Do you ever ask yourself what is open enrollment and how might it affect you?
Carl Carlson from Carlson & Company Financial Services says open enrollment is the time when most people will have to choose their health plan coverage for the following year and for most it runs until December 15.
The decisions you make at this time are important because they will determine how much you have to pay out-of-pocket for your medical costs, which in turn could impact other savings goals you have throughout the year.
We all want to know what plans are going to cost and depending on an individual’s health and circumstances, they might choose to pay higher premiums and have lower out-of-pocket costs, or they might elect lower monthly premiums and a higher deductible plan.
Many high deductible plans also permit you to contribute to an HSA, Carlson said. For a fairly healthy person, or one who can afford to have a higher deductible, a Health Savings Account is a great option that will allow them to save on a pre-tax basis.
If you have seen HSA plans but are not really sure what that means, Carlson says An HSA is a savings account that can be invested, and used to pay future qualified medical expenses.
Facts about HSA plans:
- All personal contributions are 100% tax deductible (up to certain limits)
- Some employers may offer a match or contribute on your behalf = free money
- That money can grow until it’s used, and when used to pay future medical, dental or vision expenses, that money is never taxed (no income tax or cap gains)
- You can only contribute when you’re on a high-deductible plan, but you can use it at any time
- If you don’t use it by the time you turn 59.5, you can choose to roll it over into an IRA
- Great way to plan and save for medical expenses, or even retirement, on a pre-tax basis