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Are you selecting your own health insurance for the first time? Whether you've just landed your first job or aged out of enrollment in your parents' health insurance plan, understanding open enrollment is key to finding the best coverage. Open enrollment is a time of year when you can enroll in new health insurance or make changes to your existing health insurance coverage. Here's how it works.
What Is Open Enrollment?
For most types of health insurance (Medicaid being one exception), you can only sign up for coverage during a certain time of year called open enrollment or if you have a qualifying life event. Employers generally hold open enrollment for health insurance and other employee benefits for two to four weeks in the fall. However, this may vary from one company to another, so check with your employer to confirm the dates.
Those who are unemployed or whose jobs don't provide health insurance can visit the Health Insurance Marketplace at Healthcare.gov or their state's marketplace to enroll in health insurance. Open enrollment for Marketplace health insurance starts November 1, 2021, and ends January 15, 2022.
You can enroll in both employer-sponsored and Marketplace health insurance outside of open enrollment if you have a major life event that qualifies you for special enrollment. This can include:
- Losing your health insurance (for example, because you left your job, your work hours were reduced or you're no longer a dependent)
- Losing eligibility for government health insurance programs
- Having or adopting a child
- Getting married or divorced
- Moving to an area where your previous health insurance isn't available
Depending on whether your insurance is employer-based or through the Marketplace, you may have up to 60 days before or 60 days after a qualifying life event to enroll in coverage. Check with your employer or Marketplace to confirm your special enrollment period.
Starting a new job? Employers can require a waiting period of up to 90 days before you can enroll in health insurance, but many let you enroll immediately.
What if you miss open enrollment and don't qualify for special enrollment? Depending on your income, you may qualify for Medicaid, a government program that insures those with low incomes. You can apply for Medicaid at any time.
If you just need insurance to fill the gap until employer-based insurance kicks in or Marketplace open enrollment reopens, consider short-term health insurance. These private insurance plans take effect right away, with no waiting period. Since most short-term health insurance plans offer very limited coverage, clarify what is and isn't covered before buying a plan.
What if You Already Have Health Insurance?
If you already have health insurance, your selected coverage typically renews automatically during open enrollment. But since benefits and costs often change each year, you should review your open enrollment information to see:
- Have costs changed? This includes the employee's share of premiums, copays, coinsurance, deductibles and out-of-pocket maximums.
- Are your preferred doctors still in the plan network?
- Are the prescription drugs you take still covered?
- Have benefits changed? For example, many employers are adding wellness programs and coverage for nontraditional health care such as acupuncture.
- How did you use your health plan last year? Were there costs that weren't covered?
Whether vision and dental insurance are rolled into your employer-provided insurance or offered as separate products, you can enroll in them during open enrollment or special enrollment periods as well. You can also purchase individual vision and dental insurance plans from private insurers at any time of year.
How Do You Choose Health Insurance?
When comparing plans and options, think about how you use health care. For example, if you rarely visit the doctor and don't take medication, you could lower your premiums by switching to a high-deductible health plan. If you have a chronic condition that requires costly medication, a plan with lower copays for office visits and prescriptions may be worth paying higher premiums. Or perhaps you started visiting a therapist this year and want a plan with low copays for mental health visits.
Your employer should provide information and resources to help explain your options for employer-provided health insurance so you can compare how different choices might affect your coverage and costs.
The Marketplace lets you shop for and compare plans anonymously. Simply provide some general information, such as your ZIP code and age, and get estimated costs for different types of plans before applying for coverage.
If your spouse or domestic partner has employer-sponsored health insurance, compare both of your plans during open enrollment. Generally, joining your employer's plan makes the most financial sense, since employers typically pay part of the premiums for employees but may not do so for dependents. However, if one of you has significantly better health insurance, it may be worth paying higher premiums to join that plan.
How Can You Save on Health Insurance?
Health insurance isn't cheap. In 2020, average annual premiums for employer-sponsored health insurance for an individual were $7,470. What can you do to save on health insurance?
If you get health insurance through your job, your employer may offer a Health Savings Account (HSA), health reimbursement arrangement (HRA) or flexible spending account (FSA), which can help lower health care costs.
- People with a high deductible health plan (HDHP) can save money tax-free in an HSA to spend on qualified health care expenses, which include copays and coinsurance. If your employer doesn't offer an HSA, you can open one yourself.
- HRAs are accounts employers open and fund for their employees. You can't put money into an HRA yourself, but you can withdraw money your employer contributes and use it for qualified health care costs.
- With an FSA, you contribute money pretax and withdraw it tax-free to cover qualified health care costs. (Employers may also offer limited-purpose FSAs for vision and dental care costs, and dependent care FSAs to save for child care and senior care costs.) Some employers contribute to or match funds in your FSA. Unlike HSAs, the money in your FSA must be used by year-end or you lose it. (For this year, due to the pandemic, employers have the option to let employees roll over their 2021 funds to 2022.)
High-deductible health plans typically have the lowest premiums, so they can be a good way to save if you're generally in good health. Just evaluate your deductible and out-of-pocket maximum and ensure you have enough savings to handle a health care emergency.
If your employer doesn't offer health insurance or you're unemployed, the Marketplace is generally an affordable option. Depending on your income, you may qualify for premium tax credits covering some (or even all) of the premium costs.
Going without health insurance can cost you in more ways than one. California, Massachusetts, New Jersey, Rhode Island and the District of Columbia impose tax penalties if you don't have health insurance. Even in states without penalties, a major illness or accident could leave you with hefty medical bills. Since unpaid medical bills have the potential to hurt your credit, health insurance offers protection for both your physical and financial health.