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2012 Annual Enrollment Time


2012 annual enrollment time

It’s annual enrollment time. Yay, how fun, NOT!

Health Insurance

I have about 10 choices to pick from my employer’s plan. That’s a bit absurd, but I guess it’s better than having only 2 or 3 choices. This year, I’ll sign up for self + child and Mrs. RB40 will get insurance from her employer.

The plans broke down to 4 basic flavors.

  1. CDHP – Consumer Driven Health Plan. The company pays the first $3,000 of medical expenses. Once the expenses exceed $3,000, then I pay a bridge of $1,800. After the bridge is satisfied, then there is a 10% copay for in-network providers. A Flexible Spending Account (FSA) is also available. FSA is pretax deduction that you can use toward medical costs, but you have to use it all in one year. Cost $52/month.
  2. HDHP – High Deductible Health Plan. First I pay $2,400 out of pocket. After that, I copay 10% in-network cost. HSA is available. HSA is a pretax deduction that you can use toward medical cost. Any money left at the end of the year carries over to next year and if I leave the company, I can take the HSA with me. Cost $0/month.
  3. Coinsurance Plan. First I pay $1000. Then 10% after that. FSA is available with this plan. Cost $47/month.
  4. Various Traditional Plans. I pay a copay for each visit. Cost from $133 to $160/month.

I’ve been using CDHP for the last few years and it seems to work well enough. If we stay under $3,000, then the only cost out of pocket is the $52/month fee. Vaccinations are covered for no additional charges to employee. This is great because the vaccinations probably cost over $1,000 this year.

Many young people like HDHP because if you don’t visit a doctor, then you don’t have to pay anything. The HSA is also a very nice benefit. I haven’t used it though, so I don’t know if you get any interest or anything on your balance. Some of my friends like not having to pay tax, but I’d rather use that money to invest.

The Coinsurance plan is new to me and it seems like a compromise between CHDP and HDHP.

I used traditional plans before, but the monthly fee has gone up quite a bit over the last few years so it’s not as cost effective as the consumer driver health plans. If I have a chronic health problem, I would pick the traditional plan.

For 2012, I’ll stick with CDHP. It worked pretty well for my situation and hopefully we won’t go over $3,000 next year. For 2011, we are already $400 over the $3,000 limit because I had a little unexpected procedure earlier this year. I contributed to the FSA so that $400 to the hospital is pre-tax $. All in all, I’m quite happy with how it works out so far. As long as I or baby RB40 do not have a big hospital bill over these last two months, the expense is acceptable.

Life Insurance

Annual enrollment is also a good time to review your life insurance coverage. Now that we have a kid, I increased all my life insurance coverage to the max. Here are the payout numbers:

Life insurance – $930k

Accidental Death & Dismemberment – $814k

Business Travel Accident – $581k

So if my plane accidentally crashes on the way to a business meeting, then the family would get a cool $2.3 million dollars. Nice! It’s not a good feeling to be worth more dead than alive. I’d better work harder and accumulate more than $2.3 million dollars so Mrs. RB40 doesn’t get any bright ideas.

How about you? Have you calculated out how much you’re worth dead? (By an accident of course.)

Did you have fun with annual enrollment? Why must it be so complicated?

photo credit – flickr quinn.anya

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{ 44 comments… add one }
  • Roshawn @ Watson Inc November 11, 2011, 5:18 am

    What a morbid scenario! I’m glad that you are taking care of your insurance needs. Too often this is either ignored or at least under-funded.

    • retirebyforty November 11, 2011, 11:17 am

      My life insurance was quite low before we had a baby, but now I need to make sure the little guy is taken care of. I guess a baby is a life changer after all.

  • PKamp3 November 11, 2011, 6:57 am

    Not bad! Our HDHP with HSA increased a bit, but we don’t use that much medical care and it’s nice to have the PPO. I do like the whole $6,250 pre-tax (well, California taxes earnings on the account) in the HSA, though.

    • retirebyforty November 11, 2011, 11:18 am

      Do you get any interest from the money in the HSA or does it just sit there?

      • PKamp3 November 12, 2011, 6:53 am

        I do – anything above $2,000 you can actually push to Mutual Funds. I haven’t done that yet, but I’m going to start investing some amount of my HSA.

        The interest on the savings portion is a pittance, as you can imagine.

