Healthcare Open Enrollment Tips for 2026 and a Catch-Up Plan for Retirement

Summary

NerdWallet’s Smart Money Podcast

Episode: Healthcare Open Enrollment Tips for 2026 & a Catch-Up Plan for Retirement
Release Date: November 3, 2025
Hosts: Sean Pyles, CFP®, Elizabeth Ayola
Guests: Kim Palmer, Carrie Hannon, Jana Herron, Kate Ashford

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Overview

This episode is split into two major segments. First, it offers a deep dive into Gen X’s unique retirement challenges and practical catch-up tactics, featuring insights from authors Carrie Hannon and Jana Herron ("Retirement: A Gen X Guide to Securing Your Financial Future"). Next, the hosts and health insurance expert Kate Ashford break down healthcare open enrollment, providing actionable guidance on choosing plans, understanding jargon, and avoiding common pitfalls for 2026.

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Key Discussion Points & Insights

1. Gen X and the Retirement Savings Catch-Up (00:51–16:12)

Gen X’s Retirement Crisis: Origins and Hurdles

• Underpreparedness: The average Gen X household only has about $40,000 saved for retirement (01:51).
  • Factors: 401(k)s launching as “supplements to pensions”—not as primary vehicles; pensions disappearing; insufficient financial education; economic downturns and market volatility impacting savings; high levels of credit card and student loan debt.
  • "I think Gen X is kind of the guinea pig generation" — Jana Herron (07:15).
• Social Security Uncertainty: Looming questions about the program’s future and benefit adequacy heavily impact Gen X’s retirement mindset (03:57).

Lessons for Younger Generations

• Millennials and Gen Z are saving earlier and, on average, are better prepared, partly thanks to auto-enrollment and auto-escalation of workplace retirement plans (05:52).

Financial Regrets & Lack of Education

• Many Gen Xers cashed out early 401(k) balances when changing jobs due to a lack of guidance, later realizing the costly long-term impact (06:22).
  • “Nobody explained to them how these things worked. And so hey, you change jobs, why not cash out and pay down some credit card or go on a trip?” — Jana Herron (06:22)

What Gen X Can Do Now (08:02–14:55)

• Don’t Panic—Take Inventory: “Don’t freak out… The best thing is to just not freak out and to really take an inventory of where your financial life is going.” — Carrie Hannon (08:16)
• Review Cash Flow & Budget: Identify what’s coming in, what’s going out, and cut unnecessary spending.
• Inner Audit (‘MRI’): Evaluate your values, priorities, and envision what you want retirement to look like—know what you truly need (09:28).
• Rethink Retirement: Many Gen Xers and, increasingly, all Americans are seeing “retirement” as a gradual step-down in work commitments, not a hard stop.
  • “Work is not a four-letter word… If there’s a way you can continue to earn in some fashion, that’s fantastic.” — Jana Herron (10:56)
  • “There’s a ramp down mentality among some of the Gen Xers.” — Carrie Hannon (11:42)

Three Essential Actions for Gen X (13:30–14:55)

1. Revisit Your Cash Flow: Understand your spending and align it with your goals (13:38).
2. Tackle Debt: “Debt is a dream killer.” — Jana Herron (13:59).
3. Dream a Little: Visualize what you want from retirement—this motivation helps fuel discipline.

Memorable Closing Advice

• Address health early (even high blood pressure!) to reduce later healthcare costs and preserve financial security (14:58):

  "If you address those health issues now, it'll help your finances, it'll help your retirement life." — Carrie Hannon (14:58)

• "It's financial fitness and physical fitness." — Jana Herron (16:07)

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2. Healthcare Open Enrollment Tips for 2026 (18:42–32:52)

Open Enrollment Basics (19:18–20:22)

• Applies to almost everyone: employees, spouses, marketplace buyers, Medicare recipients, and gig workers.
• Fall is the annual window for reviewing and updating healthcare and related spending accounts for the coming year.

Key Insurance Jargon Explained (20:22–22:11)

• Premium: Monthly payment for insurance.
• Deductible: Out-of-pocket amount before coverage kicks in (excluding most preventive care).
• Choosing Plans: Weigh higher premium–lower deductible vs. lower premium–higher deductible based on expected health needs.

How to Choose (21:05–22:24)

• Health care is unpredictable—consider your history, planned events, and emergency needs.
  • "You have to be kind of a health care fortune teller… run a few scenarios." — Kate Ashford (21:23)
  • "Our healthcare costs are very predictable [because we always hit our out-of-pocket max]." — Kate Ashford (22:46)

Beyond Premiums: Copays, Coinsurance, Out-of-Pocket Maximums (23:24–24:25)

• Copay: Fixed amount per service (e.g., $25 for a doctor visit).
• Coinsurance: Percentage of service cost you pay (e.g., 30% for an X-ray).
• Out-of-pocket maximum: The absolute most you'll pay in one year for covered care—a crucial number to know.

