The Medicare/Medicare Advantage Open Enrollment starts this weekend.
The Exchange/Individual Market Open Enrollment starts on November 1st.
My job’s open enrollment starts in ten days.
We are entering Open Enrollment Season. Open Enrollment is when people can start coverage or change their policies with the least amount of hassle and restrictions. There are special enrollment periods during the course of a year when life happens and circumstances change, but most people will sign up for their coverage once a year during Open Enrollment.
Each type of insurance will have their own flavor of open enrollment. Duke University provides a small curated list of choices for me. Medicare and Medicare Advantage will have a different list of plans offered by different insurers than the ACA Exchanges in Orange County, North Carolina. But there are a few things that people should remember as they try to make their choices.
- Accept that you will not make a perfect choice
- Aim to make a good choice
- Assess your probable health situation
- Know your ability to take a financial hit
- Ask for help
The research shows that people will choose dominated plans. A dominated plan is one where on all salient characteristics there is at least one plan that beats the dominated plan on all characteristics. This happens in Medicare, it happens in employer sponsored insurance and it happens on the Exchanges. Choice is tough and health insurance choice requires making multiple projections with high variability under uncertainty and imperfect information while trying to read through jargon. I do this for a living and I get confused. So we should not aim for an optimal choice but a satisficing choice where we aim to make a good enough decision and accept that we might be leaving something on the table.
The big challenge in open enrollment is figuring out what your possible health could be for the next year and your ability to take a hit. For some people, it is easy, they know they have a significant chronic condition today and will continue to have that same condition throughout the following year. At that point their search system is to find the lowest total cost plan(premiums plus out of pocket maximums) that contains their doctors and hospitals and whose customer service does not sound like fingernails scratching on a chalk board.
For most people, their decision making system is fuzzier. I think that I will have fairly low utilization next year, I think my family will have fairly low utilization. Duke offers two versions of a narrow network plan. The lower premium version has higher out of pocket costs than the higher premium version. The premium plus cost sharing math works out to be that the lower premium version is better as long as no one in my family has a $20,000 to $50,000 event. Given our ages and our medical histories, I don’t think we’ll hit those red zones. The bigger networks on the more expensive plans don’t offer much value to us as we’re relatively healthy and we have a comprehensive academic medical center as the flagship hospital in our narrow network.
There are a lot of assumptions bundled into the choice of one plan among a very short curated list of plans that I need to decide on. The next biggest challenge is figuring out what type of one type hit you can take? The bigger the hit you can take, the less comprehensive coverage you really need. Bigger deductibles are a plausible way to lower premiums if individuals have the ability to actually face a $2,000 or $3,000 or $7,000 bill without wrecking their lives. At that point it is a trade-of between lower guaranteed costs and higher potential losses. Other people can’t take that hit so they are constrained to buy more protection.
Finally, ask for help. This stuff is confusing. Talk with HR, talk with insurance brokers, talk with navigators. Spend some time and map out scenarios and figure out what things are acceptable to you and what things must be avoided.