Don't Let This Healthcare Choice Cost You During Annual Enrollment Period

When your employer-sponsored health insurance plan’s annual enrollment window opens, the decision you make about which coverage option to select can significantly impact your wallet throughout the year. Renowned personal finance expert Suze Orman highlights a critical error that many employees make during this period—failing to thoroughly analyze their actual healthcare expenses and plan options.

The Real Cost Beyond Monthly Premiums

Most workers focus solely on the monthly premium amount deducted from their paychecks, but this represents only one piece of the healthcare spending puzzle. According to recent analysis, employers anticipating increased insurance costs should prepare for premium increases in the range of 6.5% to 9%, depending on whether they’ve implemented cost containment strategies. While companies may absorb some of these increases, employees often shoulder the burden through higher paycheck deductions.

However, premiums tell only part of the story. Your actual out-of-pocket expenses depend on three interconnected components: what you pay upfront each month, what you must spend before coverage begins, and the per-visit or percentage-based costs when you receive care.

Evaluating Deductibles and Out-of-Pocket Maximums

The deductible—the amount you must pay before your insurance coverage activates—represents a crucial decision point. High-deductible health plans (HDHPs) appeal to many because lower premiums offset higher upfront costs. However, this strategy only makes financial sense if you have sufficient savings to cover potential deductibles.

A significant advantage of HDHPs is the opportunity to establish a Health Savings Account (HSA). This tax-advantaged vehicle allows you to contribute pre-tax dollars for qualified medical expenses. Since contributions reduce your taxable income and withdrawals for approved healthcare costs avoid taxation, an HSA effectively reduces your overall tax burden while building a healthcare reserve fund. Some employers also contribute to employee HSAs, further enhancing this benefit.

The mathematics matter: calculate what you’d actually spend under each plan option using your historical medical expenses. Only select an HDHP if the premium savings exceed your anticipated deductible costs plus additional out-of-pocket expenses.

Understanding Per-Visit Expenses and Network Considerations

Co-payments—fixed dollar amounts charged per doctor visit or service—and co-insurance percentages—your share of costs after meeting deductibles—vary significantly across plans. These expenses accumulate quickly if you require frequent medical care.

Insurance networks also substantially affect your costs. In-network providers have negotiated lower rates, while out-of-network providers can trigger much higher bills. Before selecting any plan, verify that your current healthcare providers remain in-network. A facility might be included while a specific physician practicing there is not, so confirm at the individual provider level.

Make an Informed Selection Using Historical Data

A practical approach involves reviewing your actual 2025 healthcare claims and receipts, then calculating what those same services would cost under each available 2026 plan option. Excluding extraordinary one-time expenses, this projection reveals which plan aligns best with your actual healthcare utilization patterns and spending tendencies.

Even if your employer offers a single plan, comprehensively understanding every cost component—premiums, deductibles, co-payments, co-insurance, and network considerations—enables accurate healthcare budget forecasting and prevents unexpected medical expenses from destabilizing your finances.