The Most Important Open Enrollment Decision You’ll Make This Year

Health insurance costs keep rising, and 2026 will be no exception. According to a report by KFF, family premiums for employer plans jumped another 6% this year (about $1,400 more than 2024) and are expected to climb another 7% in 2026. That means the average worker is now paying roughly $6,850 out of pocket just for premiums.

With inflation increasing the cost of everything from groceries to utilities – open enrollment isn’t just about the cost of healthcare – it’s one of the biggest financial decisions you’ll make all year. Here’s how to navigate your options and make the best choice for you and your family.

Leverage Open Enrollment Decision Making Tools

Many employers now offer open enrollment price comparison tools like Ask Alex to help you model your total annual costs. I suggest starting here, and running 3 quick scenarios:

1. Baseline usage: assume the same usage as this past year and any expected additional usage.
2. Moderate usage: baseline plus a few extra doctor or specialist visits, and if you have kids an additional emergency room visit.
3. High usage: this is your worst-case scenario, assume maximum out of pocket costs.

Seeing the numbers side by side helps you understand the trade-offs between what you pay for peace of mind versus what you can save on premiums.

Pro Tip:

If you can’t find the tools on your benefits site, reach out to your HR team directly to confirm if those tools exist and how to access and use them. Sometimes these tools can be a little hard to find.

Understand the Health Insurance Cost Math

Many people solely identify the best plan based on plan premiums; however, this is only part of the cost picture. Your actual costs are made up of a few components.

1. Plan premiums: This is what comes out of your paycheck for coverage. Note that premiums do not count towards your plan deductible or out-of-pocket maximums.
2. Plan Deductibles: This is the amount you pay before insurance starts sharing the costs of care. The deductible and the premiums you pay have an inverse relationship. (The higher the deductible, the lower the premiums).
3. Plan Co-pays: A co-pay is a fixed cost for certain services used in a health care plan. Co-pays are typical for things like primary care visits, prescriptions, telehealth, and emergency room visits. These costs do not count towards the deductible, but they do typically count towards your out-of-pocket maximum.
4. Plan Co-insurance: This typically refers to how much you and your insurance will pay out of pocket, once you reach the plan deductible. For example, let’s say you have a deductible of $1,000 and you have an emergency room visit that is billed at $2,000 with a coinsurance of 80/20 (80% is paid by insurance and 20% is paid by you).
   1. Total cost of visit: $2,000
   2. Deductible, which you pay: ($1,000)
   3. Balance subject to co-insurance: $1,000
   4. Co-insurance 20%, which you pay: ($200) ($1,000 x 20%)
   5. Total out of pocket for you: $1,200

Note that the higher the coinsurance the higher the premiums, as this means the insurance company will have to pay more for services.

5. Out-of-Pocket Maximums (OOP): This is the maximum amount of money you would pay in total inclusive of the deductible, co-insurance, and co-pays. Remember that premiums do not count towards this number. Once your total out-of-pocket reaches your plan’s limit, the insurance company would pay 100% for covered in-network services. Let’s look at an example, where total cost for services for the year is $11,000:

Deductible: $1,000 – You pay: 100% or $1,000

Costs covered by co-insurance: $10,000 – You pay: 20%, or $2,000

Total: $11,000 – You pay: $3,000, OOP max

Any covered in-network services above that $3,000 would be 100% covered by insurance. Note that some plans might also offer an out-of-pocket maximum that might include out of network coverage.

Identify Cost Savings Opportunities Between Plans

Once you understand the math, here are ways to further manage costs.

1. Stay in-network: To maximize cost savings you want to make sure you see in-network providers, as they have lower rates negotiated with the insurance company. The best practice is to confirm that your primary care provider and any specialists you intend to see in the upcoming year are still considered in-network for your plan. You can reach out to the insurance provider directly to confirm this either over the phone or on their website.
2. Use available cost saving vehicles (FSA vs HSA): The flexible spending account (FSA) and health savings account (HSA) both allow you to save money pre-tax and use those savings to pay for qualified medical expenses. The main difference is that the FSA is offered for non-high-deductible health care plans, and they are “use it or lose it”. This means if you don’t use the majority or all of the balance by the end of the year you lose those savings. The HSA is offered for high-deductible health care plans and are not “use it or lose it” in addition they offer an opportunity to build and even invest savings for usage now or into the future. You can read more about how to choose between an FSA or HSA, here.
3. Consider Co-Pays: Each plan can have a different co-pay arrangement. Be sure to jot down your expected usage or use this past year as a reference. Then tally up how much you would pay in co-pays for the year. Evaluate the trade-off between a plan that has higher co-pays versus lower co-pays along with the other factors previously mentioned. If you have access to an open enrollment decision making tool, it should take this into consideration for you.
4. Balance worst case scenarios with emergency savings: This is where many families unintentionally risk a lot more than they realize. When evaluating the worst-case scenario for out-of-pocket costs, determine if that scenario and your baseline scenario are something your finances can handle. For most people if your emergency fund covers at least your plan’s out-of-pocket maximum, you may be comfortable taking more deductible risk. If not, you may want to prioritize a plan that limits surprises, even if premiums are higher. What is right for you is dependent on your personal risk tolerance, and the other financial priorities you might be juggling.
5. Read the fine print on prescription drugs and ask for generic formulations: Some plans might have a separate out of pocket maximum for prescription drugs. Be sure to confirm this. In addition, have a discussion with your doctor about your prescriptions and explore if there are generic alternatives (Same formula without the name brand). It’s best practice to go to your insurance plan provider’s site to confirm the prescription is covered, and understand the costs. Oftentimes you can also save by signing up for mail order prescriptions as well.
6. Sign up for wellness incentives: This has been a huge cost saver for our family. Wellness incentive programs often offer you money back on your health care premiums for doing simple things like an annual physical, sharing step activity, or receiving health/nutrition coaching. The savings can amount to 100’s if not 1,000’s of dollars per year depending on the plan.

Make the Best Choice

At the end of the day, choosing the best health insurance plan is not just a benefits decision, it’s a financial wellness power move. By taking the time to compare plans under different scenarios, using the tools your employer provides and maximizing cost saving strategies you’re not just buying coverage – you’re buying peace of mind for your families physical and financial wellbeing in the years to come.