Plan Types: Alphabet Soup Decoded (24:25–25:53)

• HMO: Cheaper, restricted network, need referrals.
• PPO: More expensive, flexible, no referrals required, out-of-network coverage possible.
• HDHP (High Deductible Health Plan): High deductible, low premium, typically paired with HSA.

HSAs vs. FSAs (25:53–27:23)

• HSA: Only with HDHP. Triple tax advantage, can be invested, rolls over year to year (27:23).
  • “The HSA basically has a triple tax advantage…” — Kate Ashford (27:23)
• FSA: Offered by employers, lower limits, “use it or lose it” by year end, can include dependent care option for parents.

Key Questions to Ask When Choosing a Plan (28:07–29:05)

• What care will you likely need in the coming year?
• Are your doctors/hospitals in-network?
• Are your medications covered? What are drug costs like?
• Can you afford the deductible/out-of-pocket max?
• Do you want HMO flexibility or a PPO’s freedom of choice?

Employer vs. Individual/Marketplace Coverage (29:08–29:42)

• Employer plans usually cheaper (employer covers part of premium), often more benefits (dental, vision, wellness).
• Marketplace plans may be pricier; subsidies critical but in flux for 2026.

ACA Changes & Subsidy Uncertainty (29:42–31:49)

• Enhanced subsidies are set to expire at the end of 2025; 4 million could lose coverage and premiums may rise by 20% or more (29:51).
  • "For some people, that could mean the price of insurance doubles or even more than doubles." — Kate Ashford (30:47).

Upcoming Deadlines (30:50–31:21)

• ACA open enrollment: Nov 1 – Dec 15 (varies by state)
• Medicare: Oct 15 – Dec 7
• Federal employees: Nov 10 – Dec 8
• Private employer: varies, usually in late Oct–early Dec.

How to Survive Open Enrollment (31:59–32:46)

• Don’t wait until the last minute.
• Use available plan comparison tools (employers & NerdWallet offer them).
• Analyze plans for your specific situation—don’t pick blindly.
  • “These are big choices. This is your healthcare for the next year.” — Kate Ashford (32:08)
  • "My advice is, don't wait until the last minute... do the analysis and try to find the best coverage for your situation." — Kate Ashford (32:08)

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Notable Quotes & Moments

• On Gen X’s Unique Financial Position:
  • “Gen X is like the guinea pig generation and they got the worst of both.” — Jana Herron (07:15)
• On Fighting Retirement Anxiety:
  • “Don’t freak out. That would be my first thing.” — Carrie Hannon (08:16)
• On Debt:
  • “Debt is a dream killer and it's the biggest obstacle people are going to face in their future for financial security.” — Jana Herron (13:59)
• On Health Impacting Wealth:
  • "If you address those health issues now, it’ll help your finances." — Carrie Hannon (14:58)
• On Open Enrollment Craziness:
  • "I resent all the math that I have to do with this." — Elizabeth Ayola (23:42)

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Key Timestamps

• 00:51 – Gen X’s savings gap, origins of retirement challenges
• 06:22 – Early 401(k) cash-outs and lack of financial education
• 08:16 – “Don’t freak out”—recalibrating for retirement catch-up
• 13:30–14:55 – Three practical steps for Gen X to take now
• 14:58 – Importance of addressing health early to save money
• 18:42 – Open enrollment segment begins
• 20:22–22:11 – Premiums, deductibles, and plan types explained
• 25:53 – HSA and FSA differences and strategies
• 29:42 – 2026 ACA subsidy changes & premium hikes
• 30:50 – Enrollment deadlines
• 32:08 – Survival tips for open enrollment

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For Next Steps

• Episode two continues with more open enrollment topics: dental, vision, life insurance.
• Explore NerdWallet's health insurance explainer and comparison tools for personalized recommendations.

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Summary Tone

Straightforward, practical, supportive and intentionally “nerdy”—the hosts, experts, and guests keep things both relatable and precise, blending financial realism with motivational encouragement for listeners at every stage.

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This summary curated the most actionable advice and insights from the episode, ensuring even non-listeners can confidently navigate retirement planning and open enrollment decisions in 2026.

Transcript

[Jana Herron]

Men need a store that has the right thing for their thing.

[Kate Ashford]

Like a Kenneth Cole suit made with Showflex fabric to keep them cool at.

[Carrie Hannon]

Their cousin in law's third wedding in.

[Sean Pyles]

The middle of July.

[Kate Ashford]

Whatever the thing, Men's Wearhouse has the clothes for it. Love the way you look.

[Sean Pyles]

Men's Wearhouse open enrollment is here. Do you know what your plans are for health insurance in 2026, Sean?

