This article was originally published September 2018 and was last updated October 2021.
Choosing the best health insurance plan for your expected healthcare utilization is one of the most important financial decisions you can make this year. We have helped hundreds of people compare their insurance offerings, and have seen firsthand that picking the right one can save you thousands of dollars each year. This is the most comprehensive guide to open enrollment based on our previous articles and answers to too many questions you’ve sent over the last few years!
Article Quick Links:
What is Open Enrollment?
Why Do I Have to Enroll in Health Insurance?
What is a qualifying life event?
What is a High Deductible Health Plan (HDHP plan)?
What is a PPO plan?
What are premiums?
What is a deductible?
What is coinsurance?
What is an employer contribution?
What is an out-of-pocket maximum?
How can I estimate my expected future healthcare utilization?
What does risk tolerance have to do with open enrollment?
How can I tell if my favorite doctors will be in-network on a new plan?
What happens if I miss open enrollment?
What is the difference between an HSA and an FSA?
Do HSA/FSA funds roll over from year-to-year?
What can I spend my HSA and FSA money on?
How much should I contribute to my HSA account in 2022?
How much should I contribute to my FSA account in 2022?
What is the maximum I can put in my HSA in 2022?
What are the HSA and FSA tax advantages?
How can I spend my FSA money that is expiring?
Due to COVID, I haven't been able to use my FSA like I thought I would at doctor's appointments, and now I'm worried it will expire. What should I do?
Should I Enroll in a High Deductible Health Plan (HDHP) or a PPO Plan?
What is Open Enrollment?
Open Enrollment is the time of year when you compare plans and sign up for next year’s health insurance plan. For most people, it occurs in the fall or winter.
If you are on an employer sponsored plan, your employer will tell you when the Open Enrollment period begins and ends.
If you are purchasing health insurance through the ACA Health Insurance Marketplace, the open enrollment period for 2022 runs from Monday, November 1, 2021 – Saturday, January 15, 2022. You must enroll by December 15, 2021 for coverage that starts on January 1, 2022.
If you are trying to enroll in Medicaid or CHIP, you can enroll at any time.
Why do I have to enroll in health insurance during Open Enrollment?
It is important to make your plan selection during the defined Open Enrollment period, because after that time is up you cannot enroll unless you qualify for a special enrollment period due to a qualifying life event.
What is a qualifying life event?
Qualifying life events are life changes that allow you to enroll in health insurance outside of the normal Open Enrollment window. Below are some of the major “qualifying life events” that allow you to change your insurance plans.
Open Enrollment at your job. This usually happens between October and December, but varies by company. If you aren’t sure, email your HR department.
Losing your job
Starting a new job
Losing student health insurance
Losing eligibility for Medicare, Medicaid, or CHIP
Becoming ineligible for your parent’s insurance plan at age 26
Getting married
Getting divorced
Death of a spouse or domestic partner
Having a baby
Adopting a child
Becoming a U.S. citizen
Note: The ACA Exchange plans have even more reasons for a special enrollment period. For a full list of qualifying events for an ACA Exchange plan, click here.
What is a High Deductible Health Plan (HDHP plan)?
A High Deductible Health Plan (HDHP) is a type of health insurance plan that is designed to give the consumer lower fixed monthly premiums in exchange for being responsible for higher out-of-pocket costs if you do use healthcare services.
To qualify as a high deductible health plan, the deductible for 2022 must be at least $1,400 (individual) or $2,800 (family), and the out-of-pocket maximum cannot exceed $7,050 (individual) or $14,100 (family). Learn more about contribution and out of pocket limits for High Deductible Health Plans.
High Deductible Health Plans typically have low monthly premiums but high deductibles. To help individuals prepare for out-of-pocket costs from high deductibles, they are usually paired with a Health Savings Account (HSA) that provides some tax benefits.
What is a PPO plan?
A PPO plan is a type of health insurance plan that is designed to give the consumer lower deductibles and fixed copays in exchange for slightly higher monthly premiums. Most PPO plans have fixed copays for primary care visits, specialist visits, urgent care visits, and prescriptions.
What are premiums?
Premiums are the bi-weekly or monthly costs you pay for your health coverage. On an employer-sponsored plan, you typically pay a portion of the total premium cost and the employer pays the remaining amount.
What is a deductible?
A deductible is the amount you owe for a service before insurance begins to pay a portion.
For example, if a service costs $750 and you have a $300 deductible and 20% coinsurance:
Your deductible responsibility: $300
Your coinsurance responsibility: $90 ($750 - 300 = $450. $450 x 20% = $90)
Your total responsibility on this service: $390
What is coinsurance?
