Open enrollment in health insurance: What you need to know before buying

Open enrollment season is approaching. That means millions of Americans will soon need to choose a health insurance plan in 2027.

This choice can have a significant financial impact on households, and with some exceptions, you are usually locked into an insurance plan for a year before switching.

But experts say choosing a health insurance plan isn’t always an easy decision.

Consumers who purchase insurance through their employer or on the Affordable Care Act Marketplace may be able to choose from a hodgepodge of plans with varying premiums, cost-sharing provisions, physician networks, and other factors to consider.

Experts say households are struggling to make these choices as health care costs soar, and in some cases are forced to make difficult financial compromises during open enrollment.

“Employers are increasingly passing costs on to employees in a variety of ways, so it’s important for employees to be opinionated when deciding which benefits to choose,” said Carolyn McClanahan, a physician and certified financial planner based in Jacksonville, Florida.

He said he recommends consumers use an “algorithm” consisting of two questions when determining which plan is right for them.

Here are some important things to consider for this year’s open call.

Open enrollment is a period during which people can enroll, renew, or change their health plan for the upcoming year.

Most Americans under age 65 (approximately 166 million people) obtain health insurance through employer-sponsored health insurance.

Employers have the flexibility to set their own open enrollment periods, but they typically run for about a month starting in the fall, said Joan Volk, founder and co-director of Georgetown University’s Center on Health Insurance Reform.

An additional 19.2 million Americans will enroll in health insurance plans through the Affordable Care Act Marketplace in 2026, according to figures released in June by the U.S. Department of Health and Human Services.

Participants are typically self-employed, gig workers, early retirees, small business owners, and others who do not have health insurance through their workplace or federal programs such as Medicare or Medicaid.

States using the federal ACA Marketplace will have open enrollment from November 1, 2026 to January 15, 2027.

To begin coverage in early 2027, consumers must enroll by December 15. For people who enrolled or changed plans between December 16th and January 15th, coverage will begin on February 1st.

Certain states operate their own markets independent of the federally operated market.

Those states may have different open enrollment periods, Volk said, such as allowing people to enroll after December to get coverage starting Jan. 1, extending the enrollment period, or starting earlier than Nov. 1.

For example, open enrollment in Idaho begins on October 15th, and in Connecticut on October 23rd.

Consumers can purchase health plans at healthcare.gov and enroll by going to their state’s marketplace.

Volk said he encourages consumers to go directly to healthcare.gov by entering the URL instead of using search tools like Google to look for terms like “ACA Marketplace” or “Obamacare.”

A study released in August by Georgetown University’s Center on Health Insurance Reform found that consumers who search for insurance online through tools like Google are “often directed to products not regulated by the ACA” with fewer consumer protections.

Here are two questions McClanahan, founder of Life Planning Partners and member of CNBC’s Financial Advisor Council, recommends considering when comparing options during open enrollment.

1. Which is more important to you: choice or cost?

The answer to this question helps consumers choose from an alphabet soup of health plan types (HMO, EPO, PPO, POS plans, etc.).

If a consumer has a number of health problems or gets sick frequently and wants a wide roster of doctors, a preferred provider organization or plenty of room to see a PPO, the plan may be right for them, McClanahan said.

PPO plans are typically more flexible than other plan types, allowing out-of-network specialist visits without a referral from your primary care physician. However, the trade-off is usually higher premiums.

In contrast, health maintenance organization (HMO) plans are “budget-friendly” with lower monthly payments, according to insurance company Aetna. However, the plan is more stringent, requiring consumers to choose an in-network doctor and receive a referral from their primary care physician before seeing a specialist.

A middle ground between cost and flexibility is exclusive provider organizations (EPOs) and point-of-service (POS) plans, experts say. EPO plans require in-network services for coverage, but they typically offer more options than HMOs. POS plans require a referral for a professional visit, but some out-of-network coverage is available.

However, cost is more than just comparing insurance premiums.

Consumers also need to understand the differences in cost-sharing provisions such as deductibles, coinsurance, and out-of-pocket limits, experts say.

Deductible: This is the annual amount that consumers must pay out-of-pocket before health insurance companies begin paying for many services. Coinsurance: The percentage of medical costs that a consumer shares with an insurance company. This cost-sharing typically begins after you pay your annual deductible. Out-of-pocket maximum: This is the limit on the total cost burden a consumer will pay in a year, including copayments, coinsurance, and deductibles.

“A lot of people don’t understand the nuances,” McClanahan said.

Ultimately, Volk said, consumers need to make sure their plan covers the doctors and prescriptions they use.

She said she recommends referring to a health plan’s provider directory in case the publicly available directory is out of date and calling individual doctors to confirm they are in that particular health plan’s network. Health plans’ websites should also include a “Prescriptions” link with a list of covered prescription drugs, he said.

“Check a few things to see if that’s the plan for you,” Volk says.

2. Do I need a health savings account?

A medical savings account is a tax-advantaged savings account that allows you to save for qualified medical expenses. Account holders typically have the ability to save money in cash and invest the funds in the account, similar to a retirement account like a 401(k).

These are subject to three tax breaks. Contributions are tax-free, investment growth is tax-deferred, and withdrawals are tax-free when used for qualified medical expenses.

Financial advisors say these unique tax benefits can exceed those of 401(k) plans and individual retirement accounts.

Unlike flexible spending accounts, consumers are not required to use HSA funds in any particular year. If you can pay for your medical expenses out-of-pocket, you can invest your HSA funds just like any other type of investment account.

“This is a great backdoor way for people to save money for future medical costs if they don’t need it now,” McClanahan said.

He said contributing to an HSA is “a no-brainer” for people in higher federal income tax brackets, such as those with a federal income tax rate of 22% or higher.

However, health savings accounts are only available to consumers if they are enrolled in a high-deductible health plan. Among other requirements, to qualify as a high-deductible plan in 2027, a plan generally requires a minimum deductible of $1,750 for individuals and $3,500 for families. Starting in 2026, “bronze” and “catastrophic” plans will be treated as HSA-compatible plans even if they do not meet the general definition of a high-deductible health plan.

McClanahan said high deductible plans aren’t right for everyone.

For example, an HSA only makes sense for people who can afford to fund the account, she said. Contribution limits will be $4,500 for individuals and $9,000 for families in 2027.

Additionally, McClanahan said it may not make financial sense to enroll in a high-deductible plan for people who frequently need care, use health insurance frequently, or don’t have enough money to meet their annual deductible.

“People who should choose a non-HSA plan are those who don’t have the means to meet their deductible if they get sick, or those who don’t have the money to fund an HSA,” she says.