Things to keep in mind during open enrollment season
Capital (Annapolis, MD)
As we all reel from higher prices on everything from steak to gas to furniture to bedding, here's another big-ticket item that you need to think about: health insurance. In its annual survey of costs, the Kaiser Family Foundation (KFF) found that annual premiums for employer-sponsored family health coverage are up 4% from last year, "with workers on average paying $5,969 toward the cost of their coverage. The average deductible among covered workers in a plan with a general annual deductible is $1,669 for single coverage."
Given a renewed focus on the fragility of our health and the surge in job leavers and changers, this would seem to be an especially important benefit season. Let's try to fight the impulse to throw in the towel and just do what you did last year, and instead make smarter - and potentially money-saving - decisions.
Start by reviewing your existing health insurance coverage and what you spent in 2021, and then try to project what your health care costs will be in 2022. Be mindful that amid COVID, you may have skipped routine appointments that you need to factor in for next year. Then compare available plans to see what they cover; how much they cost, including copays and deductibles; and whether your doctors are in the network. Don't forget to identify regular medications that you take and make sure that the plan covers them.
To reduce the annual sticker shock, consider a High Deductible Health Plan (HDHP), which offers lower premiums and is paired with tax-advantaged Health Savings Accounts (HSAs). For 2022, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. If you're generally healthy and want to save for future health care expenses, the HDHP/HSA may be an attractive choice. Or if you're near retirement, it may make sense because the money in the HSA can be used to offset costs of medical care even after retirement. The maximum contribution for 2022 is $3,650 for an individual and $7,300 for a family. Those who are over age 55 can make an extra $1,000 contribution.
The popularity of HDHP/HSA options has diminished the focus on Flexible Spending Accounts (FSAs), but many companies still provide this option. In 2022, you can set aside $2,850 pretax to help pay for unreimbursed medical expenses. Critics of FSA's have lamented the fact that they were "use-it-or-lose it" plans, which means you had to incur eligible expenses by the end of the plan year or forfeit any unspent amounts. However, COVID-related legislation allows a full rollover of unused funds from 2021 to 2022, provided that your company agrees to allow it.
For those who are not covered by a workplace plan, the Affordable Care Act (ACA) open enrollment began on Nov. 1 and runs through Jan. 15, 2022. If you want coverage to begin on Jan. 1, you should enroll by Dec. 15. If you wait until after Dec. 15, then coverage will likely start Feb. 1. Note: If you are using a state-run marketplace, check on specific open enrollment windows, because they may be different from the federal government deadlines.
There is some good news when it comes to costs for ACA participants. The average bench mark plan premium will be about 3% lower than in 2021, according to the government, but in some state-based marketplaces, there could be a modest increase. Additionally, ACA subsidies that were enacted under the American Rescue Plan Act remain in effect for 2022.
The Kaiser Family Foundation (KFF) has more information about ACA changes that could impact family coverage, so please check it out.
Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes questions at [email protected].