Coinsurance is the percentage that you pay for services after you have met your deductible. For example, if a service costs $750 and you have a $300 deductible and 20% coinsurance:
Your deductible responsibility: $300
Your coinsurance responsibility: $90 ($750 - 300 = $450. $450 x 20% = $90)
Your total responsibility on this service: $390
What is an employer contribution?
An employer contribution can describe two health insurance situations.
An employer contribution can describe the amount of the monthly premium that your employer pays. While it doesn’t usually feel like it, the employer contribution is typically higher than the employee’s contribution.
An employer may also contribute to your Health Savings Account (HSA) or Flexible Spending Account (FSA). This is often referred to as an employer contribution.
What is an out-of-pocket maximum?
The out of pocket maximum is the maximum amount you are responsible for paying each plan year.
The out-of-pocket maximum is usually met if you have several procedures in one year. Once the out-of-pocket maximum is met, the insurance company will pay for 100% of the cost of medically necessary services received from in-network providers.
How can I estimate my expected future healthcare utilization?
In summary, think about the services you usually receive, and then think about any new services that you may need in the new plan year. This includes your primary care visits, specialist visits, urgent care visits, ER visits, prescriptions, and any other procedures.
Step 1: Think about the services you usually receive.
Do you get an annual physical? Do you see a specialist? How frequently do you go to your doctor or an urgent care? Do you take any prescriptions? Do you have frequent MRIs? Common services:
Annual Physical
Primary Care Visits
Urgent Care Visits
Specialist Visits
Generic Prescriptions
Brand Prescriptions
Step 2: What services do you expect in the upcoming year?
Do you expect to have a major surgery? Are you having a baby? Do you participate in sports or activities that are high-risk? Are you experiencing any abnormal symptoms that may require testing?
What does risk tolerance have to do with open enrollment?
With every insurance plan (healthcare, auto, home, etc), you balance the cost of the premiums with the possible out of pocket cost to you. When you buy auto insurance, you can usually get a lower rate if you opt for a higher deductible. The same is generally (though not always) true for health insurance. If you choose a plan with a high deductible (a high deductible health plan aka HDHP), the premiums are likely lower than if you choose a regular PPO plan with a lower deductible.
Generally, the smartest financial choice is to choose the healthcare plan that offers the lowest total cost of premiums + expected healthcare utilization costs. However, for some people, this may mean choosing the high deductible health insurance plan, which likely has a personal deductible ranging from $1,200 to several thousands of dollars.
If you have a low tolerance for risk, choosing a high deductible health plan can cause a lot of mental anguish and confusion as you navigate high out-of-pocket costs in a complex system.
If you are risk averse and/or like to have steady, predictable payments, you may want to pay more for a PPO plan with a lower deductible that offers more steady, predictable payments in the form of copays for many services and overall lower deductibles.
How can I tell if my favorite doctors will be in-network on a new plan?
Go to your new insurance provider’s website or app. You can usually find the right webpage by googling the name of the company and “find a provider”. For example, Google “BCBS TX find a provider.”
Choose “browse as a guest” or some other option that doesn’t require you to login. Because you are not currently enrolled, you will not have a login.
Select the closest network and sub-network provided in the insurance open enrollment documents.
Note: A subnetwork is VERY important. A BCBS TX PPO Blue Choice network is going to have a larger provider pool than the BCBS TX HMO network, for example. If you do not know the new plan’s subnetwork, ask your HR representative or insurance broker.
Search for your doctor’s name. If the doctor doesn’t come up, search for their address and specialty. It is possible they bill under their practice name rather than their individual name.
Call the provider and ask if they will be in-network with your insurance network and subnetwork in the next plan year.
For more instructions, click here.
What happens if I miss open enrollment?
If you miss open enrollment, you are not eligible to enroll again until next year’s open enrollment, or until a qualifying life event occurs. Be very careful to follow your employer’s (or the government’s) open enrollment guidelines if you plan to enroll in those plans.
What is the difference between an HSA and an FSA?
Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) are useful tax advantage investment and savings tools for healthcare expenses. The biggest difference between HSA and FSA accounts is that HSA accounts roll over from year to year, while FSA accounts are “use it or lose it,” meaning any unused funds at the end of the year are forfeited*. There are many other important nuances between HSA and FSA accounts. Learn more about FSA and HSA.
Do you need to use your funds? Check out the FSA friendly gift guides here and here.
*Note: Some employers offer a carryover option of up to $500. Check with your employer for details specific to your plan.
