Navigating the Open Season 2025.
If navigating the healthcare open season feels a little like Dorothy in pursuit of finding the Wizard of Oz, you are not alone. Trying to navigate what makes sense for you while considering your tolerance for recordkeeping is difficult to say the least. To add to the quandary, you are generally guaranteed that your health care options will rise at a higher inflation rate than your cost of living pay rate; effectively reducing your standard of living over time.
We enter open season for most employers, Medicare alternatives and Medigap insurances, the Healthcare.gov open marketplace, and the Office of Personnel Management's (OPM) Federal Employees Health Benefits.
Key Dates
Open season 2025 are the following dates:
- Healthcare.gov Marketplace Health Insurance November 1 - December 15, 2024
- Federal Employee Health Benefits (FEHB) - November 11 - December 9, 2024
- Medicare Open Enrollment - October 15 - December 7, 2024
What happens if I fail to act during open enrollment?
Generally, you will need a qualifying special event to change insurances if you fail to act during open enrollment. This could be a change in marital status or moving to another state.
What are the key numbers you need to know for 2025 for healthcare, flexible spending accounts, and retirement plans?
Healthcare Flexible Spending Account: $3,300 for 2025, $3,200 for 2024. (although your employer can limit it to be less)
Childcare Flexible Spending Account: $5,000 ($2,500 for married filing separately)
Health Savings Account (HSA): For 2025: $4,300 for self-only; $8,550 for family plans; For 2023: $4,150 for self-only; $8.300 for family plans; Additional $1,000 may be contributed to your HSA if age 55 or older.
IRA: Maximum contribution is staying the same for 2025 as 2024 at $7,000; an additional $1,000 catch-up contribution is allowed if you are age 50 or older.
Employee Retirement Plans: Employees who are saving for retirement through 401(k)s, 403(b)s, most 457 plans, and the federal government's Thrift Savings Plan can contribute up to $23,000 to those plans during the year in 2024. An additional $7,500 catch-up contribution may be made if you are age 50 or older. There was a provision in the Secure Act 2.0 where an employee whose salary exceeded $145,000 would need to allocate any catch-up contribution to a Roth plan starting on January 1, 2024. That has now been delayed to January 1, 2026.
W-2 Employees insured through your Employer
For many employers, it is simpler to use one insurance plan for their employees to reduce the employers and employees cost. If you are in this category, then open season means nothing to you. However, reading how your plan changed, besides the premium cost, is necessary to plan the upcoming year. In addition, if your employer offers a flexible spending plan, you must determine how much you want to reserve for out-of-pocket healthcare costs.
Self-Employed, Early Retirement before age 65, and non-covered W-2 employees
Generally, if you are not covered by health insurance through a job, a spouse, Medicare, Medicaid, or other state program, you have 3 options: 1) Use the Affordable Care Act's Healthcare.gov open Health Insurance Marketplace, 2) decide to forgo health insurance, or 3) pay into a faith-based health cost sharing pool that may pay for your medical expenses.
The Healthcare.gov open season lasts from November 1 until December 15, 2023. If you fail to sign up during the open season, you must have a qualifying event to occur to enroll outside of open season. Healthcare.gov offers plans in different categories called Bronze, Silver, Gold and Platinum. As you would expect, the Bronze plan has the cheapest premiums, but has the highest deductibles and pays the least co-insurance when those deductibles are met. In reverse, the Platinum plans have the highest premiums, however, has the lowest deductibles and pays the most when those deductibles are met.
The cost of these plans are not for the faint-hearted. Typically, the healthcare.gov plans start around $500 a month for an individual and $1,500 a month for a family of four for the Bronze plans. Platinum plans start around $2,500 a month for a family of four. To offset some of the costs, taxpayers may qualify for an advance premium tax credit based on their expected income. This advance credit will offset some of the costs where a taxpayer will only need to pay for the difference. (Your state may offer additional benefits) Whether you received an advance premium tax credit or not when you enrolled in Healthcare.gov, taxpayers will need to complete a Form 8962 as part of their tax return to reconcile any premium tax credit received to their income level.
As a tax preparer, I have seen both ends of the spectrum where it is very similar to the ABC TV show, Wide World of Sports. The thrill of victory when the taxpayer did not receive an advance premium tax credit, but finds out that their income level is below the threshold and receives a tax refund windfall. The agony of defeat when the taxpayer received the advance premium credit, but then finds out that their income is above the threshold and owes a large tax balance due. If you are self-employed that depends on Healthcare.gov insurance, it is critical to monitor your revenue and expenses during the year to ensure that you plan accordingly.
Under the Affordable Care Act, a taxpayer would be assessed a penalty for not having a qualifying insurance policy unless they met one of the exceptions. This penalty was rarely enforced if you claimed one of the exceptions. Starting in tax year 2018, the Trump administration effectively dismantled the penalty and an individual can decide to opt out of health insurance penalty free.
Due to the high cost of health insurance, faith-based health cost sharing plans have been around for years, but have become even more popular recently. These plans do not insure a person or family but rather share the costs of health care. Generally, the cost share "contribution" is less than the cost of the Affordable Care Act's marketplace insurance.
Federal Employees Health Benefits
Federal employees and retirees have several health insurance plan choices that include nation-wide plans, regional HMOs, and high deductible health plans (HDHP) that feature either health reimbursement accounts (HRA) or health savings accounts (HSA). Open season starts November 11thand ends on December 9, 2024. While generally, it takes bravery or outright disgust for your current health insurance carrier for someone to switch their plan during the open season, FEHB plans have evolved in the past few years. For instance, Federal retirees that are enrolled in Medicare, a few FEHB plans now reimburse a portion of the Medicare premiums. For Federal employees that do not mind some administrative recordkeeping and reimbursement, some FEHB plans offer HRA and HSA accounts that reimburse out of pocket costs. The premiums on these plans are usually some of the lowest in the FEHB suite of plans.
Health Savings Accounts (HSA)
When us tax accountants get together to have a wild and crazy time, the party breaks out into what is one of the best tax shelter items. The HSA is generally one of the top choices since the funds will never be taxed on funds deposited or spent out of the HSA, unless it is for non-medical expenses. The Healthcare.gov, FEHB, and many employers offer high deductible health plans (HDHP) that allow HSA accounts. In 2024, individuals can contribute up to $4,150 for self-only plans and $8,300 for family plans by April 15, 2025. For tax year 2025, individuals can contribute $4,300 for self-only plans and $8,550 for family plans by April 15, 2026.
If your employer partially contributes to funding the HSA, remember that the employer portion counts toward the total contribution. For instance, if your employer contributes $1,000 to your self-only HSA, then you can only contribute $3,300 to your HSA in tax year 2024. You will be able to deduct the $3,300 contribution before your adjusted gross income.
Medicare Open Enrollment
Medicare Open Enrollment starts October 15 and runs through December 7. During the Open Enrollment Period the following can occur:
- Anyone who has (or is signing up for) Medicare Parts A or B can join or drop a Part D prescription drug plan.
- Anyone with Original Medicare (Parts A & B) can switch to a Medicare Advantage plan.
- Anyone with Medicare Advantage can drop it and switch back to just Original Medicare (Parts A & B).
- Anyone with Medicare Advantage can switch to a new Medicare Advantage plan.
- Anyone with a Part D prescription drug plan can switch to a new Part D prescription drug plan.
- The Open Enrollment Period cannot be used to enroll in Part A and/or Part B for the first time.