(Update to original post from November 16, 2018)

During this time of year, your employer may request you to review your health insurance plan choices and enroll in one.

Sometimes these choices are clear to understand. Other times it takes a lot of effort to sort through the new information.

Unfortunately, most people delay the decision and then quickly make a selection before the deadline. Don’t be like most people.

Follow these steps to ensure you make the “right” selection for you and your family.

Block off time to review your health plan choices before the deadline.

When you have no health concerns, it’s easy to select the plan with the lowest premium.

However, most plans with low premiums have higher out-of-pocket expenses. For this reason, calculate your full cost instead of just looking at the premium amount.

Calculate your full cost (premium + deductibles + coinsurance + co-pays + other out-of-pocket expenses)

If you have existing doctors you prefer, verify they are on the list of your health plan’s “in-network” providers. If they are not on that list, then you will pay more money to visit them.

They are considered “out-of-network” providers. Your insurance will reimburse less money for out-of-network providers resulting in you paying more money to see your preferred doctor.

If you have upcoming surgeries or are planning to have a baby, check how much your insurance will reimburse and what you will be required to pay.

Use this information when calculating the full cost of what you will pay for healthcare.

Determine if you could contribute to a Health Savings Account (“HSA”) .

Tax benefits of an HSA include pre-tax contributions, tax-deferred growth, and tax-free withdrawals for eligible medical expenses. It’s a way to offset out-of-pocket expenses.

You can open an HSA with a qualified high-deductible health plan (“HDHP”). IRS determines which HDHP is eligible.

For 2023, it is a plan with at least a $3.000 deductible for a family or a $1,500 deductible for an individual. Check with your HR department for other requirements.

Most financial institutions can open an account for you if your employer doesn’t offer one.

An HSA has limits on how much you can contribute but has tax advantages, a similar concept to an IRA (Individual Retirement Account). Due to these tax advantages, you report your HSA activity to the IRS.

It’s not a tedious process. The IRS just wants to make sure your contributions are within their limits. The financial institution that holds your HSA provides you with the information necessary to complete Form 8889 of your taxes.

In addition to the tax advantage, there are other benefits of an HSA. It can be used for medical expenses for you, your spouse, and anyone else you claim on your taxes.

Also, there is no expiration date for using this money. You can build the account and use it for future health expenses such as infertility treatments, upcoming surgeries, or your child’s orthodontics. It’s also a good way to build a reserve for increasing health expenses as you age.

Every year, your employer gives you the opportunity to review your health insurance plan options. Even though it can be time-consuming to review all the paperwork, it’s worth it.

By calculating your full cost, you’ll have a better idea of what health care expenses you need to budget for in the upcoming year.


Niv Persaud, CFP®, CDFA™, RICP®, CRPC®, is the Founder of Transition Planning & Guidance, LLC. Life is more than money. It’s about living the lifestyle you want and can afford. For that reason, Niv consults with clients on money, life, and work. Her approach capitalizes on techniques she learned throughout her career, including as a management consultant, executive recruiter, and financial advisor. Her services include developing spending plans, comprehensive financial plans, divorce financial reviews, and retirement plans. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me.’”