It’s that time of the year again: yes, it’s spooky season and pumpkin spice latte season… but it’s also open enrollment season. (Granted, this may be the less fun part of autumn, but it’s absolutely essential!) In the coming months, we all need to do a thorough review of our health insurance options, and make sure we’re choosing the best plan for us — without paying a penny more than necessary.
Unfortunately, choosing the health insurance plan with the most coverage that’s also the most cost-effective for you and your family is NOT easy. According to 2023 research from JAMA Health, almost half of U.S. consumers say they do not understand some aspect of their health insurance coverage, and one-third do not understand exactly what their plan covers or what they might end up owing out of pocket.
In other words, it’s not just you — the whole system is incredibly difficult to navigate. But the more knowledgeable we are about our plans, the better choices we can make about our health, which is arguably the most important thing in our lives.
Sabrina Corlette, research professor, founder, and co-director of the Center on Health Insurance Reforms (CHIR) at Georgetown University shares the top mistakes we need to avoid when choosing a healthcare plan during open enrollment this year.
MISTAKE #1: LETTING YOUR PLAN AUTO RENEW
Corlette says that one of the biggest mistakes she sees people make is letting their health insurance plans auto-renew during open enrollment. Turns out, during open enrollment, people tend to keep the older, low-deductible plans they already have rather than buy high-deductible plans — but that’s not always the right move.
“They think, well, I’ve been happy with the plan this year, so I’m not going to do anything. I’ll just let myself be automatically renewed into the plan for the next year,” Corlette says. “Unfortunately, that can come back to bite you because plans change. Not only do premiums change, but benefits can change, cost-sharing can change, so it is really important to check and make sure that what you need to be covered is still covered and that the costs haven’t changed dramatically.”
(And when plans change, this means the doctors you love and the medications you need may no longer be covered, so you need to use this open enrollment period to inspect your plan options thoroughly!)
MISTAKE #2: CHOOSING THE WRONG TYPE OF PLAN
When open enrollment begins, you’ll have the option to choose between a high or low-deductible plan. Unfortunately, many times people make the wrong choice because they simply don’t understand the difference. While Corlette says that everyone has different needs and should do their own research, high deductible health plans (HDHPs) generally benefit people who are healthier and wealthier.
“If you are generally healthy and you don’t anticipate needing a lot of health care services, then a high deductible plan might be just fine because you never have to worry about facing that deductible,” Corlette says. Also, because HDHPs are tax-advantaged, they do tend to be better for people at the higher end of the income scale, Corlette explains.
Another thing to consider is that HDHPs give you the option to enroll in an HSA. So if you’re the kind of person who is disciplined enough to move some money into your HSA each month, then a high-deductible plan with an HSA could be a great option for you. (Hint: If you didn’t know it already, HSAs can stick with you for life! The funds in an HSA can be used for qualified health expenses at any time during your life, and after you turn 65, you can withdraw money from your HSA for any reason without incurring a tax penalty.)
MISTAKE #3: NOT SAVING ENOUGH TO COVER YOUR MAXIMUM OUT-OF-POCKET COSTS
During open enrollment, it’s essential to understand what your maximum out-of-pocket cost (MOOP) will be. Then, make sure you have enough money to cover your MOOP in the event of an emergency visit or unplanned health issue during the next calendar year.
Just make certain you know what you’re getting yourself into, Corlette says as she offers a word of caution from her own life: When she was on an HDHP, her husband had a serious health scare and ended up in the emergency room. “Within four weeks of the start of the plan, we had blown through our deductible and had to pay $5,000 out of pocket,” Corlette says. “At that point, we had not had enough time to build up resources in our HSA. It was a little bit of a lesson learned to make sure you have that money available from day one because anything can happen at any time.”
BOTTOM LINE
While navigating health insurance coverage can be a stressful and frustrating time, open enrollment is a great time to reassess whether your health plan is working for you. Taking the time to do your homework during open enrollment (and beefing up your emergency fund or HSA) can help you avoid unnecessary costs later in the year.
MORE ON HERMONEY:
- Shopping For Health Insurance? Why Open Enrollment 2025 Can’t Be Missed
- How Long Should You Keep Medical Bills? What To Do With Those Financial Documents
- HerMoney Podcast Episode 318: Negotiating Medical Bills
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