Along with all of the holidays and festivities in November and December, there is something else that rolls around that time every year – open enrollment for your benefits where you work.
Along with all of the other decisions you have to make during the holidays (what to give, what to eat, what to wear, etc.), there are also important decisions you need to make concerning your health insurance and other benefits.
This article will cover:
What is open enrollment?
Open enrollment is the annual window your employer gives you to enroll in the company’s group health plan, make changes to your existing coverage, or drop it altogether.
In this article, we’ll focus primarily on group health insurance. However, we should note that if you have a health insurance plan through the Affordable Care Act (ACA), also known as Obamacare, you also have an open enrollment period you don’t want to miss.
When is your open enrollment period?
Your employer determines when your open enrollment period is. Though many people think the government mandates open enrollment dates like it does tax return due dates, that’s not the case. Instead, it’s up to your company’s leadership team to select your open enrollment dates.
Most employers have what is called a “plan year” for their group health plan, where the benefits you choose when you enroll are then locked in. You can’t change them unless you experience a qualifying life event, like a marriage, divorce, or the birth or adoption of a child.
Because the plan year typically coincides with the calendar year (January 1 – December 31), the open enrollment for most companies begins around mid-way through the fourth quarter and lasts for about three weeks. However, the length of the open enrollment period is also up to the employer.
What changes can you make during open enrollment?
You can make as many changes as you want concerning your health insurance (and other benefits) during your open enrollment period. For example, you can change your plan type, deductible, or co-payment amount. Or, you can decide to enroll in your spouse’s plan and drop your company’s group coverage altogether.
The insurance company that provides your group health insurance plan can make recommendations concerning your coverage, but the decision of what you want that coverage to look like is entirely up to you.
What should you do if you miss your open enrollment at work?
The bad news if you miss your open enrollment period is your company probably won’t show mercy and let you enroll late. Typically, they’re legally prohibited from doing that per the terms of the health insurance agreement.
However, if you were already enrolled in your company’s health plan during the previous plan year and still are when the open enrollment period ends, you’ll be happy to know that most plans will simply re-enroll you automatically with the same benefits you chose the previous year.
Unfortunately, if you missed your open enrollment period and didn’t already have benefits in place, you won’t be able to enroll in your employer’s health insurance plan until the next open enrollment period comes around in the fall.
Fortunately, there are some options you have to keep you protected until the next open enrollment period.
Short-term health insurance
There are quite a few insurance companies that offer a policy called short-term health insurance.
With this coverage, you complete an application, give the agent the first month’s premium (unless the insurer requires you to pay for the entire term upfront), and you’re covered.
While that sounds simple enough, these plans have a downside — pre-existing conditions. With short-term health insurance, any health conditions you were ever diagnosed or treated for will not be covered by your policy.
Also, be aware that your coverage may end before your next plan year starts. Many short-term policies are only good for six months, then they lapse and can’t be renewed, possibly leaving you without coverage.
Coverage through ACA
If you missed out on enrolling at work and catch it soon enough, you might be able to buy coverage through your state-run health insurance exchange (part of ACA).
Most states have an open enrollment period that runs from November 1 to January 15, but some states have chosen to extend that to January 31. If you miss this window, you’re facing the same situation as you were when you didn’t enroll at work.
Purchase an individual insurance plan through a private insurer
This is a viable, and very expensive, option if you’re in very good health. Private insurance companies must accept and approve your application at any time during the year, but what they charge you is up to them.
And they’re not known to be compassionate if you have pre-existing conditions. Don’t be surprised if you have a pre-existing condition and the insurer at least doubles what your standard premium would have been without the condition.
Buy an indemnity insurance plan(s)
Indemnity plans pay a fixed amount when you are diagnosed with a covered illness.
For example, critical illness insurance policies will pay you a lump-sum cash benefit if you’re diagnosed with cancer, have a heart attack or stroke, or contract any other disease or condition specified in your policy.
You should also purchase a long-term disability insurance policy if you miss open enrollment. Disability insurance typically costs from 1% to 3% of your annual income, so it’s wise to have it and protect your paycheck. The benefit amount, benefit period, and waiting period can be customized so you can have affordable coverage.
You may even want to keep it when your next open enrollment period rolls around because group disability insurance isn’t portable, meaning you can’t take it with you when you leave your company.
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Enroll in Medicaid or CHIP
If you qualify income-wise, you could enroll in Medicaid or Children’s Health Insurance Program (CHIP). Enrollment is open year-round.
Though this won’t help you very much in the event of a catastrophic illness, take the monthly premium you would have spent at work for your health insurance and Flexible Spending Account (FSA) or Health Savings Account (HSA) and put it into an interest-earning money market account.
This may help a few months later if you need to visit the doctor, have lab or blood work done, or incur other minor medical expenses.
The bottom line
Don’t panic if you miss your open enrollment period at work. You have options, and it’s not the end of the world. It’s not a position you want to find yourself in, but by talking with a professional insurance agent, you should be able to keep yourself protected financially until your next open enrollment period comes your way.
The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.