The Critical Mistake Most Employees Make When Choosing Health Coverage During Open Enrollment

Every year, employees with employer-sponsored health insurance face a crucial decision window: open enrollment. This period allows you to select or modify your health insurance plan for the upcoming year. Yet according to personal finance expert Suze Orman, many workers overlook a fundamental aspect that could significantly impact their finances. The mistake? Failing to carefully evaluate the true cost of healthcare beyond just the headline premium number.

Why Your Health Insurance Decision Matters More Than You Think

When open enrollment arrives, the natural instinct is to quickly select a plan and move on. However, financial advisors increasingly warn that this approach can lead to poor choices that drain your bank account throughout the year. Healthcare costs extend far beyond the monthly premium withheld from your paycheck—they include deductibles, co-payments, and co-insurance amounts that can vary dramatically between plans.

Breaking Down the Three Layers of Healthcare Costs

The Premium Payment Layer

Your premium is just the starting point. Mercer’s recent analysis projects that employers will face premium increases of 6.5% in 2026 for those who have already implemented cost-reduction strategies, with increases potentially reaching 9% for those who haven’t. Even if your employer absorbs a portion of these rising costs, you’ll likely see part of the increase reflected in your paycheck deductions.

Before selecting any plan, calculate exactly how much will be deducted from each paycheck. A seemingly modest increase can compound into a significant annual impact when multiplied across 26 paychecks.

The Deductible Factor

Your deductible is the amount you must pay out of your own pocket before your insurance coverage actually begins. High-deductible health plans (HDHPs) feature larger deductibles but offset this with lower premium payments—making them attractive on paper if you don’t anticipate needing much medical care.

The silver lining? HDHPs typically pair with Health Savings Accounts (HSAs), which offer triple tax advantages. Contributions are pre-tax, withdrawals for qualified medical expenses are tax-free, and employer contributions don’t count toward your taxable income. However, the real question is whether you have sufficient reserves to cover the deductible if medical needs arise.

The Co-Payment and Co-Insurance Reality

Beyond premiums and deductibles sit co-payments and co-insurance, which represent your share of actual medical expenses. A $30 co-payment for a specialist visit or 20% co-insurance after meeting your deductible can add up quickly across multiple doctor visits and procedures throughout the year.

Network considerations matter significantly here too. In-network providers cost substantially less than out-of-network providers, so verify that your current doctors and preferred facilities remain in-network under any new plan you consider.

How to Avoid This Common Selection Mistake

Method 1: Historical Cost Analysis

Review your medical claims and receipts from the current year. Calculate what those same services would have cost under each available plan option for the coming year. This backward-looking analysis reveals which plan structure aligns best with your actual healthcare utilization patterns. Exclude any unusual, one-time medical events to get a realistic comparison.

Method 2: Side-by-Side Plan Comparison

Most employers provide plan comparison charts highlighting premiums, deductibles, co-payments, and network details. Use these documents as your starting framework. Look beyond glossy marketing language to understand the actual mechanics of how each plan handles costs.

Method 3: Network Verification

Before committing to any plan, confirm that your preferred healthcare providers appear in the plan’s network. Call the insurance company directly if necessary—a doctor’s office location might be in-network while the specific physician is not.

The Bottom Line

The mistake many employees make during open enrollment isn’t picking the cheapest-looking option or staying with last year’s plan by default. It’s failing to conduct a thorough cost analysis before deciding. Healthcare expenses represent a significant portion of household budgets for most Americans. Taking an hour to properly evaluate your options could easily save thousands of dollars annually.

Whether your employer offers one plan or several, understanding how premiums, deductibles, co-payments, and co-insurance work together under each option empowers you to make a financially sound decision that won’t derail your budget when medical needs inevitably arise.