[Elizabeth Ayola]

My plans are always to save money. But seriously, I haven't had any major health changes this year. So my plan is just to review the offering, see if there are any places that I can cut call, and if not, just continue with what I'm doing now because it's working for me.

[Sean Pyles]

There you go. Well, going into next year, it seems like saving money is going to be a real challenge for all of us. So this episode we're kicking off a two part series to help folks navigate all of the decisions that they have to make around open enrollment. Welcome to NerdWallet's Smart Money podcast where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Pyles.

[Elizabeth Ayola]

And I'm Elizabeth Ayola. As Sean said at the top this episode we're going deep into your health insurance and all the decisions you need to make around open enrollment.

[Sean Pyles]

But first, it's time for the latest installment of our nerdy book club series. And NerdWallet writer Kim Palmer is back to lead the conversation. Hey, Kim, who are you talking with today?

[Kim Palmer]

Our guests today are Carrie Hannon and Jana Herron. They're the authors of Retirement A Gen X guide to securing your financial future. They investigate how Gen X can handle retirement when most people do not have enough saved.

[Sean Pyles]

That is a really tough topic. Okay, well, we also want to remind listeners that you can enter for a chance to win our book giveaway [e-mail] bookclub for our next book club pick. And with that, Kim, I'll let you take things from here.

[Kim Palmer]

Thank you. Carrie and Jana, welcome to our show.

[Carrie Hannon]

Hi. Nice to be here.

[Jana Herron]

Yeah, super to be here, Kim. Thank you.

[Kim Palmer]

Let's start with the numbers. The oldest members of Gen x are turning 60, which is hard to believe, and they're approaching retirement with, on average, not enough savings. In fact, you say the typical Gen X household has just $40,000 in retirement savings. How did we get here? And why isn't Gen X more prepared?

[Carrie Hannon]

There's been a couple things that happened that put Gen X on this track. The Big One is the 401K. And what I mean by that is the 401K came out when Gen X was really just getting into the workplace. But the 401k wasn't really seen as a pillar of the retirement savings plan. So for a long time, and because of also congressional legislation and stuff, it just wasn't pushed. And so people who, especially older Gen Xers, you know, didn't think, oh, I need to really save money in this 401k. It was kind of just like a supplement to pensions.

[Elizabeth Ayola]

And.

[Carrie Hannon]

And then at the very same time, you have these pensions that were disappearing, so you have a lot of workers who didn't get a pension or their pension got frozen. And then you have this 401k, and they're like, what is this? And they didn't realize until later on that this is something they should have been saving into for a really long time.

[Jana Herron]

I think, in addition, this generation has gone through several economic upheavals during their working careers. And so they've lost even what they had invested in markets that, you know, in their retirement accounts often fluctuated. They lost momentum there. They're also squeezed right now by children's educations they're paying for. They have aging parents. And Jenna and I have found that the levels of debt that this generation is carrying, you know, credit card debt and student loan debt, is significant. As retirement, whatever age it may be for you, starts to come into view in your late 50s and early 60s, you go, oh my goodness, you know, what can I do to take control?

[Carrie Hannon]

And then you add to that the uncertainty with Social Security, which is very much weighs on this generation's mind. Is it going to be there? Is it fully going to be there? What kind of benefits am I going to get? And we're at a point where lawmakers have not addressed the shortfalls in the Social Security reserve fund. So that's another big question. Are hanging over Gen X when they're approaching retirement.

[Kim Palmer]

Given all of those factors, does that mean that this problem is really unique to Gen X, or do you think their experience is just sort of foreshadowing what's to come for younger generations?

[Jana Herron]

I think it is a bit of a foreshadowing. I definitely think that Gen X hit these obstacles pretty hard, but we definitely see coming behind them that some of these issues will persist. I mean, the Social Security question is still up in the air. We've got. Credit cards are still. And you know a lot about this are still a huge issue for many people, regardless of their age. And if they can't tackle that credit card debt, saving for retirement becomes super hard. And and also the younger generations have done a much more job jumping. They tend to be contract workers. These are situations where your retirement accounts can get drained during that time or you may not have an employer that offers that helps you save for retirement starting at earlier ages. And that's a real key to retirement security is starting early. And if you haven't, if you're a contract worker, have to do this by yourself, it can be pretty daunting. So that's an issue. I will add to that though that those who are enrolled in employer provided retirement plans, the younger generations have a much better playing field ahead of them because of auto enrollment and auto escalation, things that Gen X didn't benefit from at younger ages.

[Carrie Hannon]

And to add to that, I think some good news too is that the younger generations, millennials and Gen Z got the savings message earlier. And so you have seen on average that they're saving earlier in their lives than Gen X and also putting away more of their income towards retirement. So they at least are seeing what could happen and have been making behavioral changes to put them in a better spot going forward.

