Open Enrollment & Dependent Coverage

It’s open enrollment season, and many employees overlook what can be a steep cost to cover dependents on their group health plan.  Unless you KNOW you want to pay for keeping dependents on your group plan, the ONLY way to know what alternatives would cost is to apply.  Applying usually costs nothing.  Keep in mind that group coverage and individual coverage are apples and oranges.

Here are some key considerations (some general, some geared to the Idaho market):

Even if the individual coverage is from the same company as your group policy, the coverages  are totally separate.  That means separate deductibles, copays, coinsurance, and other limits.  This is especially true for maternity coverage, where in Idaho the deductible on individual plans is separate from the medical deductible.

Individual plans will likely have higher deductibles than group coverage, especially for name brand prescriptions.

Payroll deductions for group premiums are almost always pretax.  Premiums for individual plans will not have a tax advantage unless the dependent is self employed (for details ask your accountant).

Make sure you are comfortable with the PPO network associated with the individual plan.  If you are keen on a particular physician, then check this before applying.

Moving to an individual plan will not credit any current year’s expenses paid toward deductibles or coinsurance.  You are starting over.  This is very important if those types of costs have been significant for your dependents.

Some groups might require you to elect the medical insurance in order to also get the dental or vision coverage.  You need to consider the entire package.  Ask your benefits manager.

Allow a minimum of 2 weeks to apply for individual coverage so you can make an informed decision before your election deadline.

A good independent agent is your friend, and will help you make that informed decision.  Remember, once open enrollment is over, you are committed for the entire plan year, barring an IRS qualifying life change event for a mid year change.

With all of these caveats, it can make loads of sense for some employees to apply for an individual policy for their dependents rather than checking the dependents block on their election form.