        • retirebyforty November 12, 2011, 10:32 am

          That’s great to be able to push it to Mutual Funds. I love tax free investment!

  • krantcents November 11, 2011, 10:25 am

    It is not complicated, but you need to think about how you will use the various plans. I changing my FSA contribution, because I was able to replace some of my brand name drugs with generics. For a old(er) guy who is healthy, I sure take a lot of prescription drugs.

    • retirebyforty November 11, 2011, 11:18 am

      I’m reduced my FSA contribution for similar reason.

  • Sheya @ Student Health Insurance November 11, 2011, 10:38 am

    I think your coworkers as well as you are choosig wisely. You have expenses because of a child.

    Coworkers, single, young, and healthy, are best off with a HDHP. In the unlikely event that they develop an illness, it is just a one-year worth of a deductible of a risk.

    Next year (if they need more meds etc) they can upgrade to what you have.

    Assuming they keep their jobs of course. But without that, COBRA will be a heck of a lot more expensive.

    • retirebyforty November 11, 2011, 11:20 am

      COBRA is much more expensive. I guess that’s why we have so many people without health insurance.

  • Eric November 11, 2011, 12:23 pm

    My company held things steady this year, which is great given the market. I had an FSA taking out money for my PRK eye surgery, which I will not deduct for next year. It will be nice to have the $250 per month back.

    • retirebyforty November 11, 2011, 1:26 pm

      I reduced the FSA contribution this year as well. This year I’m putting money in DCAP instead for day care.

  • Buck Inspire November 11, 2011, 12:44 pm

    Timely post as I have to figure which plan to go with myself. I had a high deductible plan before and it killed me. No choice. I had a cold and it set me back $500 because I didn’t meet the high deductible. I promptly switched to my wife’s plan. Funny, I think we are all worth more dead than alive. Time to get cracking on our other gigs!

    • retirebyforty November 11, 2011, 1:24 pm

      Do you have the CDHP option? I think that works pretty well for young people as well.

  • Hunter - Financially Consumed November 11, 2011, 1:28 pm

    I’m sorry you have to go through the health insurance mincer each year. The HDHP looks like a good option from my perspective, but we are VERY lucky to have awesome coverage through the U.S. Navy.

    We’re all set with life insurance too. We don’t have accidental D & D insurance, I question the real value of this product. I do think disability coverage is an important consideration, but establishing exactly how much you need is pure guess work. Depending on the injury Social Security may have you covered.

    • retirebyforty November 12, 2011, 10:27 am

      I don’t know much about AD&D insurance either. I figured I’ll just max it out since it didn’t cost that much.
      It’s great to hear the Navy has good health coverage.

  • Jackie November 11, 2011, 2:55 pm

    Ten is a lot of choices, but as you say much better than too few! It does take time to analyze them all though and figure out which is likely to be the best option. We haven’t had open enrollment yet, which now that I think of it is unusual.

    • retirebyforty November 12, 2011, 10:28 am

      Mrs. RB40’s annual enrollment just started, that’s a bit later than usual too.

  • Edward Antrobus November 11, 2011, 7:57 pm

    My wife’s employer offers a total of TWO insurance options. an HDHP with a $5k deductible and an HDHP with a $2500 deductible. The lower deductible plan costs $3 per month extra. I don’t know why they even bothered.

    For life insurance, 1.5x base salary is free then you can buy an additional multiple of base salary for $10/month/multiple (2x is $10/month, 3x is $20/month, etc.)

    • retirebyforty November 12, 2011, 10:29 am

      Wow, just 2 HDHP. You’re right, $3/m isn’t a big difference at all. Our life insurance is a bit cheaper than that, I think around $5 every x we go up.

  • Moneycone November 12, 2011, 4:04 am

    You are right about how complicated the system is! I wonder how easy or difficult it is for our Canadian neighbors!

    • retirebyforty November 12, 2011, 10:29 am

      They have public health care right? Everyone is covered and if you want extra, then you can buy some.

  • 101 Centavos November 12, 2011, 5:54 am

    The interest in our HSA is minimal, but there it sits, slowly growing and rolling over into next year. It’s an automatic, before-tax emergency fund for future medical emergencies.

    • retirebyforty November 12, 2011, 10:30 am

      If CDHP has HSA, I would pick it and max it out as well.

