. Open enrollment season typically means complicated forms to read and big decisions to make about insurance and other benefits offered. You may find the process difficult but taking the time to evaluate your choices could save you thousands of dollars and help avoid missing your window to sign up. While there is no longer a requirement for individuals to carry health insurance, these plans cover things like routine physicals, women’s health and a variety of preventative screenings like mammograms, prostate exams and colonoscopies without having to meet a deductible. As they say, “an ounce of prevention is worth a pound of cure!”
In most states, the enrollment season lasts six weeks, which is half as long as it used to be. And, while many people are wondering whether the ACA is still viable, it has been surprisingly resilient so far, with 11.8 million Americans signed up for coverage. Insurance companies, for the first time, have reinforced their commitment to the existing system by dropping their rates by an average of 1.5%, though there is wide variation among states.
In many cases, this 6-week period is the only time to make changes until the next open enrollment period in 2019 unless you have a major life change. For example, if you have a child over the age of 26, you want to ensure they don’t miss their chance to enroll. Or, perhaps you’ve recently left your job and would like an alternative to COBRA coverage, know someone who’s trying to fill a gap for a year before they’re eligible for Medicare, or you are simply self-employed and need to insure yourself. Regardless of the circumstances, it is important to be attuned to open enrollment season.
It is also important to know what qualifies as a major life change. They are as follows:
You get married.
You get divorced.
Your spouse gets a new job.
Your spouse loses a job.
You turn 26 and lose your parent’s coverage
You have or adopt a child.
Your spouse passes away.
Understanding enrollment and which options are best suited for you
Taking the time to navigate the different options can save some consumers thousands of dollars. For instance, many companies are offsetting their rising costs by offering high-deductible, low-premium plans along with health savings accounts (HSAs). An HSA contribution is triple-tax-advantaged: it is deductible when you make the contribution, the money grows tax-deferred, and if you take the money out to pay for medical costs, it comes out tax-free. Any money not used in a calendar year is rolled to the next. For healthy, young workers, the high-deductible plan with HSA is popular among financial experts. For example, if a young healthy couple puts in the max contribution – $6,900 – and it’s taxed at 30 percent, they save $2,000. Additionally, these plans are owned and managed by you, not an insurance company. You can even pick mutual funds to invest the money like you would an IRA. Think of these as long-term savings accounts which are there for you in case of medical needs, but also will be there for you when you’re older and will likely have more medical expenses.
At the other end of the spectrum, people who have developed a chronic condition, or who are older, might fare better with a low-deductible plan. They pay a higher premium each month, but the lower deductible will reduce the amount they will have to pay out-of-pocket for medical procedures.
Seek impartial advice
As you can see, there are a lot of issues to consider, which means it might be better to hire an expert than to try to navigate your options on your own. But, you must be careful of where you get your advice. The Trump administration cut the funding for the ACA’s “navigator” program from $37 million to $10 million. Basically, that means there are fewer sources of impartial advice. Administration officials, instead, are pushing consumers toward sites operated by insurers and for-profit (and sales-oriented) web brokers, who may not provide all the options to consumers.
Kendall Capital is a wealth management firm providing financial services in the Washington, DC area to individuals and families with assets of more than $500,000.