Fall: Pumpkin spice, colorful leaves and open enrollment
Meagan Dow, CFA®, CFP™
Senior Analyst, Client Needs Research
For most people, October or November starts open enrollment season. It may not be as fun as Halloween or Thanksgiving, but it could mean saving hundreds or even thousands of dollars. Whether you’re enrolled in Medicare (and probably bombarded by advertisements), a Marketplace plan or getting messages from your employer, open enrollment is the opportunity to ensure your health insurance (and workplace benefits, if available) is the best fit for your needs.
Medicare enrollees:
Medicare open enrollment runs from Oct. 15 to Dec. 7, during which you can change your Part D plan if desired. You can use Medicare’s plan comparison tool to input which medications you take and compare plan costs. You’ll want to consider the premium as well as out-of-pocket costs (such as co-pays and deductibles).
You can change your Advantage plan either during Medicare open enrollment (Oct. 15 to Dec. 7) or during Medicare Advantage open enrollment (Jan. 1 to March 31). We recommend reviewing plans during the first open enrollment period so any elections are effective Jan. 1. The second enrollment period offers some flexibility if the plan you selected isn’t meeting your needs.
After your initial enrollment period—when you first signed up for Medicare—it’s generally not advantageous to change your Medigap/supplement plan if you’re happy with the coverage you have.
Open enrollment also offers the opportunity to change between Original Medicare and Medicare Advantage. However, there are meaningful differences between the two programs, and potentially significant implications to switching including difficulty switching back to Original with a Medigap plan once you’ve opted for Advantage. Each state has a State Health Insurance Assistance Program (SHIP) to help individuals and families understand Medicare coverage and options, so they can serve as a good starting point for helping with this decision.
About all those Medicare Advantage commercials
It’s hard to miss all the commercials advertising the benefits of Medicare Advantage plans, but there are a few things to keep in mind.
Benefits to Medicare Advantage
- Often has lower premiums than Medigap/supplement plans
- May include benefits not found in Original Medicare (such as dental and vision)
Drawbacks to Medicare Advantage
- Once you’ve been with an Advantage plan for more than a year, it’s difficult to return to Original Medicare with an affordable Medigap/supplemental plan
- Generally come with more restrictive coverage networks
- Can require pre-authorizations for certain services
- There’s evidence to suggest that some plans routinely deny care that should be covered1
Takeaway: Medicare Advantage plans can be a great choice, especially if you’re a savvy insurance shopper. But there’s a lot of variation among plans, so it’s important to fully understand the plan and the reputation of the company providing it before signing up.
Marketplace plans: Review health insurance plan
- For Healthcare.gov states, 2023 open enrollment starts Nov. 1.
- For states with their own exchanges, open enrollment dates vary but tend to also start on Nov.
1. Check with your state for their deadlines. - Compare plans using Healthcare.gov. This tool will help determine if you qualify for any tax premium credits or cost-sharing subsidies and show you available plans in your area.
Workplace open enrollment: Review all available benefits
Each employer sets their own open enrollment period, but they generally occur in the fall so that employees’ elections can take effect on Jan. 1. While it’s easy to just select whatever you chose last year, below are a few things to keep in mind as you’re navigating your choices.
Some employers offer multiple choices for health, dental and/or vision insurance, so be sure you take some time to understand which may be best for you. Additionally, couples may want to explore spousal/domestic partner benefits and even compare benefits across employers (keeping in mind that some employers charge a penalty for partners who have access to their own employer coverage). Compare differences in provider networks, prescription coverage, benefits, cost, and access and employer matches to a health savings account (HSA). Different plan selections can result in thousands of dollars of difference in health care costs.
If you’ve never given much thought to how much life insurance to have, or if you’ve had a major life event since you last elected (e.g., marriage, divorce, birth/adoption), you may want to make sure you have enough insurance. You can use our Life Insurance Calculator or consult with your financial advisor.
Most individuals should have both a short-term and long-term disability policy. If your workplace offers these benefits, they’re worth considering.
Health care savings accounts allow you to use pretax dollars to pay for qualified medical expenses, with the two most common being Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs).
- FSAs are use-it-or-lose-it accounts, and you generally can’t change your contributions outside of open enrollment unless you have a qualifying life event. Plan carefully to avoid contributing more than you expect to spend for the year. Some are general health accounts that can be used for any qualified medical expense, while others are for special purposes like only dental and vision expenses.
- HSAs generally have more favorable characteristics, but you can only contribute to one if you have a qualified high-deductible health care plan. If you can contribute, the contribution limits are higher, you keep what you don’t use (making it a powerful savings vehicle), and you can change how much you’re contributing at any time. To learn more, ask your Edward Jones financial advisor for the report Five Things to Know about HSAs.
If you have a dependent who needs care while you work, find out if your employer offers a Dependent Care Flexible Spending Account (DCFSA). These are tax-advantaged accounts that allow you to use pretax dollars to pay for qualified dependent care expenses. Like FSAs, they’re use-it-or-lose-it, so plan carefully for how much you save. Additionally, most people who use a DCFSA won’t qualify for the Child and Dependent Care tax credit, so you may want to consult with a tax professional to determine which is more advantageous (typically DCFSAs become more advantageous the more money you make). If you have a spouse who also has access to a DCFSA, make sure you’re not exceeding the limits if you both contribute.
Retirement savings plans
Retirement savings decisions aren’t generally part of open enrollment, as you can usually change your elections at any time. That said, while you’re evaluating your workplace benefits, it’s not a bad idea to learn about or review your options for saving for retirement. At a minimum, try to take advantage of any employer match that’s offered.
It may not be the most exciting fall tradition, but giving a little attention to open enrollment, and ensuring you have the coverage and elections you need, can best position you and your family for the year ahead. And once you’re finished, go enjoy a pumpkin spice latte.
1 U.S. DHHS Office of Inspector General, “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care,” April 2022 (https://oig.hhs.gov/oei/reports/OEI-09-18-00260.pdf).
Meagan Dow
Meagan Dow leads the Analyst team within Edward Jones Client Needs Research. This team focuses on creating advice and guidance helping investors prepare for retirement, enjoy their retirement, save for education, plan their estates and protect their financial goals.
Meagan is a Chartered Financial Analyst and a Certified Financial PlannerTM.