Millennials have diverse health insurance needs.
Millennials — people born between 1981 and 1996 — are the largest generation in the U.S. workforce, according to the Pew Research Center. As of 2017, 56 million millennials were working or looking for work. That’s 35 percent of the U.S. labor force. Research suggests millennials tend to be savvy health care consumers. A higher percentage of millennials than baby boomers or members of Generation X checked the quality rating of a doctor or hospital, according to a 2017 survey by the nonprofit Employee Benefit Research Institute. About a third of millennials — a much higher percentage than people in older generations — say they’re extremely or very likely to accept a job with slightly lower pay but a more robust benefits package, according to the 2018 Aflac WorkForces Report. But when it comes to choosing health insurance, millennials aren’t a homogenous group, says Kim Buckey, vice president of client services at DirectPath, a company that provides personalized health benefits education and enrollment services to large employers. “The millennial generation covers a wide range of life and work experience, as its members range from their early 20s to their late 30s,” Buckey says. “So for this group, in particular, one size does not fit all.” Whether you’re a millennial who’s a recent college grad, about to turn 26 or already well into parenthood, here are 15 strategies for making the best choices during open enrollment for health insurance plans.
1. Before you enroll, take stock of your circumstances.
Has your life changed in the past year? Did you marry, divorce, have a child, relocate, get diagnosed with a serious health condition or take up a risky sport? If so, your current health plan might not be the best choice for you in the year ahead, Buckey says. Think about whether you’re likely to have the same or an increased need for medical care in the coming year — whether it be more prescriptions, more office visits or X-rays or maternity care — and take a look at what that will cost you under your current plan. “Ninety percent of employees roll over their elections from year to year — which means you might be spending more than you need to on coverage that doesn’t make sense for you,” Buckey says. “Or, you might not have enough coverage. There are strategies that can help you make the best choices before, during and after open enrollment season.”
2. Study what your employer is offering.
Familiarize yourself with the health plan or plans your employer is providing, Buckey advises. Are there new options available? Are there plans you never really considered before? Is your current plan still available? What options is your employer offering that might help you budget for and cover health expenses, such as voluntary benefit programs, or account-based products such as a health savings account or a flexible spending account? A 2016 survey by Transamerica Center for Health Studies found that 27 percent of millennials say they’re very informed when it comes to warding off disease. By contrast, more than a third of millennials — 35 percent — say they are not at all or not well informed about their health insurance options.
3. If you’re not yet 26, weigh the pros and cons of staying on your parents’ plan.
It might be tempting to simply stay on your parents’ plan until you turn 26, Buckey says. After all, your folks pay the premiums and you don’t have to go to the trouble of choosing a plan. But the health plan that’s right for your parents may not suit you. For example, if their plan is an HMO and you want to see a doctor who’s not in their network — which is quite possible, particularly if you don’t live at home or even in the same state as them — you’ll have to pay the full cost of your visit. “And think about it — do you want your parents to know every time you’ve gone to the doctor or filled a prescription?” Buckey says. If you’re over 18, they won’t get the bill, but they may be notified that a claim was filed under their plan. Keep in mind that aging off your parents’ plan triggers a special enrollment period, and it’s your responsibility to notify your employer to begin that process, says Mary O’Keeffe, vice president of benefits at CognosHR, a human resources consulting firm based in Chicago. If an employee works at a company that offers health insurance, he or she would go to the human resources department or manager and say they need to get on the employer-sponsored plan because they’re 26 and no longer eligible for their parents’ plan.
4. Brush up on basic health insurance terminology.
Understanding the terminology of health care will help you make better choices, Buckey says. Research suggests many millennials aren’t comfortable with their ability to navigate medical benefits and the health care system. Brush up on the meanings of copays, deductibles and out-of-pocket expenses. If you know the difference between a health savings account and a flexible savings account, you’ll be in a better position to choose what’s best for you.
5. Take advantage of whatever resources your employer or health care provider offers.
Read the health care benefits materials your employer provides, Buckey says. If your employer offers a benefits fair or group meeting to answer detailed questions about your health care options, participate; you can ask your own questions and hear what others are asking. Some health care insurers and employers provide online decision tools that help you pick the right plan for you, based in part on your own expected claims utilization, says Eric Gulko, president of Innovo Benefits Group, a Boston-based company that provides benefits consulting services to employers. See if your employer offers such tools to help you choose what options are best for you.
