Money Rehab with Nicole Lapin - Open Enrollment: Everything You Need to Know

Episode Date: November 24, 2021

If there’s ever a time to “phone a friend,” it’s during open enrollment for health insurance. What kind of nightmare human decided on the terminology for health insurance? Does it need to be this freakin’ complicated?? The short answer: no, no it does not. Today, Nicole unpacks the jargon and helps you decide which policy is right for you. If you don't get health insurance through your work, check out options here: https://www.healthcare.gov/ Or, here: https://www.hioscar.com/ Check out NPR's awesome glossary of terms here: https://www.npr.org/2021/10/15/1046371801/health-insurance-terms-defined-open-enrollment Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. It's that time of year again.

Christmas songs are inescapable. We're dusting off our menorahs and SantaCon is on. And what else? Tis the season for open enrollment for health insurance. I know, I know it's not everyone's favorite topic, but we have to talk about it now because deadlines are fast approaching. If you get health insurance through an employer, your company can set its own deadline for benefits enrollment. If you're going to use a health insurance plan from the government, the deadline varies by state and by program, but your deadline will be somewhere between December 7th and January 15th. Health insurance is a really big deal. You know this. It's another

topic in the financial world, though, that feels like a Goldilocks story. You can decide to not get health insurance coverage and end up getting stuck with gigantic medical bills. Or you could get a really expensive policy that gives you more bells and whistles than you actually need. What you want is an insurance policy that is just right. Health insurance is a bear of a topic, of course, but have no fear. Today we're tackling it head on. Stay tuned for another episode about other employee benefits like disability insurance. But for today, it's all

about health insurance. First, we'll be talking about the different ways to get coverage, and then we'll unpack the jargon. Finally, we'll go over how to choose the best plan for you. Let's start at the beginning. It's a good place to start. How the heck do we get health insurance? Well, there are four major paths to get health care. To help you determine which path is best for you, I've put together a little true or false quiz. Ready? True or false. Do you have employer-sponsored health insurance coverage? True or false? Do you have employer-sponsored health insurance coverage? If the answer is true, then you should take it and you'd be in good company. About 157 million Americans rely on employer-sponsored health insurance coverage. True or false? Are you 65 years or older?

If you answered true, then Medicare is the right plan for you. Quick dictionary definition here. Medicare is a federal program where the government pays for a significant portion of your health care. You may also be eligible for Medicare if you're under 65 years old or have certain disabilities or conditions like kidney failure. To see if you're eligible, you can follow the link to Medicare info in the show notes. True or false? Do you fall into a low-income bracket? If you answered true, then you may be eligible for Medicaid. Medicaid is run by state governments, so eligibility differs depending state by state, but it's a very popular program. Medicaid covers about 80 million Americans.

If you answered false to those three questions, then you'll be able to get health insurance through the online health care marketplaces created by the Affordable Care Act, also known as Obamacare. To be eligible to enroll in health coverage through the marketplace. You must live in the United States. You must also be a U.S. citizen and you can't be incarcerated. Not sure if anyone's listening from jail, but what's up? Once you choose your path to health insurance, you're going to need to choose a specific plan. And when you do, you're going to encounter a lot of jargon, like a lot, a lot of jargon. NPR has an awesome glossary on some of these terms that I've linked in the show notes. Here are a few that you should know. Premium.

Your health insurance premium is the amount you pay every month. It's just like your internet subscription or any other bill. Deductible. Your deductible is a threshold. It's the amount of money that you will spend on health services before your insurance kicks in and starts paying. Throughout the year, all of your medical expenses get applied to your deductible. So the first appointments and prescriptions you pick up of the year might seem extra expensive because you haven't hit your deductible yet. Once you hit that magic number, your health insurance will start footing the bill. Copayment and coinsurance. After you hit your deductible, you'll likely still have some costs when you go to the doctor

in the form of a copayment, which is a fixed amount or coinsurance, a percentage of the total cost. Out-of-pocket maximum is the most you'll ever have to pay on covered health services in a given year. It's the threshold above the deductible. If you hit it, you'll have no co-pays or coinsurance. Your insurance will pay 100% of the cost of all covered health services for the rest of that calendar year. Hold on to your wallets, boys and girls. Money rehab will be right back. Now for some more money rehab. So now let's layer those terms on top of some of the common health insurance plan structures out there. Take a deep breath. I'll do the same. Grab a little sip of water. We're diving into some more jargon again. Thank you, NPR's glossary.

