November is typically Open Enrollment month for next year’s health insurance. This is both through your employer or now through the Exchanges if you are not covered by an employer’s plan.
The types of plan options that you have are pretty standardized throughout the country. You have HMOs and PPOs. Most of you probably know the difference, but if you don’t, the difference is basically this: An HMO is less expensive, but you need your primary care doctor’s referral to go to see a specialist, and a PPO is more expensive but you don’t need the referral to see a specialist.
The Olympic Medals
Within these plan options, there are further options that are named the same as the Olympic medals: Gold, Silver, and Bronze. There is also a Platinum option, which the Olympics don’t have, but which is a higher, more expensive level of coverage than the Gold. The following is a link to the Health Benefits Table from Covered California, which is the California health care exchange website. The table shows what is covered and what the costs are among the various Gold, Silver, and Bronze (and Platinum) plans:
Go For Bronze!
Unlike the Olympics goal (Go for Gold!), today I am encouraging you to Go For Bronze. That is, I believe the Bronze plans may be the best option for a lot of people out there. This is especially true if the following are true:
- You are younger and/or you don’t go to the doctor very often and you aren’t on expensive medications.
- You want a plan that will cover catastrophic issues (hospital stays and the like) but you aren’t as concerned about standard doctor visits.
- You want to save money.
- Your company actually offers a Bronze-level plan. Some companies don’t.
- The Bronze plan opportunity allows you also to invest in a Health Savings Account, or HSA. You can only put money into an HSA if you have what the IRS considers to be a “high deductible” plan. Your employer will know if a Bronze plan is HSA-eligible (some Bronze plans are not). If you are on the Exchange (Covered California and the like), you can check a box to show only Bronze HSA-eligible plans.
- Your company may even offer to fund or match-fund part of your HSA. This would really make the Bronze plan appealing.
HSA vs. FSA
To review, a Health Savings Account is different than a Flexible Spending Account (FSA). An FSA is actually a salary reduction up to a maximum of $2,650 per family in 2018. You then incur a qualified medical expense and you submit to your FSA for reimbursement. Effectively you pay for the qualified medical expenses with pre-tax money. An FSA is use-it-or-lose-it, meaning if you don’t incur and submit the amount you have withheld in your FSA, you lose it – you can’t carry it over to future years.
An HSA is different. With an HSA, you earn the salary, but before you pay tax on it, you deposit it into a tax-deferred account. Since you earn the money, it’s yours, and you can save it and carry it over to future years if you don’t use it during the current year. There is no time limit – you can carry it over for as many years as you would like. This is an excellent way to save for future Medicare Advantage premiums – save as much as you can in an HSA when you are making good money, but don’t spend all of your HSA every year. Then you will have money saved to pay your Advantage premiums pre-tax. Great deal!
HSAs also have higher limits than FSAs. The maximum HSA contribution for a family in 2018 is $6,900, plus a “catch-up” contribution of $1,000 per person age 55 and over.
If you are currently healthy, don’t go to the doctor that much and/or aren’t on expensive medications (most generics aren’t expensive), and you have an opportunity to open an HSA, I strongly encourage you to look closely and consider the Bronze-level plan during Open Enrollment. I understand everyone is different and their health situation is unique, but, in general, Bronze plans offer good coverage for less money, with the added kicker of a potential HSA account.