‘Tis the season for open enrollment for:
- Individual insurance
- Many group health plans
I work for a broker/third party admin in the world of health insurance. While I typically deal with group health insurance, I certainly am familiar with individual insurance and Medicare. That being said, I would love to share some of the knowledge I’ve acquired over the last 8 years in this industry. This is your article to learn everything you need to know about open enrollment.
Open enrollment for individual insurance for 2020 begins on November 1st, 2019 and goes through December 15, 2019. Yep, it’s a relatively short period of time. My advice is to be ready to get quotes, research, compare plans, and make a purchase if you are in the market for individual insurance. Otherwise, if you miss it you won’t qualify for individual insurance until next year unless you qualify for a Special Enrollment Period (SEP).
You qualify for SEP if you’ve had certain life events such as losing health coverage, getting married, moving, having a baby or adopting a child.
Individual insurance has been set up to be self-serve on Healthcare.gov; however, many people find it daunting. There are plenty of individual brokers or agents all over the country to assist you in the purchase of your individual product. You won’t pay any extra to go through a broker or agent. Agents make their money via commissions from insurance carriers.
The advantages of working with a broker/agent:
- They can do the quoting for you
- You’ll have someone to ask questions via email or phone
- They are very familiar with the plans and networks available
Essentially, they can save you the time it takes you to do much of the research. Just look for an individual broker/agent who is licensed in your state. In many states, brokers must act in the consumers’ best interest.
There are a couple of “buyer beware” items when purchasing individual insurance. Be sure you really understand and are comfortable with the network of the plan you are choosing. Many individual plans only have hospital-specific and/or narrow networks.
The other caution is surrounding subsidies. There is a time of reckoning during tax filing season. Subsidies are based on your estimated Modified Adjusted Gross Income (MAGI) for the year in which you are purchasing insurance. It’s kinda funny, but qualifying for a subsidy actually incents you to not want to receive a raise in income. Whaaat?!?!
If your MAGI is below 138% of the Federal Poverty Limit (FPL), you may qualify for Medicaid in your state. Otherwise, if your MAGI is between 100% and 400% of the FPL, you may qualify for tax credits to lower your health insurance in any state.
If you are 65+ or qualify for Medicare due to a disability, open enrollment for 2020 is from October 15, 2019, through December 7, 2019. Again you have a small window in which to make your plan changes and elections.
Medicare open enrollment is really just for people who are already on Medicare to make unrestricted plan changes. However, when you turn 65 you qualify for Medicare regardless of the time of year. Additionally, if you are disabled at any time, you may qualify for Medicare.
The parts of Medicare
- A – Upon turning 65 you will automatically be enrolled in part A for zero premium.
- Part A covers things like inpatient care, skilled nursing, home health care, and hospice.
- B – This can be elected for a premium. Or you can defer if when you become eligible if you are still employed with insurance.
- Part B covers things like ambulance services, clinical research, preventative care, durable medical equipment, mental health, and second opinions pre-surgery.
- Premiums are based on your income and in 2019 the base premium for part B is $135.50. It goes up minimally each year. It’s taken directly out of your social security (if you are collecting it); otherwise, you’re typically billed quarterly.
- D – Prescription drug coverage. This costs a premium also. Additionally, if you defer part D due to being on a group health plan after you turn 65 you’ll need to show you’ve had creditable prescription coverage when you do enroll to avoid a late entrant penalty.
- C – Advantage plans. This is what I plan on enrolling in when I’m Medicare eligible. You’ll need to be on A & B to get an advantage plan. Basically, advantage plans are no or low premium and Medicare pays them to administer your health insurance. Additionally, advantage plans include prescription drug coverage and copays for office visits. Different insurance companies like Anthem BCBS or UHC AARP sell advantage plans.
- F – Supplemental plans, also known as Medigap will no longer be available in 2020 for newly eligible Medicare folks.
Here is a great article that highlights the Medicare changes for 2020.
Lastly, in regards to Medicare, I highly recommend an agent or a broker to assist you. You’ll be inundated with a ton of stuff as you approach 65.
Group Open Enrollment
If you’re on a group health plan through your employer, you will have an annual group open enrollment period. Check with your human resource department for when this is.
A lot of group plans renew 1/1 so there is a strong likelihood yours does also.
Open enrollment is your time to add dependents, enroll if you formerly waived, and make plan changes if your employer offers multiple options.
Things to Pay Attention to with Any Open Enrollment
Regardless if you are facing individual, Medicare or group open enrollment you will be faced with choices. This last section is designed to highlight the important items to pay attention to when making your decision.
This is the amount of money you pay to purchase the insurance. If you’re on a group health plan through your employer, you’re only paying a percentage of that premium. Typically employers pay the lion’s share of the premium.
Um, this tells you where you can seek care from so pay attention. With the rising cost of healthcare, insurance companies are coming out with narrow network plans. Often these narrow network plans are specific to your area which means when you travel outside of it, the only things that are covered are emergencies.
Some employers offer a narrow network option and a broader network option. Be sure to compare the differences between the two before choosing. The narrow network options will have a lower premium.
As I mentioned before most individual plans have a narrow network.
With Medicare Advantage plans, you’ll be able to choose between HMO options (no out of network benefits) and PPO plans. Study the networks and check your doctors!
Don’t automatically discredit these narrow network options because of their restrictions. They may very well work for you. Additionally, don’t just choose them for the lower premium. I advise you know what you are signing up for always.
These are the big things that you must pay before coverage kicks in. If you are on an HSA qualified plan, you must pay your deductible before anything is covered. The only exception is preventative care which is covered 100%.
If you are on a more traditional plan with copays, your deductible only applies to major medical episodes of care. That includes inpatient, out-patient procedures and surgeries, and major tests.
This is the percent you pay after you meet your deductible.
Copays represent a flat dollar amount that you pay for certain services like office visits, prescriptions, urgent care, and emergency room episodes. If you are on a traditional style plan, you won’t have to meet your deductible before paying the copay for these episodes. While if you are on an HSA qualified plan, you will need to meet your deductible first before paying any copay. HSA qualified plans always say HSA in the name.
Maximum out of Pocket
This the most you’ll pay in one year on your plan. It includes deductibles, coinsurance, and copays.
Calendar Year or Plan Year?
Lastly, know if your plan deductible & max out of pocket run calendar or plan year. Typically, it’s the former.
HSA Qualified Plans
If you happen to be on an HSA qualified plan, you can contribute to a Health Savings Account (HSA) and get a tax break. Check out my article regarding my affection for HSAs. Here are the new contribution limits for 2020:
The contribution limits of Flex Spending Accounts (FSA) have not been announced yet for 2020.
The cost of healthcare continues to be a major issue here in the United States. I’ve written about ways to reduce your costs at ChooseFI so check it out! I’m a big advocate of being a wise consumer of healthcare.
Whatever plan you are on, make sure you understand it and know your exposure. Like anything in life, it’s always better to budget and be prepared than to be blindsided.