The fall is a magical time. The weather is finally cooling down, the leaves are changing into beautiful colors and you can find Pumpkin Spice Lattes at Starbucks.
But the fall often brings a less popular change: open healthcare enrollment.
Picking a new healthcare plan is about as fun as actually going to the doctor. It’s a complicated process and the options don’t usually get much better every year. If you’re like most people, you pick the same plan you always do, even if you’re not sure it’s actually the best.
Want a better way this year? Read below for our solution to finding the best healthcare plan for you.
Review your latest health insurance options.
If your work for a traditional employer, you’ll likely get an email or a packet from HR about your latest health insurance options. These may be similar to last year or be from a completely different provider.
Even if the provider is the same, your premiums, deductibles and out-of-pocket limits may be different. It’s crucial to compare the options because you might wind up more than you realized.
Ask your HR provider what the major changes are. For example, if your company used to contribute a certain amount in your Health Reimbursement Arrangement, ask if those contributions will be different.
Create a Spreadsheet to Compare Health Care Plans
You can create a spreadsheet to compare your options. The columns should include at least the following:
- Name of the insurance provider
- Type of plan – platinum, gold, bronze or silver
- Premium amount
- Deductible amount
- Out-of-pocket limit
- HSA eligible
Here is a simple Google Sheets template you can start with:
Spreadsheet to Compare Health Care Plans
Next, you’ll look at your options and fill in the spreadsheet with those figures. This is where you might start to get confused, especially if you have several different options to choose from.
First, think about what kind of healthcare you really need. Do you rarely go to the doctor or do you anticipate having surgery next year?
If you’re healthy and never get sick, you’re better off choosing a bronze or silver plan. These plans will have a lower monthly premium but come with a more expensive deductible.
Read: 3 Things to know before picking a health insurance plan via HealthCare.gov
A bronze plan may also be HSA-eligible, which means you’ll receive access to a Health Savings Account. These accounts let you contribute money that you can then deduct on your taxes, similar to a traditional IRA or 401(k). The annual limit for HSA contributions in 2019 is $3,500 for individuals and $7,000 for families.
The money you save in an HSA can be used at any time for healthcare expenses. You can use it this year. in five years or when you’re retired and on Medicare. You can use it to buy glasses, pay for surgery or at the emergency room.
Another huge benefit to HSAs is that you can invest the money once you’ve reached a certain threshold, usually between $1,000 and $2,000.
This also makes your HSA a type of back-door retirement account. All withdrawals from an HSA are also tax-free, and any interest that you earn when you invest in an HSA is also tax-free. You can invest an HSA in ETFs and index funds, just like you would your IRA.
But deciding if an HSA-eligible plan is right for you can be difficult. HSA health insurance plans have a high deductible. If you know you’re going to have a baby next year, you may want to choose a silver or gold plan so you pay less out of pocket total.
This is where your spreadsheet comes in. If you think you’re going to have an expensive procedure next year, look at the total out-of-pocket expense for each plan. Add that to the annual premium amount. The final result is how much you’ll pay for the whole year, if you end up needing surgery or other major services.
Ideally, you want to pick the plan with the lowest out-of-pocket expense. However, if you are one of those people who never gets sick, then you should choose the plan with the lowest monthly premium.
When you’re deciding between the different low-cost plans, choose one with an HSA option. That way you can save money in the HSA and use those HSA funds to pay for your healthcare expenses tax-free.