Last time in our Open Enrollment Basics post, a number of terms were mentioned that may be new to you, and of course you can’t make good decisions without data. One of those sets of terms are the types of health insurance that may be available to you.

Where does one get health insurance?

• State exchanges, such as this one for Minnesota
• Government assistance programs, such as Medicaid or CHIP which are available in situations of low income, children, pregnant women, those with disabilities, and the elderly. Link for Minnesota resources.
• Employer

How do I know what options I have available to me from my employer?

Your employer’s Human Resources department will provide some guidance and comparative documents prior to open enrollment.

Traditional health insurance

This is what many people think of when they think of health care insurance. Primary care visits may be covered 100% at the first dollar of care. After a deductible is met, in-network non-primary care is often covered in an 80%/20% ratio (where the employee pays a co-insurance of 20%). Out-of-network deductibles are often separate from, and much higher than, in-network deductibles. There are likely co-pays, such as a $50 flat fee to even be seen in the Emergency Department or by Urgent Care. The premiums (minimum costs you pay, even if you use zero medical services) are higher, the deductibles are smaller, and the total out of pocket risk (the maximum you would pay for your family in a really bad medical year) is capped at relatively lower rate. You’re trading higher known costs for lower maximum dollars at risk.

High deductible health insurance

With the Affordable Care Act, and Health Savings Accounts, this option has become the standard for many Americans. There is a federal requirement for how large the deductibles must be, and how large the maximum in-network out of pocket amounts may be; these are typically much higher deductibles than traditional insurance, and much higher out of pocket maximums.

A visual comparison

So how do I choose?

• Those who tend to choose traditional health plans might fit this description:
  • people with chronic conditions
  • who utilize a lot of health care services
  • who utilize a lot of primary care services (if primary care is covered by their plan at an incentivized rate, such as 100% at dollar zero)
  • who will reach the out of pocket maximum for the year
  • are risk adverse
  • are unable to manage the cash-flow necessary if their medical situation was worse than usual
• While those who tend to choose high deductible health plans might fit some or all of this description:
  • healthy people
  • those who don’t utilize much health care services
  • those with less out-of-network exposure
  • are able to manage large potential bills through cashflow
  • are able to fund their entire HSA and plan to use it as an investment vehicle

Don’t forget to consider coordinating complimentary benefits.

This includes tax-advantaged accounts with no or minimal roll-overs (HCFSA’s), tax-advantaged accounts with unlimited roll-over (HSA’s), and employer provided benefit accounts (cafeteria plans, such as dental, vision, hearing accounts with only employer contributions). And if you’re married, your spouse may have employer-provided plans that are different. First, dig out all of your “explanations of benefits” (EOBs) from your health insurance company, and itemized charges from your health providers. Figure out what kind of utilization you’ve had in the past. Think about what are known or likely potential differences for the coming year. It’s likely time to break out the spreadsheets. Or if you still don’t feel confident, maybe you decide it’s time to discuss your situation with a fee-only financial planner who has hourly or single-topic engagements, because the difference in plan choices can cost you thousands of dollars.