Choosing an Employer Health Plan? 3 Factors to Consider

Here's how to make the right call.

October is a pretty important month for salaried employees. It's the month when companies typically begin the open enrollment process.

During open enrollment, you can sign up for different employee benefits for the upcoming year. Those might include things like flexible spending accounts, pet insurance, and health insurance.

Now when it comes to health insurance, you may have the option to choose between a few different plans. Here are some questions to answer that should help you make the right decision.

1. How much do you want to spend on premiums?

Premiums are the amount of money you pay each month to have health coverage. Many employers subsidize health insurance premiums so you don't have to pay them in full. And that's a good thing, because without that subsidy, those premiums could be prohibitively expensive. Still, it's a good idea to compare your premiums costs under different plans and see what numbers you're looking at.

2. How high do you want your deductible to be?

Your health insurance deductible is the amount of money you're required to pay out of pocket before your insurer will start picking up the tab for the services you need. Generally, health insurance premiums and deductibles have an inverse relationship where the higher one is, the lower the other is likely to be.

If you'd rather keep your premium costs low, then you may end up with a higher deductible to meet. Or, you can choose a lower deductible but potentially pay more for your plan upfront.

3. Is participating in a health savings account important to you?

A health savings account, or HSA, lets you set aside pre-tax dollars for healthcare spending, similar to a flexible spending account. The difference, though, is that HSAs let you carry your funds forward indefinitely and invest money you aren't using. As such, they can be a really big source of tax savings.

If participating in an HSA is something you want to do, then you'll need to opt for a health insurance plan that's compatible with one. That will mean choosing a high-deductible plan.

In 2023, you'll need a minimum health insurance deductible of $1,500 to qualify for HSA contributions, and that assumes you have self-only coverage. If your health insurance plan covers your family, the minimum deductible to be compatible with an HSA is $3,000.

Keep in mind that there are other requirements for health plans to be HSA-eligible. Health insurance plans generally come with a maximum out-of-pocket spending limit, and to qualify for an HSA in 2023, your plan's maximum needs to be $7,500 if you have coverage just for yourself, or $15,000 if you have coverage at the family level.

Make the right choice

Health insurance is an important type of coverage, so you'll really need to put some thought into your choice. Once open enrollment begins at work, take the time to research your options early on. That way, you won't have to rush a really essential decision.