[Jana Herron]

Kim, One other thing I wanted to add to this is when Janet was Talking about the 401ks were just babies, you know, they were just getting started for Gen X. Nobody understood them. And truthfully, many of us, and I did this myself, cashed out of my 401k after 5 years in a plan at the age of 30. Now, I'm not telling you it was a huge amount of money, but there was no financial education. Nobody informed me of what making that move, what the repercussions were. And when I look back at what that money might be worth in today's dollars if I, even if I hadn't added another cent to it, it's shocking to me. And I think Gen Xers in those early years, nobody explained to them how these things worked. And so hey, you change jobs, why not cash out and pay down some credit card or go on a trip?

[Kim Palmer]

It sounds like almost what you're saying is that Gen X is like the guinea pig generation and they got the worst of both.

[Jana Herron]

I think so, I think in many ways. But younger boomers definitely got hit by this as well. It was, you know, there was the boomers started, the shift began then, but the Gen X square in the face and it was up to the do it yourself retirement became the law of the land, so to speak. So retirement, when you're younger is often something you. It's so unrealistic and so far down the road that you just kick this whole idea down, down, down, until with the oldest Gen xer now hitting 60, they go, oh, my goodness, where am I? And what is. You know, what do I actually have to deal with? And what Jana and I have done in this book is say, it's cool. You can do this. We're going to give you some tips to, and advice on taking control at that age and moving back to Those in their 40s, the younger gen Xers.

[Kim Palmer]

Well, let's dig into that side of things a little bit more and talk about what Gen X can do. So if you know you don't have enough saved for retirement, but it is just around the corner, what can you do? Is it ever too late?

[Carrie Hannon]

Don't freak out. That would be my first thing. Because I think for a lot of us, if we're thinking about something that is so negative, you might just put your head in the sand and kind of try to move forward. But the best thing is to just not freak out and to really take an inventory of where your financial life is going. Back to the basics of understanding your cash flow, what's coming in, what's going out, how much do you have saved, what obligations do you still have left that you need to deal with? Some of the financial planners that I spoke to really said that people, especially when they get in their 40s and their 50s and they're making a lot more money, they kind of lose touch with exactly how much money is going out the door and where it's going. And I know that happens with me. You have some lifestyle creep, you get a raise, you're like, oh, we can go on a nicer vacation this year. And you start to forget all those lessons of, okay, we should penny pinch here. But so it's really good to go back over, look at your budget, figure out where you're spending your money, and maybe where you might be wasting your money. You know, maybe there's a better way for that money to be used. And so I, I think that's the first thing to do, is to reacquaint yourself with your cash flow.

[Jana Herron]

It's definitely doing that, what I call the inner mri. Like, what are your priorities? What really matters to you? If you start to cast a look down to the next chapters of your life, I mean, retirement isn't what it used to be. It's not stepping back out of the workforce necessarily. There's longevity when you think of three decades potentially to live in retirement. It's fairly daunting and it really is something that this generation taking a closer eye at. How can continued income in some fashion add to my financial security in retirement if I can stretch out my working years a bit, And I'm not saying pedal to the metal, you know, you don't deserve to have a balanced life, but these are issues that are going to be front of mind. But if you focus on what's going to matter to me, where might I live it during those years where the cost of living might be less, what kinds of things would I want to do? Is it traveling, is it hobbies, is it family? But how much am I going to need for that? And it's crystal ball and we know that that's pretty hard to do. But once you understand your values and as Janet talked about the nuts and bolts of what you actually have to work with, these two compare together to create a really successful financial future for those who are willing to do the work.

[Kim Palmer]

Do you see a future where Gen X in a sense keeps working forever? Maybe not in that full time grind like you alluded to, but doing some form of work just to continue bringing in income throughout their so called retirement?

[Jana Herron]

I think it's a safety net. I think everyone should consider work is not a four letter word. If there's a way that you can continue to earn in some fashion, I think that's fantastic. Not everybody's going to be able to do this right. There's health issues, caring for aging partners, family members, so it can be a little unrealistic for some people. But with the ability to work remotely, this is a huge boost for many people to have some form of continued income through consulting, whatever it may be, starting your own little side gig business, it doesn't have to be forever, but I say stretching out the working years as long as possible can't hurt you. I'm not saying do something you're miserable at and we don't say that in the book. We say, you know, try to find things where your skills can have an impact on the world and you can make a difference and earn some money at the same time.

[Carrie Hannon]

I've been talking with a few of my friends who are also Gen X and they're, they're probably about eight, nine years older than me. And one of the things they're thinking about is definitely doing a step back from maybe not the position they have, but one that is a little bit less stressful but still brings in money. And that is like Their first step in retirement is to do that step down but not step out. And so I definitely am hearing that's what people want to do because they know that they want to keep making money. They still have children who maybe are finishing up college. So there are those expenses definitely there's like a ramp down mentality among some of the Gen Xers.

