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Open Enrollment 2021: Should You Change Health Insurance in a Pandemic?

Change Healthcare in a Pandemic?
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In an effort to educate readers about the importance of healthcare coverage, especially during a global pandemic, we are creating a series about open enrollment for 2021. We will continue to share information about open enrollment and how it might affect this year, so please come back to read future posts.

Making plans for next week, let alone next year, can be a real challenge during a global pandemic. An estimated 16.2 million Americans lost their health care coverage due to coronavirus-related layoffs, and as of September, more than 6 million Americans have tested positive for COVID-19—a cruel paradox when adequate health care has never been more critical. Meanwhile, insurance companies are grappling with how to set their 2021 premiums to cover anticipated increases in COVID-19-related payouts.

Against this backdrop of uncertainty is open enrollment, which begins Nov. 1 for most individuals. What is open enrollment? It’s the period of time (usually in the fall) when you can enroll in, cancel, or change health care plans for the upcoming calendar year. Depending on your circumstances, you may need to switch your plan, sign up through your state exchange, or enroll in Medicare.

How bad will the pandemic be in 2021? Will premiums increase beyond your ability to pay? Will you be able to get elective surgery, given the need to maintain hospital capacity for COVID-19 patients? No one has the answers, but we hope the following information will help you think through these variables and make the best possible choices for you and your family during open enrollment 2021.

Will health insurance premiums spike next year?

U.S. medical insurers may have to shell out as much as $251 billion this year for coronavirus care, according to estimates published by Covered California. Their research also suggests that 2021 premiums may rise anywhere from a modest 4 percent to a whopping 40 percent—a yawning gap that demonstrates the uncertainty of the situation. The key takeaway for consumers, though, is that rates are in part determined by expected costs for the next calendar year, not past costs.

Insurers submitted their estimated premiums for 2021 in late summer (ahead of open enrollment), subject to state regulatory approval. So, while proposed premiums submitted to regulators in 2019 couldn’t have foreseen the coming pandemic, insurers’ proposed premiums and deductibles for 2021 are based on several as-of-yet unclear factors, such as:

  • The state of the pandemic in 2021, including the cost of testing and treatment
  • Whether insurers will need to withdraw funds from their mandated cash reserves to cover COVID-19-related costs
  • The extent to which certain elective surgeries will continue to be postponed in 2021 to maintain capacity and resources for COVID-19 patients
  • Any possible relief from Congress that could help cover pandemic-related costs

Fortunately, most known rate proposals have been moderate, with some insurers even lowering their rates for 2021. According to a Kaiser Family Foundation report looking at 63 publicly disclosed filings across 10 states and the District of Columbia, rate changes range from a 2 percent decrease to a 6 percent increase. While the costs of treating COVID-19 are quite high, averaging $20,000, with severe cases costing as much as $88,000, the widespread delay of elective procedures has reduced insurers’ overall costs.

Cost increases may become much clearer as open enrollment begins. In the meantime, you’ll want to have a realistic sense of what you can afford in monthly premiums, deductibles, copays, and other out-of-pocket expenses.

How COVID-19 may impact your health care choices

As we get closer to open enrollment, you’ll want to take stock of any major changes impacting you and your family. Perhaps you were laid off, got married or divorced, are at high risk of coronavirus infection, were diagnosed with a serious illness, welcomed a new child, or plan on having some sort of elective surgery that your current insurance plan doesn’t cover.

Not all of these factors are directly related to COVID-19, of course, but the pandemic will certainly impact health care in a broad way. The following scenarios will give you an idea of when it might make sense to change health insurance coverage during open enrollment.

Change in employment

If you lost your job during the pandemic, you’ll want to explore your options through the state exchange or federal Marketplace. While you have the option of remaining on your former employer’s insurance plan after termination using COBRA, it can be quite expensive, and may not be a viable long-term solution. If you have the option of enrolling in your spouse’s employer-based plan, make sure it adequately covers your needs and is actually the more affordable option–you may be surprised.

You may be eligible for free or low-cost Medicaid or CHIP coverage if your loss of employment results in a dramatic loss of income, and you may enroll at any time. The most common alternative to job-based coverage, however, is through the Marketplace. You may apply through the Marketplace at any time if you lose your job and the health coverage that came with it, even if you were fired for cause.

If you have a new job that offers health care benefits, you also may enroll for coverage at any time. This is referred to as a “Special Enrollment Period” and generally applies to situations where you have experienced a major life event of some kind.

COVID-19 concerns

Whether you’re elderly, susceptible to complications from COVID-19, work in a high-risk environment, or have a compromised immune system, open enrollment presents an opportunity to ensure you have the coverage you need. At a minimum, you’ll want to find a plan that adequately covers testing with reasonable copays. Also, make sure you can afford any applicable deductible, should you become hospitalized with COVID-19.

In addition, there may be situations where you’ll be referred to specialists or third-party testing facilities. Just make sure your plan has adequate in-network providers for coronavirus testing and care, or you may end up paying full cost for these services. Some insurers are waiving the out-of-pocket costs associated with COVID-19 treatment, but many of these waiver periods are set to expire before the new year.

Elective care

If you were planning to get an elective procedure in 2021, you should understand that this option could depend on the extent of the pandemic during the year. If beds, staff, and other resources are needed to treat COVID-19 patients during the winter months, then many elective procedures will be postponed. This could then create additional pent-up demand once these procedures are cleared, along with worse health outcomes due to delays in treatments like cancer screenings and preventative surgeries.

If you have a high-deductible health insurance plan (HDHP), you may qualify for a health savings account (HSA), which allows you to put aside pre-tax income for uncovered medical expenses. Whether the global pandemic has significantly changed your outlook for medical coverage in the coming year or not, open enrollment is an opportunity to better match your needs with available plans or changes like adding an HSA. Just make sure you do your homework before you change health insurance.

Make open enrollment part of your overall financial plan

Learning how to juggle debt, income, and health care coverage—while planning for your future—can seem overwhelming. But it doesn’t need to be, especially if you take the time to learn the essentials. Our simple-to-follow guide to help you find the tools you need to make the right choices that lead to a better financial health. Get started today by downloading our How to Manage Debt guide.

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Steve Tanner is a veteran writer and editor with experience covering topics from law, to business, technology, and finance. He started his career as a business and technology reporter in Silicon Valley and helped lead the direction of several publications, both print and online. His work has been published in Red Herring, San Jose Business Journal, SFGate.com, and FindLaw.com, among others.