Your Guide to Open Enrollment 2022 - Kiplinger's Personal Finance
It has been said that nothing is certain except death and taxes, but you can add a third item to the list: rising health care costs. Large employers expect health care expenses to increase 6% in 2022, for a total of about $16,300 per employee (including contributions from both the employee and employer), according to the Business Group on Health’s annual survey. Although large employers expect hospitalizations and other costs associated with COVID-19 to contribute to the increase in health care spending, they predict that treating conditions such as cancer, diabetes and heart disease will have an even greater impact.
Health care costs were flat in 2020 compared with 2019 because the pandemic led consumers to delay everything from elective surgery to annual physicals, and some consumers continued to postpone treatment in 2021. As the pandemic wanes, though, employers expect workers to schedule makeup appointments and surgeries. In addition, more than three-fourths of large employers predict that employees with chronic conditions, such as diabetes and heart disease, will increase their use of health care services, according to the Business Group on Health.
Meanwhile, to keep their health care costs down, some employers are tying premiums, deductibles and other out-of-pocket costs to wages, which means that high earners pay more for their coverage. In 2021, 40% of large employers offered some sort of wage-based cost-sharing, according to the Business Group on Health. And while the survey didn’t ask employers about their plans for 2022, that number is likely to grow.
Compare employer plans
For most people with employer-provided coverage, high-deductible health care plans will still be the name of the game. Consumers can expect to be offered one or two high-deductible plans and possibly a preferred provider organization (PPO) plan or a health maintenance organization (HMO) plan, says Mark Hope, employee benefits expert with Willis Towers Watson, a global human resources consultant. An HMO plan typically provides little or no coverage for out-of-network care. You may also need a referral from your primary care doctor to get coverage for specialist visits.
If you’re a relatively healthy individual who only needs coverage for yourself or for you and your spouse, a high-deductible health plan is probably your least-expensive option. The premiums tend to be lower than those for a traditional PPO or HMO plan. To help offset the costs of meeting a deductible, high-deductible plans typically come with a health savings account (HSA) that your employer may contribute to. Contributions are pretax (or tax-deductible for HSAs that aren’t employer-sponsored), money in the account grows tax-deferred, and withdrawals are tax-free for qualified medical expenses.
To qualify for an HSA, your 2022 plan must have a minimum deductible of $1,400 for self-only coverage or $2,800 for family coverage (the same minimums apply to 2021 plans). Before you sign up for this lower-premium plan, make sure you understand how the deductibles work, whether you have coinsurance or co-payments, and whether the coinsurance or co-payments count toward your deductible.
Co-payments are typically fixed costs tied to a specific service—say, $25 each time you see your primary-care doctor or $40 when you see a specialist. Coinsurance works on a percentage basis. You may, for example, be responsible for 10% or 20% of the total cost of the service provided, with your insurance provider picking up the rest.
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For 2022 high-deductible plans, the maximum out-of-pocket cost is $7,050 for self-only coverage or $14,100 for family coverage. Keep in mind, though, that these plans are required to cover most of your preventive care, such as blood-pressure screenings, mammograms and immunizations, at no cost to you. They also may consider certain treatments connected to chronic care—for example, statins for high cholesterol and insulin for diabetes—as part of preventive treatment, meaning you can receive care at reduced or no cost without having met your deductible.
However, if you have a chronic health issue that requires you to see a doctor frequently (and it’s not part of the high-deductible plan’s preventive-care list) or you have a family, a PPO plan, if available, could be the better choice, says Patricia Graves, an employee benefits expert with the Society of Human Resource Management. The premium is higher, but the deductibles are typically lower, and the plans cover a portion of out-of-network care.
That’s what Jasmine Moore, 30, of Chattanooga considered when she recently switched employers and had to choose among two high-deductible health care plans and a PPO. Although the lower premium for a high-deductible plan was appealing, Moore decided that paying the higher PPO premium was worth it because she needs to see an allergist on a weekly basis and requires coverage for five prescription drugs.
To get a more complete picture of your total costs, your employer may provide a calculator that compares premiums and out-of-pocket costs for various plans based on your expected health care needs throughout the year. If you kept any explanation of benefit (EOB) forms from the past two to three years, along with any other receipts related to medical care, look them over to see what you’ve spent—especially if you put off appointments due to COVID-19. Your 2020 and even 2021 spending may not be a true reflection of what you and your family typically spend on health care in any given year.
Spotlight on mental health
The pandemic may be slowly coming to an end, but mental health problems will likely continue. Returning to the office, watching kids go to school or reading about world events has put many Americans on edge. They’re also more open to tapping virtual mental health services. In a May poll conducted by the American Psychiatric Association, nearly 60% of Americans said they would use teletherapy services, up from 49% in 2020. Employers are taking notice. About 90% of large employers are concerned about their employees’ long-term mental health, and 62% added new mental health benefits in 2021, including teletherapy, according to the most recent survey by the Business Group on Health. Those services are likely to remain available in 2022.
For 2022, employers are also hyper-focused on addressing the cost and stigma surrounding mental health issues. Employees with access to an employer-sponsored health care plan can expect to have access to free or low-cost telehealth counseling, along with mental health webinars. Employers are also expected to beef up family therapy options.
If you’ve been seeing a therapist throughout the pandemic, or you want to start, pay attention to whether the therapist is in your plan’s network. Although nearly half of large employers say they’re planning to expand their plan’s mental health network, your current mental health specialist may not make the cut for the 2022 plan year. If that’s the case, make sure you understand what an out-of-network therapist will cost you.