[Kim Palmer]

I know you write in the book that Gen X is reinventing retirement. Can you explain what that looks like, what you mean by that?

[Jana Herron]

I think it's a little bit Kim, how we were talking about, it's reimagining what's possible. So many Gen Xers are kind of, it's a generation of self starters kind of, you know, do it theirselves. I mean Gen X has been pretty scrappy, right? So this is a generation that sees retirement not as their parents may have retired, but truly as something that they can remake in their own way. And that includes, you know, a balanced lifestyle, taking that look at the different facets of their life and how earning and financial security really matters and how to focus on that. And I must say in the elder generations of boomers did this as well. But working with a financial advisor can be super helpful here in helping reimagine re retirement. So it's really thinking about what would you regret if you couldn't do it in your lifetime and starting from there and say, okay, let's go backwards and how can I make that happen? How can I do it? Not how can't I do it?

[Kim Palmer]

So if Gen X listeners were going to do three things today as a result of your book and your advice, what should those three things be?

[Carrie Hannon]

Definitely revisit your cash flow to see where your money is going and where you can maybe redeploy it to help you get closer to your goals. It's a great exercise anyway because it helps you realize I prioritize going out to eat or I prioritize nice vacations. And so that's going to help you figure out what your retirement also is going to look like.

[Jana Herron]

I would start tackling your debt. If debt is an issue in front of you, get serious about this. What is it that you need to do to pare that down? Because debt is a dream killer and it's the biggest obstacle people are going to face in their future for financial security. So take a hard look at it now. Most of us don't want to think about that. But if you can start to pare down debt and get financially fit, starting with what Janice said, you know, looking at Those numbers get financially fit and also let yourself. Number three would be dream a little. I think it's great to have dreams, to have vision boards, because that's what gets you thinking about the possibilities and also gives you the incentive to take actions with your finances. Not just saving for retirement. I call it saving for life. And I think that is how you need to focus on the things that you want to use this money for. And that really helps people start lighting a fire under taking control of their retirement, lifestyle and finances.

[Kim Palmer]

Any final thoughts to share with our listeners?

[Carrie Hannon]

There's one thing that reporting on this book that really hit home for me. I'm a Gen Xer myself. I'm on the, on the younger end. And when I was looking into the healthcare costs in retirement, of course they can be really huge. But the person I spoke to who was both a financial planner and a physician, said when you're in your 40s and your 50s, this is the time for you to actually be able to get a handle on your health so that you can reduce those costs in the future. That means things like if you start to have high blood pressure, which by the way, I just started having deal with those kinds of issues, if you get those under control, then they don't get worse. And so your health outcomes are much better. And so I just thought that was such a wonderful thing because when I talk to my Gen X friends, health comes up a lot. Like all of a sudden, oh, my back hurts, you know, my, my joints are hurting, I'm getting high blood pressure. All of a sudden I have high cholesterol. And so if you address those health issues now, it'll help your finances, it'll help your retirement life. It's something that I took away and took to heart.

[Jana Herron]

I love that it's financial fitness and physical fitness.

[Carrie Hannon]

It really is. Yeah.

[Kim Palmer]

Carrie Hannon and Jana Herron, thank you so much for joining us on Smart Money.

[Jana Herron]

Thanks.

[Carrie Hannon]

Thank you so much.

[Sean Pyles]

And thank you, Kim.

[Kim Palmer]

Thank you.

[Elizabeth Ayola]

Now we're about to get into this episode segment all about open enrollment. But first of all, listener, let us know what's on your mind. We want to know, maybe you need help deciding between an HSA and an fsa. Or, or you still haven't booked your holiday travel and you need help figuring out the most affordable way to get to your family gathering.

[Sean Pyles]

Or maybe you're looking ahead to your financial goals for the new year and want some help crafting goals that you'll actually keep. Whatever your money question, we nerds are here to help. Text us or leave us a voicemail on the Nerd hotline at 901-730-6373, that's 901-730-Nerd. Or email us at podcastnerdwallet.com in a moment.

[Elizabeth Ayola]

All you've ever wanted to know about open enrollment. That's coming up next. Stay with us.

[NerdWallet Wealth Partners Sponsor]

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[Sean Pyles]

We'Re back and answering your money questions to help you make smarter financial decisions. This episode we've got part one of a two parter about open enrollment, that time of year that we all look forward to.

[Elizabeth Ayola]

Sean, I don't know who's looking forward to open enrollment, but it's not me.

[Sean Pyles]

Yeah, honestly, me either. No one really looks forward to this, but I think it's safe to say that most people have a lot of questions when it comes to open enrollment. So we're going to do a two part explainer of everything from how to choose a health plan and the difference between an FSA and HSA to whether you need life insurance or dental coverage.