      • Ed November 12, 2011, 6:24 pm

        My wife has a CDHP that has HSA, she puts in the difference of what her PPO would have cost and the price of the CDHP, about $63 per check. The company also matches and puts in $1300 year. Minimal interest is earned, like current savings rates, but when $2k is reached you can put it in a select group of mutual funds.
        I like to think if it as a secondary 401(K) as it is tax free, rolls over, and can be used at any time for health care or for anything after 65 years old.
        My kids are double covered on my insurance, but my wife is primary, so it is nice to have their office visits go towards the deductible and then only pay the copay from my insurance.

  • Funancials November 12, 2011, 6:46 am

    I’m impressed you have so many options. I find most people would rather be told what to choose – or have between 2-3 options – just so they don’t feel overwhelmed. My company now has an interactive guy that asks questions about your life and makes a recommendation.

    • retirebyforty November 12, 2011, 10:31 am

      I’d rather have about 4 options, but I guess more options is better than less.

  • Everyday Tips November 12, 2011, 9:48 am

    Sounds like you had to pretty good choices, and great job on signing up for so much insurance.

    I think we are pretty well insured- my husband is around a million and I am at 500,000. It isn’t fun to think about, but it is something people really need to think about.

    • retirebyforty November 12, 2011, 10:32 am

      I had the minimum life insurance until we had a baby. After that, I thought I should max it out just in case.

  • Robert @ My Multiple Incomes November 12, 2011, 10:08 am

    Annual enrollment is so complicated. So many options and so much time needed. And you don’t want to screw up because you have to live with your choice for at least a year.

  • femmefrugality November 12, 2011, 10:55 am

    I actually have. I’m worth a lot less than you, the upside being that I don’t have matricide fears!

  • Andy Hough November 13, 2011, 12:13 pm

    Your options now are probably better than they will be once you retire. Being self-employed the only health insurance I can afford comes with a high deductible that keeps me from ever actually using the insurance.

  • Aloysa November 13, 2011, 12:31 pm

    We have two choices. One is high deductible with an HSA account, and one that costs $92/month with a low dedactible. We chose the second one just because I always worried that something big happens and we are stuck with a huge deductible. I am not a big believer in the HSA account because I witnesses first hand how fas it can be drained.

  • SB @ One Cent At A Time November 13, 2011, 7:02 pm

    I have only two options in HDHP. Premium plan and normal plan. In premium plan per month deduction is most and expectantly the out of pocket maximum is $2500 as compared to other one at $5000.

    I believe the life insurance max is 8 times your gross annual salary. Should i do the back calculation? Not bad Joe.

  • youngandthrifty November 14, 2011, 2:34 pm

    I love your posts on health care Joe!! It gives me a glimpse as to what it might be like to live in the US!

    Does your wife have insurance coverage? What will happen when you retire? Will you guys be using her benefits?

    • retirebyforty November 14, 2011, 2:57 pm

      Thanks! Yes, Mrs. RB40 has insurance coverage and we will all migrate to her plan when I leave my day job. Luckily her plan is quite affordable for families.

  • Evan November 17, 2011, 1:20 pm

    I just handled my open enrollment also…we actually decided to downgrade a bit since the kid was born and we have no upcoming problems. I still pay a FORTUNE…a little over 800 a month!

    • retirebyforty November 17, 2011, 9:54 pm

      $800/month is extremely expensive to me. Your company is not contributing enough to the cost or something? Why is it so expensive?

      • Evan November 18, 2011, 6:05 am

        We have the third out of 5 plans (we had the 5th but when it got bumped to 1200 we had to evaluate if we really use out of network) and they really don’t contribute all that much…

  • Leigh November 20, 2011, 12:17 am

    I have a CDHP plan as well though my deductible is much lower than yours, probably because I don’t have any dependents on my plan. A lot of people seem to prefer the co-pays model, but I drew up a spreadsheet and the CDHP one saved me about $400 this year.

    My company’s plan period is weird, so we don’t have open enrollment quite yet. I’m curious to see what happens next year since this past year they tried to push people from the HMO plan to the CDHP plan. Maybe they’ll come out with a HDHP next year!

    I’m worth a pretty penny dead. I joke to my parents that if I die before I have a kid or get married, they’ll get most of the money or more back that they spent raising me.

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