Open Enrollment Guide: What to Know When Choosing a Health Plan
by Rick Notter
| 5 min read
The open enrollment period for health insurance coverage can be daunting. An individual may be changing jobs and selecting a health plan under a new company, or from the individual market.
They may have to change plans or investigate different coverage options because of a personal or family life event. Or an individual may be tasked with enrolling in a plan by themselves for the first time.
Whatever the case may be, here are five key points to understand when heading into the open enrollment period this fall for health coverage in 2023.
Employer-based coverage vs. individual market
Health insurance provided to employees by an employer or by an association to its members is called group coverage. Health insurance bought on the individual market — not through an employer or association — is called individual coverage.
Those who have had employer-sponsored coverage in the past are probably used to their employers:
- Answering questions about plans
- Deducting an individual’s share of their premium from their paycheck each pay period
- Giving a choice of health insurance plans
- Paying for all or some of the monthly premium
- Providing plan documents
If for some reason a person can't get coverage through their employer anymore, they'll still want a health plan in place to improve their overall well-being and guard against potential medical expenses.
For many people, that means buying individual health insurance. Unlike traditional employer-sponsored insurance, those shopping on the individual market must:
- Get to know and manage all their health coverage and benefits
- Make all monthly premium payments
- Purchase a plan
- Shop for and choose a plan that covers them and their family
HMO vs. PPO
Two common types of health plans individuals can choose from are HMOs and PPOs.
HMOs, or Health Maintenance Organizations, have their own network of doctors, hospitals, and healthcare providers that an individual’s insurance company agrees to pay for. HMO members are required to select a primary care provider who will be their partner in health care.
Coverage starts with preventive services that can keep minor problems from turning serious and includes special programs to help individuals reach their health and wellness goals.
A PPO, or Preferred Provider Organization, offers flexibility when choosing health care options. Those with this plan can go to any health care professional they want without a referral — inside or outside of their network. Staying inside their network means lower out-of-pocket costs. When traveling outside their network, higher out-of-pocket costs will arise and not all services are covered.
A deductible is the amount of money paid for health care services each year before health insurance begins to pay. In most cases, the higher a plan’s deductible is, the lower the premium (the cost you pay per month). When someone is willing to pay more out of pocket for care, they save on what they pay each month.
The lower a plan’s deductible, the higher the premium. An individual will pay more each month, but their plan will start sharing the costs sooner because they will reach your deductible faster.
There’s a big difference between a $500 and a $5,000 deductible. Some people would rather have a smaller premium and pay more up front for care as they go. It can make expenses less predictable since it’s hard to know when someone might experience a costly medical event.
Some people like feeling more financially secure. They like knowing that when they need their insurance, they won’t have to come up with a large sum of money before their plan starts helping with the cost. They’d rather have a higher premium, but a lower deductible. It makes costs more predictable.
Availability of subsidies
A subsidy is financial assistance that helps pay for something. It's not a loan to be paid back. When buying a health plan, applying for a subsidy can be part of the process. Getting a subsidy depends on:
- Family size
- How a person’s income compares to the Federal Poverty Level
- How much health insurance costs where someone lives
The main factor is income. If an individual makes about $34,000 or less, or a family of four that makes about $69,000 or less, they may qualify for both types of subsidies:
- The Advanced Premium Tax Credit subsidy, which lowers monthly health insurance payments or premiums
- The Cost Sharing Reduction subsidy, which reduces the out-of-pocket costs paid during a policy period – usually a year – for health care services received.
Due to recent legislation, more individuals will qualify for premium tax credits, including zero-dollar premium plans, as premium tax credits were enhanced.
Considering accessibility to telehealth when reviewing plan options
Individuals should also consider how health plans offer access to telehealth services when weighing their decision. Through telehealth, patients can engage in appointments with physicians and specialists on their phone or through their smart device.
It’s a health care delivery option that allows patients to meet with physicians and mental health specialists from the comfort of their homes.
Telehealth can remove carriers to accessing health care and can be especially beneficial in helping patients avoid spreading infectious diseases to practitioners and fellow patients in physical settings.
Those who are chronically ill or immunocompromised may consider telehealth a logical option. It can also be convenient for elderly or pregnant individuals. Patients with hearing/and or vision challenges should explore the accessibility options of the health plans available to them.
Choosing a health plan for the coming year can feel overwhelming; but individuals can empower themselves to make a choice that’s best for themselves and their families by understanding the basic dynamics of health insurance.
Rick Notter is the vice president of individual business at Blue Cross Blue Shield of Michigan. For more health news and information, visit MIBluesPerspectives.com.
- Help Employees See the Value of an HSA-Compatible Health Plan
- Making Smart Choices During Open Enrollment: The Benefits of an HSA
- Why Should Employers Opt for Insurance Plans with an Integrated Health Savings Account Solution?
Photo credit: Getty Images