Select Page

If you will be getting insurance coverage through your employer, chances are that open enrollment for next year is right around the corner.

Our time to enroll changes from year to year as the HR department negotiates and finalizes the rates for the upcoming year.  What has tended to happen is that the bigger the increase for employees, the later they will announce open enrollment.

So, let's hope our announcement comes soon!

Even if your employer hasn't rolled out the details, you can still get started on your planning for next year.  Here's how.

You can look at how you did in 2012 and get an idea as to whether you picked the right plan.  This can help lead what plan to choose for 2013.

We have three options.

Our employer offered three varying types of plans for 2012.

  • EPO – This was the most similar to what would traditionally be called an HMO.  It offered the highest level of coverage in terms of percentage covered for most procedures, but also had the highest employee contribution levels, and also had a significant deductible.
  • PPO – This plan had lower everything from the EPO: A lower out of pocket cost, a lower deductible, but lower percentage payouts for most procedures that required a co-pay.  It also had a higher out-of-pocket maximum.
  • High Deductible / HSA Plan – This plan was the lowest out of pocket cost, but allowed you to more manage your plan.  This is best for healthy people that don't typically require a lot of medical care, as your overall costs can be lower.  The risk is that you have much higher contribution limits, so your maximum costs are higher should you require significant care.

What I recommend doing is gathering your plan in formation for 2012.  You did keep it, right?  If not, you should be able to request it from your HR department or find it online where you signed up last year.

Run some what-if scenarios

Pretty much every plan allows you to logon to your insurers website and look at the detailed costs for everything that was submitted throughout the year.  You can use this information to plug in a what-if scenario for how your costs would have been to date for each option.

You'll already have all of the data available from the plan you actually picked.  Just look at your pay stub to see what was pulled out and look at the insurance information to see what your costs were.

Next, you might have to go back into the other plans and see the differences in both your paycheck withdrawal as well as your out-of-pocket costs.

You can use some shortcut tricks to come up with some of the differences.  If your co-pay difference for an office visit is $10 difference between plans, you can just count up the number of office visits you had and calculate that.  Similarly, if your current plan covered, say, 80% of your costs and a competing plan covered 90%, you could just cut your actual costs in half when coming up with the side by side comparisons.

The point is, it might not have to be exact, but if done right, you should get a good idea on whehter you picked the most cost-effective plan.  If you don't estimate that things are going to change all that much, you might look at changing plans to one that would have cost you less.

Account for changes

Sometimes, things do change and you know they will.  In years where we had our two kids, we were fortunate enough to know we were expecting the following year at the time of enrollment.  This allowed me to plan based on the costs of childbirth.  This doesn't work for everybody (e.g. if you get pregnant in February), but even if you're planning on a kid next year, you might want to plug in as if it's actually going to happen.

Once you plug in any changes, this also can provide a potential outcome.

Nothing is guaranteed

One thing to keep in mind is that despite your calculations, this will not provide a guarantee that you'll pick the plan that results in the lowest costs to you.  All it takes is one case of appendicitis or a car accident or something else, and your numbers can go out the window.

I recommend hedging against this in a pretty simple way: If choosing a different plan results in lower costs to you, bank the difference.  If something unexpected happens, you'll have a pseudo-emergency fund that should cover these costs based on your savings.  If nothing does happen at the end of next year, you might be able to funnel that money to something else.

Do you ever do any pre-planning for insurance?  Discuss!