Health insurance is a key employee benefit<\/a>, and many workers don’t spend much time picking the right plan, surveys show.<\/p>\n Nearly one-third of health insurance enrollees\u00a0spent less than 30 minutes<\/a>\u00a0choosing a plan in 2024, according to an Employee Benefit Research Institute survey of more than 2,000 participants in fall 2024.<\/p>\n Some 48% of millennials, my generation, admitted to “blindly” picking health plans<\/a> because they didn’t understand them, a separate Justworks survey of nearly 4,200 U.S. adults from late 2024 found.<\/p>\n More from Personal Finance:<\/strong> Picking the wrong plan could be costly as health care prices rise.<\/p>\n Companies expect health plan expenses to increase by 9% in 2026<\/a>, according to the nonprofit Business Group on Health, based on June survey responses from 121 large employers with plans covering 11.6 million workers.<\/p>\n In 2024, employers offering health insurance covered 75% to 85% of plan costs<\/a>, and workers paid the rest via premiums and copays, according to a survey of 2,100 firms from the Kaiser Family Foundation, a health-care policy organization.<\/p>\n But as plan costs rise, companies could shift more expenses onto workers<\/a> in 2025, financial consulting firm Mercer found, based on a survey of roughly 700 organizations.<\/p>\n Amid uncertain costs, here’s how I’m preparing for health care open enrollment choices this fall.<\/p>\n Tracking health care spending<\/p>\n One of the hardest parts of picking health insurance is knowing future needs. There is no crystal ball, but you can review past medical spending.<\/p>\n Several years ago, I started tracking annual out-of-pocket health care costs, including co-payments, prescriptions, medical bills, over-the-counter expenses and more. It’s tedious, but I use the number for two open enrollment tasks:\u00a0<\/p>\n Total out-of-pocket expenses, along with detailed receipts, are also useful at tax time to see if I can claim the medical expense deduction<\/a>, which isn’t typical. (You must itemize tax breaks to qualify, and 90% of filers<\/a> use the standard deduction, according to the latest IRS data. Even then, unreimbursed medical expenses have to exceed 7.5% of adjusted gross income.)\u00a0\u00a0\u00a0<\/p>\n Paying now vs. later<\/p>\n Typically, health plans offer two choices. You can pay more upfront via higher premiums from each paycheck. Or, you can pay more later with a bigger deductible, which is how much you owe before insurance kicks in.<\/p>\n By tracking yearly medical expenses, I can see which option could be more affordable for the coming year.<\/p>\n In some cases, the higher deductible is cheaper when you’re healthy and rarely use services. Plus, many plans cover preventative care, such as yearly physicals, at no cost, before hitting the deductible.<\/p>\n That strategy could change if I expect multiple treatments or a surgery. In that case, I would consider opting for the higher premium, lower deductible plan.<\/p>\n Regardless of the health plan I choose, I always aim to cover my deductible plus other out-of-pocket expenses with my FSA, which is also funded via paycheck deductions.\u00a0<\/p>\n The money goes in before taxes, and I can spend those pretax funds on eligible healthcare expenses, co-payments and deductibles. I think of the tax savings like a discount.<\/p>\n The downside of FSAs is I must spend the balance by the end of the calendar year \u2014 or forfeit the funds \u2014 with a small carryover allowed into the next year.\u00a0I track that spending monthly to avoid a surprise balance in December.<\/p>\n The average household FSA contribution was $2,250<\/a> in 2024, and 77% was expected to be spent by November, according to 2024 data from Numerator, a market research data provider.<\/p>\n dowell | Moment | Getty Images<\/p>\n Leverage a health savings account<\/p>\n Before joining CNBC, I was a full-time freelance writer for six years, with a high-deductible health insurance plan through Healthcare.gov<\/a>.<\/p>\n Premiums were high, but I could contribute to a health savings account<\/a>, which works like a long-term emergency fund for medical expenses. Unlike an FSA, the balance rolls over yearly.<\/p>\n If you can afford to leave the money untouched, some HSAs let you invest the balance for long-term growth.<\/p>\n HSAs offer three tax benefits. There’s an upfront deduction for deposits, the funds grow tax-free and withdrawals are tax-free for eligible health care costs.<\/p>\n
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Cover your health insurance deductible<\/p>\n