Do HSA/FSA funds roll over from year-to-year?
HSA: Yes. For example, if you put $1,000 into your HSA in 2019 and don’t spend it, that amount plus any interest earned will roll into 2020.
FSA: No. FSAs are “use it or lose it,” meaning any unused funds at the end of the year are forfeited. Do you need to use your funds? Check out the FSA friendly gift guides here and here. Learn more about FSA and HSA.
Note: Some employers offer a carryover option of up to $500. Check with your employer for details specific to your plan.
What can I spend my HSA and FSA money on?
HSA: HSA Eligible Items include: Doctor visits, copays, deductibles, co-insurance, prescription costs, dental care, vision care
FSA: FSA Eligible Items include: Doctor visits, copays, deductibles, co-insurance, prescription costs, dental care, vision care
Learn more about FSA and HSA, and check out some of our FSA/HSA eligible products.
How much should I contribute to my HSA account in 2022?
HSA accounts are tied to high-deductible health plans, so you generally want to contribute at least enough to cover your deductible. This provides a solid financial cushion in case you meet your deductible. If you hope to maximize the tax benefits of the HSA account, you may want to contribute the maximum allowed annual amount of $3,650 (individual) or $7,300 (family).
Because HSA accounts roll over from year-to-year and can be invested, there is little risk in contributing “too much” as long as you don’t exceed the maximum annual amount.
Some people maximize HSA accounts as an investment vehicle to protect against and prepare for future healthcare expenses. For example, if you plan to have a baby in 1-2 years, you may want to max out your HSA account for the next few years so you can be prepared financially for that high expenditure year. If you are part of the Financial Independence community, you may also want to max out your HSA account as part of your investment strategy. Learn more about HSA contributions here.
How much should I contribute to my FSA account in 2022?
While FSA accounts still provide tax advantages, they are riskier than HSA accounts because unspent money at the end of the year is lost. This is known as “use it or lose it” and encourages you to only contribute what you need for that plan year.
Because of the “use it or lose it” structure, most people contribute their expected healthcare costs for the year. For example, if you only expect to have one doctor’s visit ($45), buy one pair of glasses ($120), and get birth control (free), it likely only makes sense to contribute around $165 to your FSA account. If you expect to have a major surgery in this plan year, it makes more sense to contribute at least your deductible amount. Learn more about FSA accounts here.
What is the maximum I can put in my HSA in 2022?
SHRM has a helpful chart that compares the amounts you can contribute in 2021 vs 2022. If you are contributing for only yourself, you can contribute a total of $3,650 in 2022. If you are contributing for a family, you can contribute up to $7,300. If you are 55 or older, you can contribute an extra $1,000 of “catch-up contributions.” Learn more about HSA contributions here.
What are the HSA and FSA tax advantages?
HSA Tax Advantages:
Contributions are not subject to standard income taxes
Interest earned in the account is tax free. Distributions may be tax free if you use them to pay for qualified medical expenses.
FSA Tax Advantages:
Annual contributions are not subject to federal income taxes, social security taxes, or Medicare taxes.
Due to COVID, I haven't been able to use my FSA like I thought I would at doctor's appointments, and now I'm worried it will expire. What should I do?
First, check to see if your employer offers a rollover. Some plans will let you rollover a fixed amount from year to year, so that is your best option. If you still have money leftover, there are many useful, lesser known items that you can purchase that are FSA eligible. Check out these FSA friendly lists here and here.
Should I Enroll in a High Deductible Health Plan (HDHP) or a PPO Plan?
You Might Want to Consider a HDHP If…
Your monthly healthcare utilization is low, i.e. you mainly just take advantage of preventive care, 100% covered prescriptions (such as birth control) or just an occasional doctor visit. If so, a HDHP might be right for you! This is because you will pay low fixed costs and very few services will likely be applied to your deductible.
Your overall healthcare utilization is so high that you anticipate meeting your out-of-pocket maximum (OOP Max). Once you meet your out-of-pocket maximum, all in-network, medically necessary services are covered at 100%, so you won’t have costs beyond that point. If you anticipate meeting your OOP Max, you can determine the total cost of your care by adding the annual cost of premiums plus the cost of your OOP max.
Note: If your deductible is not included in your OOP max, you’ll want to add that to the equation as well. Consult your summary of benefits for details.
If you do enroll in a HDHP, also enroll in the Health Savings Account for tax savings!
You Might Want to Consider a PPO If…
Your healthcare utilization is medium i.e. you use enough to meet your deductible and some coinsurance. If so, you will likely spend less money overall on a PPO plan. Just make sure to stay in-network!