You can use funds from an HSA or a flexible spending account to cover teletherapy and in-person sessions if you are diagnosed with a mental health issue and treatment is deemed necessary. “If you want marriage counseling, for example, just to reconnect with your spouse, your HSA or FSA money generally won’t cover that,” says Jody Dietel, senior vice president of advocacy and government affairs at HealthEquity, which helps employers manage employee benefits. But if you’re diagnosed with depression and your therapist recommends that your spouse come to therapy with you, that would probably be covered under both HSA and FSA rules, she says.
More telehealth, at a cost
Workers with employer-provided health care plans can expect to see expanded access to telemedicine for everything from diabetes care to dermatology. In 2020, the average telehealth visit cost $40 to $50, according to Mercer, a benefits consulting firm. But prices are rising, particularly with respect to virtual mental and behavioral health therapy. And if you end up choosing a high-deductible health plan, you may be required to pay for any telehealth service in full until you meet your deductible, as is already the case with in-person visits.
Under the Coronavirus Aid, Relief and Economic Security (CARES) Act signed into law in 2020, insurers were allowed to waive co-payments or requirements to meet a deductible for telehealth visits without jeopardizing the tax status of their plans. This provision is set to expire on January 1, 2022, which means you could be on the hook for the cost of all telehealth services until you meet your deductible. However, health care advocates are lobbying Congress to extend the telehealth provisions.
Dental, vision, prescriptions
Once your medical needs are out of the way, don’t forget to check out your options for dental and vision care. Those are usually separate policies, with employers often offering two dental plan options and one vision plan.
This year, don’t be too quick to sign up for the cheapest dental option, or skip the coverage altogether. Regular dental and vision screenings are important, because changes in eye, tooth and gum health can signal other medical problems. If the pandemic caused you to delay some of these appointments, your dentist or optometrist may find some problems that require immediate attention.
For example, if you skipped dental appointments during the pandemic, you may need treatment—such as a crown on a decayed tooth—that could have been treated at a lower cost had it been discovered earlier. If pandemic-related stress led you to grind your teeth, you may want to explore whether your dental plan covers a mouth guard that your dentist molds to your teeth.
When signing up for a prescription drug plan, check for any changes in your coverage. Typically, coverage is split into categories, with generic drugs requiring the lowest co-payment from you. Co-payments for nonpreferred, brand-name drugs are usually higher, and some drugs may not be covered at all.
And when you check your prescriptions, keep in mind that it may be less expensive to pay cash at a big retailer, such as Walmart, than to fork over the co-payment your insurance plan requires.
HSA (and FSA) perks
You can use your health savings account to pay for a long list of out-of-pocket costs, from co-payments to contact lenses. For 2022, the HSA annual contribution limit for self-only coverage increases from $3,600 to $3,650. If you have family coverage, the limit jumps from $7,200 to $7,300 next year. If you’re 55 or older at the end of 2022, you can put in an extra $1,000 in “catch up” contributions.
Your employer may also offer a health care flexible spending account, which allows you to set aside pretax money for qualified out-of-pocket medical expenses. In 2021, you could stash $2,750 in an FSA; 2022 limits hadn’t been announced at press time.
HSA and FSA funds can also be used to purchase personal protection equipment, such as N-95 masks, hand sanitizer and self-diagnostic COVID-19 tests. You can also use HSA and FSA funds to buy over-the-counter medications to treat COVID-19 symptoms, says Dietel. (Note that you can’t have both an HSA and an FSA.)
COBRA and the marketplace
If you lost your job or left voluntarily during the pandemic, you have two options for health care: Keep your employer-sponsored coverage through COBRA (which stands for the Consolidated Omnibus Budget Reconciliation Act), or buy a policy on the individual marketplace. With COBRA, you can keep your doctors for up to 18 months, but premiums are high—an average of $600 to $700 a month for self-only coverage, or more than $1,700 a month for a family. That’s because you’re on the hook for the employer portion of your premium along with your own, plus a 2% administration fee. The American Rescue Plan offered a COBRA subsidy to laid-off workers, but it’s set to expire September 30.
The more cost-effective route is to go to the individual marketplace and sign up for a plan under the Affordable Care Act. Open enrollment starts November 1 and ends December 15. This year brings changes that could lower the cost of your premiums.
The American Rescue Plan expanded ACA subsidies, lowering premiums for individuals at every income level and eliminating them for some households. If your estimated modified adjusted gross income (MAGI) for 2021 is between 100% and 150% of the federal poverty level ($17,420 to $26,130 for a two-person household), you’ll be able to get an enhanced silver-level plan at no cost. (Generally, bronze plans have the lowest premiums and highest deductibles, platinum plans have the highest premiums and lowest deductibles, and silver and gold plans fall in between.)
Those with 2021 income of 150% to 400% of the federal poverty level will see a decline in premiums, and households with income that exceeds 400% of the FPL—$69,680 for a two-person household—will qualify for the most significant drop in cost, because the amount they pay for premiums is capped at 8.5% of their MAGI.
These changes are also a boon for young adults who are turning 26, which means they are no longer eligible for their parents’ health plan and must sign up for health care on their own. A single individual qualifies for a no-cost enhanced silver plan if his or her 2021 estimated income is between $12,880 and $19,230 for a one-person household.
To search for a plan, go to www.healthcare.gov/get-coverage and select your state from the drop-down menu. If your state runs its own health care exchange, you’ll be directed to its website. Otherwise, you’ll pick a policy through HealthCare.gov, which provides plans that are compliant with the Affordable Care Act. You can consult an ACA navigator to help you pick the best plan for you at www.healthcare.gov/find-assistance. You can also find help at www.nahu.org or www.getcoveredamerica.org.