Open enrollment 2022 is here. Depending on your company, November/December may be the time you can change your health insurance plan, increase your life insurance coverage, and decide whether you want to enroll in disability insurance. I am going to share 3 tips on how to best maximize your employee benefits during the 2022 open enrollment period.
What is open enrollment?
Open enrollment is the period of time each year when you can enroll in a health insurance plan or change your coverage. People can enroll themselves as individuals or as a family if they are the policy holder responsible for the insurance of their spouse, partner, or children.
What is the open enrollment period for 2022?
The open enrollment period for the majority of the states is November 1, 2021 – January 15, 2022. There are some states that have slightly different dates so make sure that you check out the specific enrollment period for your state. If you receive health insurance through your job, open enrollment dates are set by your employer. It’s important to look at insurance plans during this time because after open enrollment ends, you will have limitations on your ability to get insurance, change plans, or access discounted rates through tax credits.
When does healthcare coverage begin?
Your healthcare coverage dates are determined by when you sign up for insurance.
- Enroll on or before December 15, 2021: your coverage will begin on January 1, 2022
- Enroll between December 16, 2021, and January 15, 2022: your coverage will begin on February 1, 2022
How much does insurance cost during open enrollment?
Depending on the coverage level, the average cost of health insurance in 2021 was $313 to $709 per month. In 2022, health insurance will be slightly more expensive. There are health insurance discounts from the Advance Premium Tax Credit (APTC), which are available to those who earn between 100% and 400% of the federal poverty level.
What happens if I miss my states’ open enrollment deadline? Can I still get healthcare coverage?
If you miss the open enrollment deadline in your state, you may still qualify for a Special Enrollment Period (SEP) that will allow you to apply for health insurance. You may qualify if you have experienced a qualifying life event such as the loss of health insurance through a job, household changes such as marriage, divorce, death, or a baby, or if you have changed your home address.
If you do not qualify for SEP then you may be able to apply for a short-term health insurance plan. If you do not want a short-term health insurance plan, then you will need to wait until open enrollment in Fall 2022 to apply.
If you have low-income then you may still be able to sign up for 2022 coverage during special enrollment periods each month. Low income is defined as a maximum salary of $19,320 per year for individuals and $39,750 for a family of four.
Tip 1 – Should you enroll in life insurance?
Most likely, you are already getting basic life insurance coverage courtesy of your employer. Typically, it’s one times your salary. So if you make $100,000, then your employer is probably already giving you $100,000 dollars in basic life insurance coverage. Even if you do have a basic life insurance policy, it might not be enough to protect young children or other dependents. If this is the case, you may need supplemental life insurance.
So, should you then enroll in supplemental life insurance?
It really depends on your situation. If you’re single, or if your spouse is working, and you don’t have any dependents, you may not necessarily need to enroll in supplemental life insurance coverage. If you have a dependent, a child, or a non-working spouse, then you may want to consider getting one.
If you’re a federal employee and have a dependent, you also have the option to get supplemental life insurance through the government called FEGLI (the federal life insurance government plan). However, getting FEGLI may not necessarily be in your best interest. Typically, if you choose the FEGLI, your premiums will increase as you age, whereas if you get term life insurance in the marketplace, let’s say 20 or 30-year term life insurance, then your premiums will be level. Make sure you consider the premiums before you choose which option is best for you.
Tip 2 – Should you get disability insurance?
A lot of people overlook disability insurance, but it’s very important. According to the Social Security Administration, one in three Americans between ages 35 and 65 will become disabled for more than 90 days. So it’s definitely worth considering.
What is disability insurance?
Disability insurance replaces a portion of your paycheck if you get sick or injured and are unable to work.
What are the two types of disability insurance?
There are two types of disability insurance which include short-term disability and long-term disability insurance.
Short-term disability insurance covers you immediately when you are unable to work for a short period of time due to hospitalization, an accident, or becoming ill. It typically covers you for 3-6 months depending on your plan. This is beneficial for women who plan to have a child because you can get money after you give birth through your short-term disability policy. Usually, it gives you around 50% to 60% of your income for up to six weeks if you have short-term disability insurance coverage. There is a cap, though, so keep that in mind.
Long-term disability insurance covers your income if you are unable to work due to an illness or injury. Is intended to provide benefits for a longer period of time which can be 5-10 years or even until retirement. If you want to know more about long-term disability insurance and why you might want to get coverage, check out our “Three Types of Insurance You’re Forgetting” blog.
Can you get short-term disability insurance if you’re already pregnant?
Unfortunately, the answer is no, you cannot get short-term disability if you are already pregnant. We were having a discussion with one of our clients about this the other day. Most carriers consider this as a pre-existing condition, so you might not get covered if you sign up when you are already pregnant.
Tip 3 – What health insurance plan is best?
It can be very overwhelming choosing a health insurance plan. There are several factors to consider such as should you enroll in your health insurance plan through your company, or should you sign up for your spouse’s health insurance company? It’s often best to work with a credentialed financial advisor to help you choose the best insurance plan for your medical needs for your household.
Should you get an HMO or a PPO plan?
An HMO (Health Maintenance Organization) generally only gives you access to certain doctors and hospitals within its own network and generally costs less than a PPO. A PPO (Preferred Provider Organization) provides more flexibility when picking a doctor or hospital. The differences between plans include the network size, ability to see specialists, costs, and out-of-network coverage. When you are choosing between an HMO or PPO plan, it’s not necessarily about which one is better, but which one is best for you and your situation.
Should you consider a gold or silver or bronze plan?
- Bronze plans: have the cheapest monthly costs but they generally have high deductibles or fewer cost-sharing benefits. Bronze plans are usually best for people who are young and healthy or don’t expect to need significant medical care.
- Silver plans: these plans balance coverage with monthly costs. Silver plans are usually best for most people including those who expect to have typical medical needs.
- Gold plans: these plans are expensive but they have strong cost-sharing benefits and low deductibles. Gold plans are best for people who expect to need significant medical care.
Bonus tip: What about FSA vs HSA? Should you sign up for this?
Health savings accounts (HSAs) and flexible spending accounts (FSAs) let you put away pretax money that you use to pay for a long list of out-of-pocket costs. You can also lower your tax bill at the end of the year by using pretax dollars for qualified medical expenses. If you want to know more about FSA vs HSA, then check out our “HSA vs FSA: Which One Should You Get?” blog.
Make the most of open enrollment 2022
Even though there is no federal mandate for health insurance in 2022, it’s still important to have health insurance. Set some time aside to look over your health insurance during the open enrollment 2022 period and make sure that you are maximizing all of the benefits available to you. If you have any questions about open enrollment or health insurance, schedule a free discovery call with one of our fiduciary financial planners today.
Alvin Carlos, CFP®, CFA is an investment advisor and fee-only financial planner, in Washington, D.C that works with clients across the country. He has a Master’s degree in International Relations from SAIS-Johns Hopkins. Alvin is a partner of District Capital, a financial planning firm designed to help professionals in their 30s and 40s achieve their financial goals through smart investing, reducing taxes, retirement planning, and maximizing their money. Schedule a free discovery call to learn how we can help elevate your finances.