At this time of year, many of you might have an opportunity to select a medical plan as part of your employer’s open enrollment period. Selecting the appropriate medical plan is one of the most important decisions each year. We all have heard stories, unfortunate stories, of hard working folks that have significant financial issues due to extreme medical expenses. This blog post isn’t written to convince anyone that they need adequate health insurance – rather it is meant to provide some thoughts and tips on how to make the best choice for you and your family.
Employers that offer multiple medical plan options generally offer three types:
- Traditional
- Preferred Provider Organization (PPO)
- Health Maintenance Organization (HMO).
Traditional: This option usually provides the greatest flexibility in accessing doctors and hospitals. And, as you might expect, usually carries the highest monthly premium, deductible, and copay on services.
PPO: This option provides for lower premiums and copays as compared to the traditional plans if you visit doctors and hospitals within the PPO network. There is some flexibility in that you can seek services out of the network if desired, albeit at a higher cost in terms of deductible and/or copayment.
HMO: The HMO option generally features the lowest cost in terms of monthly premiums, deductibles and copayments in exchange for less flexibility. Each person must select a primary care physician whom is responsible for directing your overall care.
Here are some more tips and considerations in selecting medical insurance during open enrollment period:
✔ Coordinate with your spouse: It may make sense to both be covered by one employer’s plan depending upon your premium sharing requirements.
✔ New children: Sometimes the plan that was appropriate for a couple is no longer the best plan with kids. If your family is growing, consider a plan with a lower doctor visit copayment.
✔ High(er) deductible plan: These can be great options as they reduce your monthly premiums in return for potentially higher deductibles. Be sure that you have adequate cash reserves.
This is the second blog in our 8-part open enrollment series. Check back in the upcoming days for more important tips to help you make the best choices for the upcoming year.
Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Center for Financial Planning and not necessarily those of RJFS or Raymond James.