[Elizabeth Ayola]

So many decisions. It's head spinning, to be honest.

[Sean Pyles]

It is. So we've asked fellow nerd Kate Ashford to join us and walk through this first part, which is all about healthcare plans. Kate, welcome back.

[Kate Ashford]

Hi, guys.

[Sean Pyles]

So how do you feel about this time of year? Are you excited for it? Are you dreading it? Are you kind of excited to dig into the details here?

[Kate Ashford]

I actually find this time of year really interesting because I'm always curious what kind of benefits we're going to be offered. And as someone who's written about health insurance for a while, I'm always like, what's coming down the pipeline? So I think I might be in that minority, though.

[Sean Pyles]

And that's what makes you a nerd.

[Kate Ashford]

Exactly.

[Elizabeth Ayola]

Well, open enrollment applies to pretty much everyone, right? Regardless of whether you get your health coverage through an employer or if you're self employed or a contractor or a.

[Kate Ashford]

Gig worker, this does apply to a lot of people. This is for people getting insurance through an employer or a spouse's employer, for people who are getting insurance from the marketplace, and for anyone who's already on Medicare. So this fall is your opportunity to examine what you've got and to sign up for something better if you can, and set up your elections for the year for things like HSAs and FSAs. If you're on Medicaid, you can apply at any time if you qualify, whether it's open enrollment or not.

[Sean Pyles]

All right, well, let's start with some of the real basics. We hear these terms all the time, but that doesn't mean we actually understand what they mean. So, Kate, one of the big determiners we all have to look at when we're pouring over our choices is how to evaluate premiums and deductibles and what it all adds up to. So can you walk us through those?

[Kate Ashford]

Absolutely. The premium is what you pay each month for your health insurance. If you're getting insurance through work, this is probably taken out of your paycheck and you never see it, but it's still a cost to consider. And a deductible is what you pay out of pocket before your health insurance starts to cover things aside from preventive care, which is usually covered up front. So if your plan has a deductible of $500, you pay for the first $500 of covered medical costs and then your insurance kicks in.

[Elizabeth Ayola]

Most plans either have higher premiums that you pay monthly or high deductibles that mean you're paying a potentially higher Bill, if you end up using a lot of your insurance, I personally have a higher deductible. So how do. Nobody asked me. So how do individuals and families, Kate, go about deciding what works best for them?

[Kate Ashford]

I have a high deductible, too. If we're weighing in, you have to be kind of a health care fortune teller here and think about how much health care you typically need or use each year or what you might need if you have something coming up, like you're going to have a baby or you're going to need a surgery, your kid needs braces, et cetera. If you see the doctor a lot, like you have a chronic condition, or again, like if you're pregnant, you may want to consider a plan with higher premiums, but lower co pays or maybe a cheaper plan like an hmo. But if you're healthy and you're generally just getting your annual physical and a flu shot, and maybe you see the doctor once or twice, you might go for the high deductible plan with low premiums and just pay out of pocket for the care you need. The high deductible plan can feel like a scary choice, but if you've got the money to cover your upfront costs, it can be cheaper overall because of those low premiums.

[Sean Pyles]

But your deductible may be 10 times what you mentioned earlier. It could be around $5,000 versus $500.

[Kate Ashford]

Exactly. Yes.

[Sean Pyles]

So given that we aren't fortune tellers here, how are we supposed to know what kind of health care that you might need in a given year? Because, right, like this year I just had an annual checkup, but next year I might get hit by a bus.

[Elizabeth Ayola]

No, don't put that out there, Sean.

[Sean Pyles]

Knock on wood. Knocking on wood, Knocking on wood. Okay, so I know that'll never happen, but this always seems like such a bizarre thing to ask people to try to figure out. And it makes a big difference in what kind of health care you might want to choose. So can you help us make sense of all this? Kate?

[Kate Ashford]

This is a crazy thing to have people forecast honestly, because your health situation can change so suddenly, but minus surprises. I think people generally have a sense of how often they typically see the doctor. My family, we are high users of health care. I always assume we're going to hit a high deductible, and I'm looking at that maximum out of pocket because we're probably going to hit it. And after we hit it, our costs are covered. So our healthcare costs are very predictable. For less frequent users, it's probably worth running a few scenarios, like which plan would suit you for your typical healthcare use and which plan would be better. If you have an emergency, you kind of have to decide how you want to protect yourself and also what you can afford.

[Elizabeth Ayola]

So once you've looked at premiums and deductibles, then you also have to start evaluating CO pays, coinsurance and out of pocket maximums. So much to keep up with. Give us a rundown of what these terms mean and also how to evaluate where these fit into your decision making. And I'll be honest, I resent all the math that I have to do with this.

