This is a guest post by Colin Anawaty.
Most of us lack understanding — and confidence — in trying to guess our healthcare expenses each year. It’s like trying to solve the world’s most complex Rubik’s Cube while blindfolded, with our future healthcare and financial well-being at stake. That guesswork, combined with the challenge of trying to decipher typical health plan vernacular, can make picking a health plan a painful experience.
It can be particularly painful for employees during open enrollment. In a MetLife survey of how employees feel about open enrollment, about 45% of respondents said they fear it as much as asking for a raise.
When picking a health plan, the average worker chooses based on how they feel and what they need at the moment. After all, humans are psychologically primed to go for the immediate reward over the delayed one, even if waiting is more beneficial. That often causes us to choose the cheapest, lowest-premium employer health insurance plan. Who doesn’t like more cash in their wallet each month?
But your health is arguably your most valuable asset on the job — and it’s not getting any more affordable to cover — so spending time to decide the best employer health insurance plan for your needs is key to a long, happy career.
How to Choose a Healthcare Plan for Open Enrollment 2021
It isn’t always easy to know how to choose a healthcare plan that saves you money while providing an adequate amount of coverage for your future health concerns. You don’t want to be burdened by high premiums when you’re in good health, but you also don’t want to ignore health concerns out of fear of a high deductible — especially since seemingly minor matters, like chronic aches or slightly high blood pressure, can add to your daily stress at work.
Before you take on the challenge of open enrollment for 2021, consider these tips for picking an employer health insurance plan that will meet your needs and allow you to do your job effectively:
Take stock of your current health and wellness.
With all of the guesswork that goes into picking a health plan, it pays to gather as much information as possible. The most valuable information is the current state of your overall health and well-being, which largely tells you how likely you are to need medical care in the upcoming year. Start by considering your age and what concerns are common for your demographic.
For example, if you have chest pains, high blood pressure, or a high risk of chronic health concerns, then you may want to consider a plan with a lower deductible. If you are healthy and don’t have to receive medical care regularly, you might consider taking advantage of a high-deductible health plan (HDHP), which carries lower monthly premiums.
Choose the coverage you actually need.
One of the biggest concerns when choosing an employer health insurance plan is being stuck overpaying for coverage you don’t need or use. If you don’t have existing health concerns, then an HDHP is a good option because you can put the money you save each month on premiums toward other things — like wellness.
An HDHP can allow you to contribute to a health savings account (HSA), which functions like a healthcare-dedicated 401(k). The difference, however, is that you can spend the money from your HSA on your health and wellness — like visiting the doctor, prescriptions, dental care, and much more — at any time without having to pay penalties. And if you don’t have any health expenses to cover, an HSA can function like a retirement 401(k).
Plan for retirement using your health insurance plan.
If you choose to take advantage of a high-deductible health plan with an HSA, don’t confuse it with an employer-owned flexible spending account (FSA) or health reimbursement arrangement (HRA). Unlike the latter, an HSA is one of the most powerful financial benefits available during open enrollment for 2021.
When you contribute to an HSA, you don’t pay taxes on the money you spend or save. And if you don’t have medical expenses next year, you can simply invest the money you contribute to your HSA and roll it over until you need it — no matter how many career moves you make. This means an HSA is a great way to save for retirement; even if you’re in excellent health now, you’re almost guaranteed to need healthcare at some point in the future. Your future healthcare and quality of life could depend on your HSA.
Employees worry about choosing the best employer health insurance plan for good reason. Studies show that more than 66% of all bankruptcies occur because of exorbitant costs resulting from medical issues. By understanding how to choose a healthcare plan that meets your needs, you can enter open enrollment 2021 with confidence. To avoid any additional anxiety during an already stressful time, take steps now to find a plan that allows you to care for yourself for decades to come.
About the Guest Post Author:
Colin Anawaty is the CPO and co-founder of First Dollar, a company revolutionizing people’s relationships with their health and wealth. Colin spent the past decade of his career creating software products in the healthcare and finance industries. In his free time, Colin gives back to the University of Texas and Techstars as a mentor and startup investor.