Open enrollment season doesn’t exactly inspire a lot of fanfare, but making an uninformed decision on your elections now could impact your health and finances for the next year.
And regretful decisions are more common than you might think. Roughly half of millennials and Gen Z adult workers say they’re confused about their health-care insurance options and blindly choose their plans, according to a recent survey of 4,167 people from Justworks, the HR tech company, and The Harris Poll.
As a result, nearly half also say they’ve regretted their health insurance choices.
“Unlike other lines of insurance, where you can cancel or make changes to your car insurance or your renters insurance throughout the year, barring certain qualified life events, you’re making a [health insurance] decision that you’re going to have to live with for 12 months,” says David Feinberg, senior vice president of risk and insurance at Justworks.
Even experts make miscalculations that come back to haunt them.
“I have absolutely made decisions that I come to regret at a later date,” Feinberg says.
“It’s like any budgeting exercise: you do the best with the information you have about expected outcomes for the upcoming year,” he explains. “Unexpected claims do arise or they don’t. [Then] things either work out more advantageously, in which case I might have been over-insured, or less advantageously, in which case I probably had to dip it in my pocket more than I wanted to.”
Here, Feinberg shares the biggest mistakes he often sees people make with their health coverage during open enrollment, and how to avoid them.
Waiting until the last minute
The worst thing you can do during open enrollment season is procrastinate on researching your options, Feinberg says.
Your open enrollment period will depend on where you get your health coverage. For example, the enrollment window for Affordable Care Act Marketplace plans runs from Nov. 1, 2024 through Jan. 15, 2025. Most employer-sponsored insurance plans, meanwhile, typically start their enrollment period in the fall and lasts a few weeks.
“This is a really important decision that’s going to impact people’s income level [and is] probably their highest expense after rent,” he says. “And so making sure they understand what those decisions are and how it’s going to impact their life is critical.”
Leverage any print materials, Q&A sessions, town halls or other resources provided by your HR department to understand your options.
Making an uninformed last-minute decision is “as effective as gambling,” Feinberg says. “It could work out in your favor, but it’s an uneducated decision, and unfortunately, that’s probably what leads to the regret.”
Thinking the most expensive option is best
When people make their elections at the last minute, they often assume the most expensive option means the best and most comprehensive coverage for them, Feinberg says. That’s a big mistake.
Instead, it’s important to think through your specific health needs and the needs of any dependents or partners on your plan.
Feinberg recommends asking yourself a few key questions to determine your needs:
- What health-related costs did you pay for in the past year across medical, dental, vision and other wellness needs?
- What procedures do you anticipate needing in the next year?
- What are your typical prescription drug costs?
- What is your risk tolerance? Could you cover unexpected health costs out-of-pocket?
Generally, Feinberg is a fan of high-deductible health plans, or HDHPs, which come with lower monthly premiums and are typically popular among people with minimal health coverage needs. Paired with a health savings account, or HSA, the option can provide some of the most flexibility in health insurance coverage, he adds.
That being said, “this type of health plan typically requires the most level of understanding and research.”
Ignoring HSAs and FSAs
Speaking of savings accounts, Feinberg says it’s worth your while to learn about HSAs and flexible spending accounts, or FSAs.
Both types of accounts use your pre-tax contributions to cover qualified medical expenses, but they differ in a few significant ways. For example, to access an HSA, you have to be enrolled in an HDHP, not be covered by Medicare and not be claimed as a dependent.
FSA money must typically be used up by the end of the year, unless your employer allows you to roll over a set amount.
For those who qualify for one, HSAs are popular thanks to their “triple tax benefit“: contributions go in pre-taxed, funds grow tax-free, and you can withdraw money for qualified medical expenses tax-free.
Feinberg has leveraged the benefits of an HSA himself: When his wife gave birth to their first son, he had money set aside to cover a private New York City hospital room.
Not learning from your mistakes
For young workers, it might take a few years to get comfortable navigating the health-insurance system and figuring out your yearly needs.
If you do end up making a regretful decision in your coverage, Feinberg says it’s important to learn from your mistakes, track what the outcomes are, and course-correct during the next open enrollment season.
“When making these decisions, you’re making them in the abstract: Well, what if something happens? Or, what does a one-off event look like?” he says. “The advantage of going through the year with a plan you regret is you can see what those real-life examples are, and then start to contemplate how, if you had enrolled in something different, it might have played out differently.”
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