[Kate Ashford]

I think everyone resents the math. Copays and coinsurances are the payments you're making for certain kinds of care. So a copay is a fixed amount, like you might have that $25 copay to see your regular doctor. And coinsurance is usually a percentage of the cost of a covered service. So you might pay coinsurance of 30% of the cost to get an X ray. And that out of pocket maximum is the most you'd pay in a year for covered care. And you should glance at these numbers from plan to plan, at the very least, especially that maximum out of pocket, because you might look at that number and say, no way could we afford that. If we have a health crisis, we need the other plan with a lower max out of pocket. But it's also a matter of what you can afford in terms of premiums. So it's a big balancing act.

[Sean Pyles]

So let's move on to the Alphabet soup of healthcare options. There are PPOs, HMOs, HDHPs. So can you talk us through all of these letters and what they mean, and maybe some of the advantages and disadvantages of each one?

[Kate Ashford]

So HMO stands for health Maintenance Organization, and it's a type of health plan that works with a specific network of doctors and hospitals. And it's usually the cheapest plan, but it's also the least flexible. So you have to get referrals from your primary doctor every time you want to see a specialist. And you'll only be covered for doctors and the plan's network unless it's an emergency. So it's kind of rigid. PPO stands for Preferred Provider Organization. And they tend to cost a little more than HMOs, but you have more choices. You can usually see specialists without a referral. And if you want to see a doctor that's out of network, you can usually do that. It'll just cost more if you travel. If you have Complex care needs. If you don't want to ask for a referral every time you want to see a podiatrist, this can be a good option. Rounding this out are high deductible health plans, or HDHPs. That's what Elizabeth and I are talking about. These are plans with high deductibles you have to meet before they start covering care, and usually the premiums are lower. These plans also might come with a health savings account, or hsa, which can be a big tax advantage. High deductible health plans can be a good option for people who don't use much health care or weirdly, for people who use a lot of healthcare, like me, because you can predict your costs and they can be lower over the course of the year with this kind of plan.

[Sean Pyles]

All right, and while we're waiting, or I guess maybe basking in this Alphabet soup, let's go through some of the other acronyms here. FSA and hsa. What are they and how are they different?

[Kate Ashford]

Health Savings accounts, or HSAs, are accounts you can use to save for and then pay for eligible medical expenses with pre tax money. And to contribute to one, you have to have a high deductible health plan. So these two things go together. On the other hand, if you don't have a high deductible health plan, a flexible spending account, an fsa, is what you could use to save for and pay for medical expenses with pre tax money if your employer offers one. There may also be an option for an FSA for dependent care, which is super useful for parents, but not related to healthcare at all. But it may be one of your options.

[Elizabeth Ayola]

And how do these work?

[Carrie Hannon]

Kate?

[Elizabeth Ayola]

I know sometimes people get debit cards they can use for FSAs and HSAs. I would know about the latter because I have one. And sometimes people get reimbursed.

[Kate Ashford]

Essentially, you can choose to save a certain amount of money to these accounts each year and the money is taken out of each paycheck and deposited into the account. And yes, you generally get a debit card you can use for eligible expenses, or you can submit claims against the account and get reimbursed. And it's worth mentioning that if you're using an hsa, you usually can't use an FSA unless it's a special limited type you only use for dental and vision expenses. So you can't really use both at the same time.

[Sean Pyles]

So one of the big advantages of HSAs is that you can invest in them. They can be a tax investment vehicle on Top of being a healthcare option. So can you talk through how this tax break works here? Because it's pretty sweet.

[Carrie Hannon]

It is.

[Kate Ashford]

The HSA basically has a triple tax advantage, and that is that the money is taken out of your paycheck pre tax. You pay no taxes when you take the money out to pay for medical expenses. But also, as you mentioned, in a lot of HSAs, you have the option to invest the money, and any earnings on that money are also tax free. And unlike an fsa, which is more or less use it or lose it each year, an HSA rolls over from year to year. So you can actually treat it like another retirement savings account if you want to. And there will be no shortage of healthcare expenses in retirement you can use the money for if you go this route.

[Sean Pyles]

That's one thing that always stood out to me is that HSAs are actually more flexible than the FSA, a flexible spending account. So it seems like a bit of a misnomer there, but I'm just being pedantic, perhaps.

[Elizabeth Ayola]

All right, let's run down some of the key factors to consider when you're making these plan decisions. Now, what are the main questions individuals and families need to ask themselves as they're sorting through their options?

[Kate Ashford]

So whether you're on the individual marketplace or choosing from your employer's options, the big questions to think about are things like, what are your expected medical needs for the next year? Are they the same as usual, or something different coming up. Do you need access to certain doctors or hospitals? And does the plan you're considering have them in network? That's big. Same goes for prescription drugs. Does the plan you're considering cover them and how much will they cost? Because this also changes from year to year. Do you want the freedom to go out of network or would an HMO work for you? You need to note what kind of monthly premiums you can afford, what kind of deductible can you afford? And if you don't have the funds to cover that high deductible, that's not a great choice for you. Again, look at the out of pocket maximum, because if something catastrophic happens, that is the number you could be facing.