6. Pay attention to deadlines.
Enrolling hundreds if not thousands of employees is a lot of work, and employers and their insurance companies need time to process enrollments and issue new plan ID cards. Consequently, open enrollment is typically limited to a two- or three-week window. If you miss the deadline, you’re out of luck — either you won’t have any coverage at all or may default to a plan you don’t want, Buckey says. Be sure to make your selections before the deadline.
7. Consider the total cost of each plan.
Don’t choose a plan based only on the per-paycheck cost of coverage, Buckey advises. “Be sure to compare deductibles, copays, coinsurance and out-of-pocket limits,” she says. For example, you should consider how prescription drugs are covered. Will you pay a copay or do you have to meet a deductible and pay a percentage of the cost? “The ‘right’ answer is different for each person, so don’t just sign up for whatever your co-workers are choosing,” she says.
8. Check whether your provider offers tiered provider networks.
Did you know that the same surgery might cost different amounts depending on the hospital you choose to go to? Or that while one doctor will charge X for an exam, another doctor will charge Y for that same test? Given such disparities, a tiered health insurance plan might be your best option, Gulko says. In tiered health plans, insurers rank hospitals and providers based on the cost of the care they provide, according to the Hospital Healthsystem Association of Pennsylvania. Consumers are therefore provided motivation via lower cost-sharing to obtain their health care from providers in the lower-cost tier. “Because of this type of disparity, insurance carriers have created plan options to incentivize members to choose lower-cost providers,” Gulko says. “As a millennial, if you have not yet developed long-term provider relationships, you might be flexible in which doctors and hospitals you go to, consider saving some money and choosing a plan with a tiered or narrower network of providers.” Some plans in a tiered provider network can save you up to 10 percent or more in your premiums through the year.
9. Consider choosing a plan with telemedicine services.
Because they grew up in the digital age, millennials tend to be more comfortable using technology for a wide array of services than many people of older generations, like baby boomers. For example, Aetna’s inaugural Health Ambitions Study, released in June 2018, found that 36 percent of millennials view telehealth services as a way to increase the ease and convenience of speaking with a doctor, compared to 14 percent of consumers ages 65 and older, says Firdaus Bhathena, Aetna’s chief digital officer. Millennials therefore may be attracted to telemedicine services, which allow you to have a digital appointment with a health care provider, Gulko says. For example, suppose you wake up with what appears to be pink eye, and you’re considering trying to get an appointment with your doctor or walking into an urgent care center or pharmacy clinic. If you have a health plan that offers digital health services, you could click on the telemedicine app on your smartphone, and a doctor licensed in your state will appear on your screen. He or she will ask you questions and examine you through the camera, Gulko says. If you need a prescription, the physician can order it, and you can pick it up at your local pharmacy. “That’s it,” Gulko says. “You move on with your day. The visit is covered under your health plan, usually at a copay or a dollar amount in the $40 to $50 range.”
10. Don’t sleep on other kinds of benefits.
Medical options get the most attention, but you should educate yourself on the other benefits you can sign up for during open enrollment to determine which choices are best for you, says James Schutzer, vice president of JDM Benefits, an employee benefits consultancy based in White Plains, New York. JDM provides human resources solutions for corporate clients of various sizes in an array of industries. Besides a medical plan, you may be able to sign up for other benefits, including dental, vision, life insurance and disability insurance. “Additionally, your company might offer other voluntary [employee-paid] benefits like identity theft, legal services, accident plans and even pet insurance,” Schutzer says.
11. Research your health insurance options IRL.
Conducting research online is good, but you can — and should — explore other ways to get the information you need, says Jeff Bakke, chief strategy officer at WEX Health, a technology provider that helps businesses administer benefit administration, including advanced billing and payments. One good non-digital resource is your parents, for example. Whether you’re still on your parents’ plan or have aged out of it, talk to your mother and father about their coverage, Bakke advises. “Even if you’re still on it, your parents can be a valuable resource,” he says. “What have they found to be the best health insurance? What tips can they share on issues that have arisen?” Talk to your peers too, on what their experience with health insurance is — have they had to choose coverage during the open enrollment period? Discussing these issues with them can help you learn what they’ve done right and avoid the mistakes they’ve made.