HMO or health maintenance organization plan. An HMO plan tends to have a strict network of doctors and other health care providers that you can see with financial help from your insurance company. If you see a provider in the network, you're good. But if you go outside of the network, then the costs are all on you, except in certain emergency situations. PPO or Preferred Provider Organization Plan. A PPO plan still has a network of providers, but if you see out-of-network providers, your insurance will still cover some of the costs. However, PPOs tend to be the priciest plans, especially when it comes to premiums. High deductible health plan, HDHPs. HDHPs tend to have lower premiums than PP-P-O's, but higher deductibles.

That means that your monthly costs will be low, but you'll likely pay a good chunk of medical costs out of pocket. To help employees with these higher deductibles, employers will typically let employees with a high deductible health plan open a health savings account or HSA. To learn more about HSAs and FSAs, check out Money Rehab episode 52 called Are FSAs Really Worth the Trouble? Short-Term or Limited Duration Plans Some of the health insurance plans people might try to sell you are short-term or skinny plans. They might seem very appealing because they're cheap, but they also might not cover some of the basic things like prescription drugs and annual checkups. That's why a lot of experts warn that beyond use for a few weeks or months, let's say between school and a job, they're not a very good deal. Basic or catastrophic.

If you're pretty healthy, no chronic medical conditions, or you don't need to take pricey prescription drugs, a basic plan might be all you need. It will provide financial protection if you get a serious diagnosis, God forbid, or get into an accident, and you'll otherwise only need to worry about, hopefully affordable, premiums. Comprehensive coverage. Say you have a bigger budget for monthly premiums and you want to pay more every month to have access to more flexibility and lower co-pays. A comprehensive plan might be your best bet. Medium coverage is the level between basic and comprehensive. If you do have specialists you know you need to see or other ongoing health issues, you might want to look at the plans that may have higher premiums but offer more coverage. So now you may be thinking, okay, Lappin, I have all the terminology I will ever need to know ever, ever, ever about health insurance.

How do I actually make a decision about these plans? To help you think through some of these important questions, I'm bringing back our true or false quiz. True or false, if you need to cover a couple grand in medical fees tomorrow, would it be difficult? True or false? If you need to cover a couple grand in medical fees tomorrow, would it be difficult? True or false? Do you take prescription meds? True or false? Do you think your healthcare needs will get more demanding or more expensive within the next year? True or false? Do you see a doctor several times a year? True or false? Are you planning on starting a family? True or false? Does it make you stressed out to think of a scenario in which you don't have high coverage? If you answered more trues than falses, you should probably look at a health insurance plan with more coverage,

like a medium coverage or even comprehensive plan. Okay, I promise I'm gonna let you go, even comprehensive plan. Okay, I promise I'm going to let you go, but before I do, here are some final tips. Number one, when you're comparing plans, always make sure to either find or calculate what your total out-of-pocket costs will be for each plan. If you only look at premiums or you only look at the deductibles, you won't be getting the full picture. For example, premiums are going down across the board. But to compensate for that, healthcare deductibles are getting more and more expensive. So your key metric when you're comparing policies is what you will expect to pay out of pocket, all things considered. Number two, you shouldn't use your emergency fund as health insurance. Yes, we do need an emergency fund, and sure, we may use it on health care

costs in a pinch, but health insurance policies are oftentimes better vehicles to pay for health care costs than just a savings account. This is because most health insurance premiums you pay are tax deductible. So you will get some tax love if you sign up for health insurance, but you won't get any tax love on your doomsday fund. Here's a third and final tip. Again, from my favorite article ever from NPR. If you're buying a policy through the federal health insurance marketplace, you might get discounts on your premium costs depending on your income, where you live, and who's in your household. So always shop around for plans after you've entered that information in the marketplace. Millions of uninsured people qualify for $0 premium plans.

And even more people qualify for plans with premiums of $10 or less per month. For today's tip, you can take straight to the bank. If you're deciding between a HMO or PPO plan, call the insurance companies and ask if the certain doctor you see or medicine you take is covered. and ask if the certain doctor you see or medicine you take is covered. If you have a particular doctor that you love and you want to keep seeing, but they're now out of network, you may decide that it's worth spending a little extra money on a PPO plan. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin.

Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Thank you. and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.