Hello, folks! David DeWitt, CFP® here, reminding you that it's the most wonderful time of the year—no, not Christmas—open enrollment season! 🍁
And this blog really should have been released a month ago because, for many of you, your open enrollment periods are ending soon! But with ADHD in mind, chances are many of you have not gotten around to it yet!
Let's break this down so that even my ADHD brain can keep up. Open enrollment is your annual opportunity to adjust your benefits. Yeah, decisions can be a headache, but they're a headache that can pay off.
HSA vs. PPO vs. HMO: Choose Your Fighter
What's an HSA?
An HSA, or Health Savings Account, is a unique type of financial account where you can put away pre-tax money for medical expenses. Think of it as a shielded piggy bank that's safe from Uncle Sam's reach. The real magic of an HSA lies in its triple tax advantages. Firstly, the money you contribute is pre-tax, reducing your taxable income for the year. Secondly, any interest or gains on the money inside the HSA grow tax-free. And finally, when you withdraw the money for qualified medical expenses, those withdrawals are tax-free as well. This triple tax-free benefit makes an HSA a powerful tool in your financial planning arsenal.
Why It's Important
Think of it like a rainy-day fund for health stuff. If you have unexpected health expenses and your HSA is fully loaded, you don't have to worry about taking from your savings or building more nasty debt.
Factors to Consider
- High-deductible Plans: HSAs are usually paired with high-deductible health plans. Make sure you're okay with that trade-off. And remember, the savings in the HSA help offset the deductible.
- Investment Opportunity: Yes, HSAs can be invested for potential growth. If you're in it for the long game, this could be a sweet deal. Imagine you maxed out your HSA for twenty years and only ever had to use a small chunk of it yearly. You could have 100k or more growing in your HSA!
- Medical history and expectations: If you typically have a lot of healthcare expenses, then an HSA plan may not be for you.
What's a PPO?
PPO stands for Preferred Provider Organization. This plan allows you to choose your healthcare providers without needing a referral.
Why It's Important
Freedom, baby! With a PPO, you're not stuck with a set list of doctors. If you have specialists to manage ADHD or anything else, this might be the way to go.
Factors to Consider
- Cost: PPOs often have higher premiums and out-of-pocket costs.
- Network: You'll save more if you stick to the PPO’s network, so ensure your favorite docs are in-network.
- Coverage: PPOs usually offer more extensive coverage for services, which could be a win if you need varied care.
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HMO Plans: The Health Insurance MVP
What It Is
HMO stands for Health Maintenance Organization. It's a health insurance plan where you choose a primary care physician (PCP). This PCP becomes your main point of contact for most of your health needs and, if necessary, will refer you to specialists within the network.
Why It's Important
HMOs are often more wallet-friendly than other plans. They can offer lower monthly premiums and out-of-pocket costs, but they come with a catch—less flexibility. If you're like me and sometimes wish decisions were more streamlined (thank you, ADHD), an HMO might just be your jam. It simplifies your choices and routes everything through your PCP.
Factors to Consider
- Network Restrictions: With an HMO, you usually need to stay within the network for non-emergency care, or else you'll pay entirely out of pocket.
- Referrals: You need a referral from your PCP to see a specialist. For some, this might be a minor inconvenience; for others, it could feel like an unnecessary hoop to jump through.
- Location: Ensure there are ample providers in your area. Nothing like picking an HMO and then realizing the closest in-network doctor is an hour's drive away.
Considering HMOs, weigh the cost savings against the potential limitations. It's all about what's most valuable to you—saving some bucks or having a wider range of immediate choices.
And remember, it's okay to ask questions, seek advice, and take your time deciding. Your health and finances will thank you!
Life Insurance: The Unsung Hero
What It Is
Life insurance provides a financial safety net to your dependents if you pass away.
Why It's Important
If someone relies on your income or would inherit your debt, this is for you. Plus, being accident-prone and impulsive thanks to ADHD ups the ante a bit, doesn't it?
Factors to Consider
- Debt: If you have it, life insurance is a good call.
- Dependents: Got kids, a spouse, or anyone else depending on your income? Non-negotiable.
- How much do you need? The simplest rule of thumb is to multiply your income by ten. If your work can't offer that much, then consider a supplemental policy.
Consult with a trusted financial professional to determine how much makes sense for you and your situation!
Disability Insurance: Help! I've fallen, and I can't get up!
What It Is
Disability insurance pays you a portion of your salary if you can't work due to injury or illness.
Why It's Important
Imagine tripping during one of your ADHD hyperfocus episodes and breaking a leg. How will you pay bills? That's where this comes in.
Factors to Consider
- Occupation: Some jobs are riskier than others.
- Savings: If you're living paycheck to paycheck, this is crucial.
- Policy Terms: Look for policies that cover both short-term and long-term disabilities.
Long-Term vs. Short-Term Disability Insurance: The Dynamic Duo
What They Are
Let's discuss the Batman and Robin of income protection: long-term and short-term disability insurance.
Short-Term Disability Insurance: This is your safety net for the "Oops, I broke my arm" moments. It covers you for a short period, usually up to six months, replacing a portion of your income.
Long-Term Disability Insurance: Now, this is your superhero cape for the long haul. If you're out of commission for an extended period—think years—this kicks in after your short-term coverage ends.
Why They're Important
Short-term has your back for immediate crises, while long-term is your lifeline for serious health issues. For us with ADHD, it's easy to downplay risks and go, "Ah, that'll never happen to me!" But, let's be real, we're not invincible.
Factors to Consider
- Coverage Length: Short-term is for quick fixes; long-term is a marathon. Choose based on your lifestyle and occupation.
- Income Replacement: Usually, short-term offers a higher percentage of income replacement, but for less time. Long-term gives you less money but for a longer period.
- Eligibility: Some plans require a health examination. If you're like me and even scheduling a doctor’s appointment feels like a marathon, ensure you're up for that.
Choosing between long-term and short-term isn't an either-or situation. Ideally, you'd have both, like a financial utility belt, ready for whatever life throws your way. But, if you have to pick one, align it with your risk factors and career stage.
Now, integrate this into your open enrollment decision-making matrix (read: scribbled notes or mental tally). You got this!
FSA: The Financial Firecracker
What It Is
A Flexible Spending Account (FSA) is like an HSA but with an expiration date. Use it within the year for medical expenses, or say goodbye to that money.
Why It's Important
FSAs lower your taxable income and help you pay for medical expenses. But remember, it's a use-it-or-lose-it deal.
Factors to Consider
- Expense Planning: Make a list of predictable medical costs for the year.
- Fund Limits: Know the maximum amount you can contribute.
- Time: If you're not great at year-long planning (#ADHDLife), maybe skip this one.
The ADHD Reality Check 🎉
Look, the hardest part of all this for us ADHDers is actually making a choice. I get it. But consider this your financial self-care. Set multiple reminders, loop in a friend to keep you accountable, or doodle your options if it helps you focus.
So, take the leap. Embrace the chaos of open enrollment as an opportunity to be a money-smart, future-planning warrior.
Here’s to making wise (and well-informed) decisions this open enrollment season!
David DeWitt, CFP® : Oct 27, 2023 10:45:00 AM
