Six questions to ask before making annual enrollment benefits elections

1. What factors should I consider when choosing a medical plan?

The size of your family. Decisions are simpler when it's just you. Add a spouse or partner or children into the mix and things get more complicated. Remember—your plan may cover adult children up to the age of 26, even if they are married or don't live with you.

Your spouse or partner's healthcare plan. Compare the benefits of your plan with your spouse or partner's. Sometimes you may be better off going onto their plan (or vice versa). Also consider whose plan should cover your children, if applicable.

• Employer plans may have a “Spousal Surcharge” (an additional dollar amount added to the premium cost for having your spouse on the plan when they have access to their own employer coverage). To avoid this, it may be more cost-effective for you and your spouse to be covered separately under your respective employers’ plans.
• If your spouse or partner’s open enrollment period does not align with yours, consider contacting human resources to see if you can get the annual enrollment guide ahead of time in order to compare plans and make an informed decision in a timely matter. Annual enrollment guides outline a company’s medical benefits and the associated cost structure.

Your financial situation. It's important to evaluate how each plan could affect your monthly household budget. When it comes to health insurance, you usually have a "pay now or pay later" decision. Certain types of plans have lower premiums but potentially greater out-of-pocket expenses. If you’re considering a plan with a high deductible, review whether you can meet any major out-of-pocket costs that you may have to pay.

Your health. Generally, if you are young and healthy, you may only need to cover medical costs that could result from a sudden injury or major illness. If, on the other hand, you or someone in your family has a chronic condition, or your children play contact sports, you might prefer to pay a higher premium for a plan that offers lower out-of-pocket expenses.
 

1. What health insurance-related terms should I understand and review when making my medical plan elections?

Premium. The cost charged when purchasing insurance coverage. The premium is typically based on the type of healthcare plan selected—plans with lower out-of-pocket expenses, such as a traditional preferred provider organization (PPO), generally have a higher premium than those with higher potential out-of-pocket expenses, like a high deductible health plan (HDHP).

Deductible. The amount you generally must pay for a covered expense before any benefit plan payments are made. Some services (primarily preventive care and possibly some doctors’ visits) are not subject to the deductible.

Copayment. The flat dollar amount you must pay as your share of a covered expense. For instance, if your plan covers a doctor’s visit at a $40 copay amount, you’ll pay $40 when you go for your appointment. The remaining cost of that visit would be paid by your medical insurance plan.

Coinsurance. The amount of cost you share in as an insured. For example, if a plan has an 80%/20% coinsurance requirement and your doctor’s visit incurs a cost of $100, as a participant, you’d be responsible for $20 under that arrangement. Keep in mind—in most cases, this is after you’ve met the deductible.

Out-of-pocket maximum. The maximum amount paid by the participant (or family) for services received during the plan year. This amount may apply to the medical plan, prescription drug plan or both. This maximum does not include any excess reasonable and customary expenses incurred.

1. What’s the difference between an HSA and FSA?
    

There are a few key differences you should keep in mind while making decisions during annual enrollment.

• The types of health insurance plans they can be paired with. Health savings accounts (HSAs) are only available with high deductible health plans (HDHPs) while healthcare flexible spending accounts (FSAs) (with the exception of Limited Purpose FSAs) are available with any plans but HDHPs.
• Annual contribution limits. The maximum amount you can contribute to an HSA in 2021 is $3,600/individual and $7,200/family (a slight increase from the 2020 limits of $3,550/individual and $7,100/family). The FSA limit for 2021 has not yet been announced by the IRS; but in 2020 contributions of up to $2,750 were allowed.
• Longevity of funds. The money in your HSA is yours and goes with you, even if you leave your current job. The funds rollover indefinitely and can even be a retirement savings tool. The money in your FSA is subject to “use it or lose it” rules. You must use the funds within the year (with limited exceptions in some cases) or you lose them.
   

To learn more about how these accounts work, read our Guide to HSAs and FSAs.

1. When am I allowed to make elections for my benefits?
    

Generally speaking, you can make your elections during your annual enrollment period. This is different for every company. There may be some exceptions to this. For example, some companies allow employees to change some elections on certain benefits (e.g., life insurance) at any point throughout the year. Another exception is if you have a qualifying life event.

Some examples of qualifying life events include (but are not limited to): marriage or divorce, death of a family member, birth or adoption of a child, loss of coverage or changes in residence.
 

1. Aside from medical coverage, what other benefits may I want to consider enrolling in during annual enrollment?
    

Life insurance. Most companies offer basic life insurance, but the amount offered may not cover your needs. Depending on your personal situation, you may want to opt into supplemental or additional life insurance for yourself and/or any dependents. For more on life insurance, read What you need to know about life insurance.

Excess liability insurance. An umbrella policy, also known as excess liability, is layered on top of your homeowners and auto insurance policies and provides additional protection against claims that exceed your underlying policy limits. It’s important to coordinate the coverages provided by all these policies to avoid gaps or buying too much coverage.

Disability insurance. You should evaluate if your company provides short- and/or long-term disability insurance and what options you have to buy or increase coverage. Further, you may want to consider paying the premiums with after-tax dollars if you have the option so that any benefits payable by this policy would not be taxable.

Long-term care. Long-term care policies could cover the costs of services such as full-time nursing home care or a home aide. This insurance isn't just for the elderly either, as many people needing long-term care are younger than age 65.

1. What happens if I lose employer medical coverage?
    

You have a few options, should you lose employer-sponsored medical coverage.

Medicare. Once you reach age 65, you are eligible to be covered under Medicare. There are four parts of Medicare:

• Part A provides inpatient/hospital coverage
• Part B provides outpatient/medical coverage
• Part C offers an alternate way to receive your Medicare benefits
• Part D provides prescription drug coverage

Medicare itself may not cover all your needs. To obtain further coverage you may need to consider buying a Medicare supplement or “Medigap” policy. Medigap is extra health insurance that you buy from a private company to pay healthcare costs not covered by Medicare.

COBRA. Workers and their families who lose their health benefits have the right to choose to continue group health benefits provided by their group health plan under COBRA. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan. This coverage is available for limited periods of time (up to 36 months) under certain circumstances, including:

• Voluntary or involuntary job loss
• Reduction in the hours worked
• Transition between jobs
• Death
• Divorce
• Other life events
   

Marketplace. The health insurance marketplace in which individuals and families can apply for coverage (healthcare.gov) is operated by the federal government and individual states. The open enrollment period through the marketplace runs from November 1—December 15, 2020 to opt into plans for 2021, but you could be entitled to a special enrollment period if you lose your employer-sponsored coverage. If you sign up for healthcare coverage through the marketplace, you should work with a tax professional to determine if you may be eligible for any tax credits to make the premiums more affordable.

If you have Ayco as a company benefit, register or log in to learn more about this and other financial wellness topics. If you’re not sure whether your company offers Ayco Financial Counseling, contact your human resources representative.