[Sean Pyles]

And this is where a lot of that math that none of us like doing comes in.

[Kate Ashford]

Yes.

[Sean Pyles]

So, Kate, can you walk us through some of the differences that people face depending whether they get their health insurance through their employer or elsewhere?

[Kate Ashford]

If you get your health insurance through an employer, the employer usually pays a portion of the premium, so that's almost always going to be cheaper. Employer Benefits may include other things like dental or vision coverage, HSA and FSA choices, gym reimbursements, that kind of thing. On the individual market, those prices tend to be higher because you're paying the full premium. Although subsidies do complicate this a little, and there aren't as many extras, you're generally on the hook for any additional benefits you'd like to add.

[Elizabeth Ayola]

There are big changes coming to the aca, right? The health care exchanges subsidies are significantly reduced or going away, Is that right, Kate?

[Kate Ashford]

Yes, at the time that we're taping, and apparently this could change at any time. The enhanced ACA subsidies and expanded eligibility that were put in place in 2021 are expiring at the end of this, unless the government extends them. This is basically financial assistance to help people pay the costs of health insurance. And if those aren't renewed, we go back to the smaller, more limited subsidies from before. And about 4 million people are projected to lose their health coverage and become uninsured, according to the Congressional Budget Office. On top of that, healthcare premiums are expected to go up by about 20% on average. And keep in mind that most people on the marketplace have been getting subsidies to help pay for coverage. So if those subsidies are much smaller or people aren't eligible for them anymore, they'll be paying the full price of coverage, plus any rate hike. And for some people, that could mean the price of insurance doubles or even more than doubles. So that's a big deal and something we should all watch.

[Elizabeth Ayola]

And let's do a quick reminder of some deadlines that are coming up.

[Kate Ashford]

Okay, so if you're getting health Insurance through the ACA, the Affordable Care act open enrollment is November 1st to December 15th. If you need a plan that starts January 1st, although this can also vary by state, so check with yours. For Medicare people already enrolled In Medicare, it's October 15th to December 7th. If you are a federal employee, those dates are November 10th to December 8th. And if you get your plan through a private employer, it varies. It's usually two to four weeks in late October through November, maybe early December. So pay attention to your HR emails.

[Sean Pyles]

One thing that stands out to me about all of these deadlines is that we might be expected to make decisions about our healthcare plans, especially those who are getting plans through the aca. And they may not fully know what it might cost them, because if the subsidies would expire at the end of the year, is it smart for them just to expect that's going to happen at this point and be conservative in their assessments? Or should they maybe make their judgments based on what they paid this year? It's going to be a really tough call when it comes to that math we were talking about.

[Kate Ashford]

I think this is a really uncertain place for people to be, and I would imagine people should make choices based on the prices coming at them this fall because we don't know what the government is going to do.

[Sean Pyles]

So Kate, how would you advise our listeners get through this process with their wits intact? A bottle of wine or a beer at hand? Or maybe a nice cool glass of iced tea?

[Kate Ashford]

Your beverage of choice for sure. My advice is don't wait until the last minute on this. These are big choices. This is your healthcare for the next year. So once you have access to your options, really take a look and do the analysis and try to find the best coverage for your situation. NerdWallet does have a really helpful explainer for how to choose health insurance. We can link that in the show notes and if you do some googling, there are some health insurance plan comparison calculators out there that will ask you some questions and predict which plan will cost you less overall. You might also find that your employer offers one of these comparison tools. Don't just blindly pick. It's really an important choice.

[Elizabeth Ayola]

Okay Ashford, I am ready to do open enrollment now. Thank you so much for helping us out today.

[Jana Herron]

Sure.

[Kate Ashford]

Thank you for having me.

[Elizabeth Ayola]

And be sure to join us next episode where we'll talk about everything from dental and vision coverage to life insurance in part two of our Open Enrollment Explainers.

[Sean Pyles]

And that's all we have for this episode. Remember, listener that we are here to answer your money questions. So turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-N E R D. You can also email us at podcasterdwallet.com follow Smart.

[Elizabeth Ayola]

Money on your favorite podcast app that includes Spotify, Apple Podcasts and iHeartRadio to automatically download new episodes.

[Sean Pyles]

Here's our brief disclaimer. We are not your financial investment or healthcare advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

[Elizabeth Ayola]

This episode was produced by Tess the Glass. Hilary Georgie helped with editing, Nick Karisimi mixedart audio and a big thank you to NerdWallet's editors for their help.

[Sean Pyles]

And with that said, until next time, turn to the nerds.

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