12. Consider opening a health savings account.
If you have a qualified high-deductible health plan, starting a health savings account will help you pay for expenses not covered by insurance, says Steve Auerbach, chief executive officer of Alegeus, a national company that helps third-party administrators and health plans deliver benefits accounts, like HSAs. To be eligible for an HSA, you must have health care coverage that has a deductible of at least $2,700 for a family plan and a minimum of $1,350 for an individual plan, according to Internal Revenue Service guidelines. The plan must also have maximum out-of-pocket expenses of $13,500 for a family and $6,750 for an individual, after which the policy covers costs. HSAs not only help you pay for out-of-pocket health care, they’re also a great way to save for the future, Auerbach says. That’s because you can contribute money into an HSA on a pretax or tax deductible basis, have it grow tax-free and use the pretax dollars to pay for qualified medical expenses at any time. The money contributed into an HSA stays with the account holder for life, rolling over from year to year and moving with them even when they change employers. HSAs can also be invested, like a 401(k) account, for growth.
13. Don’t make the mistake of thinking health insurance is optional.
If you have a full-time job that provides health insurance, you know you’ll have coverage. If not, you may be tempted to try to save money by not purchasing health insurance. Sure, you’re young and healthy, and you have no chronic conditions like diabetes, rheumatoid arthritis or heart disease. But what happens if, for instance, you break a leg during a bicycling accident? Though there’s no longer a tax penalty for not buying insurance, it’s still a highly risky move, Bakke says. Going without health insurance to try to save money is a bad bet. “Medical expenses are the most common cause of bankruptcies in this country; don’t get surprised with medical bills that far outweigh your ability to pay,” Bakke says.
14. If you work in the gig economy, don’t worry, you have options.
Most people have employer-provided benefits, Bakke says. But many millennials make a living by cobbling together a handful of part-time jobs, none of which provide health insurance. If you’re a freelancer or an independent contractor, and your employer doesn’t provide health insurance, you still have options. In 2018, open enrollment for people purchasing their own health insurance plans for 2019 runs from Nov. 1 to Dec. 15, according to HealthCare.gov. Go to the public exchange in your state, which you can access online at HealthCare.gov, and evaluate the options there. If your state operates its own health insurance exchange, you’ll be directed there. The site can also help you determine whether you’re eligible for a subsidy; about 86 percent of people who buy health coverage on the public exchange receive some sort of subsidy. If you’re one of those who don’t, you can go directly to health plans in your market and get a quote for the insurance plan options available to you. You can also check with groups like freelancers unions and AAA that offer discounts to members.
15. If you aren’t eligible for an HSA, consider using an FSA.
If you don’t have a high-deductible health insurance plan and consequently don’t qualify for an HSA, you might consider starting a flexible spending account, which many employers offer. An FSA allows you to set aside money on a pretax basis to pay for eligible health care expenses throughout the year. Typically, you can arrange for funds to be taken out of your paycheck throughout the year to fund your FSA, which you can use to pay for out-of-pocket health care expenses and a wide range of similar expenditures. For example, you can use FSA funds to pay for acupuncture, chiropractic care, crutches, canes, walkers and non-cosmetic surgery. Currently you can contribute a maximum of $2,650 annually to an FSA (the amount can change year to year). These accounts differ from HSAs in a couple key ways: Unlike HSAs, FSAs don’t belong to you, the consumer; if you establish an FSA through your employer and leave your job, you can’t take the account with you. Also, FSAs operate on the “use it or lose it” principle. That is, you must spend your FSA funds in the calendar year for which you earmarked the money, or you forfeit the money. Some plans offer a grace period of 10 weeks to use the funds in your account; others allow you to roll over up to $500 to be used in the following year. “Given [that] the average health plan deductible is nearly $1,500, if you had set aside this amount in your FSA and pay 25 percent in combined federal and state income taxes, for example, you could save $375 that year by using your FSA to pay for these expenses up to this deductible,” Bakke says.
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