Open Enrollment
The leaves are changing, the air is crisp, and Fall has finally arrived. Along with cool weather, football, and pumpkin spiced everything, you may have received a large packet in the mail from your employer. It probably came in email format as well because it is very important! Open Enrollment season is here for those of you receiving benefits from your employer. While not nearly as exciting as pumpkin spiced lattes, open enrollment is a very important time for you. I’ll explain more about open enrollment and what items you should be considering throughout the process.
What is Open Enrollment?
This is a period during the year, usually in the last few months, where you can make changes to your employee benefits. You can update your health insurance and other benefits while also reviewing any changes your employer has made to the benefits offered. Some of these items can be changed during the year. However, items such as health insurance are likely only allowed to be changed during open enrollment unless you have a life event, e.g., having a child during the year. Here are the important items you should be reviewing during open enrollment.
Health Insurance
The first step is to review any changes your employer made to the plans that are offered. Next, has anything in your life changed or is there a big change that may occur during the next year? One common scenario is when a baby is expected during the next year. You will want to review the plans to see which one will work best for the costs that you will incur during that process. There are many variables in the decision for which health plan to choose. Focus on the amount of premiums you will be paying each month, items not covered, your deductible, and your total out of pocket costs. Then you can find more specifics on areas you are concerned about. Ask for help from your HR department if you need more details.
Health Savings Accounts
I want to highlight this separately even though it is part of your health insurance options. An HSA allows you to put money away pre-tax and withdraw it tax-free as long as it is used for qualified medical expenses. These accounts are a great way to save money to cover medical expenses or use as additional retirement savings. You need to make sure that your health plan qualifies you to make HSA contributions. If your plan qualifies but your employer does not offer an HSA through the program, you can open an account on your own to make contributions.
I’ll be posting a full HSA blog post in the near future.
Retirement Savings
This is a great time to review your 401(k) or similar type of employer retirement plan. Once again, the first step is determining what the employer is offering because it may have changed. Many employers offer a company match to these plans. I recommend contributing enough to receive the maximum employer matching because that is as close to free money as you can get. You should also review the investment options in this account. Employers are required to review these options every year so they may offer investments this year that better align with your financial goals. These changes can usually be made throughout the year, but open enrollment is a great time to review.
Additional Insurance Items
Your employer may offer some of the following insurance items.
Short-Term Disability Insurance – What options do they provide for short term disability insurance? The common offer is 30-60 days, but some policies can last up to a year. There may be some included without any cost, but you usually have the option to add more.
Long-Term Disability Insurance – This is less common to be offered, but you may be able to purchase coverage. This insurance pays a percentage of your current income after a certain period, usually after short term disability insurance ends.
Life Insurance – Another item that most employers offer a basic level of term life insurance coverage. You can add additional levels of life insurance without having to go through the application process. This can be a great starting point for your life insurance needs and may even cover the total amount necessary for you and your family.
Dental/Vision – These two plans are separate from your health insurance. Make sure to understand what is offered and whether you are automatically enrolled. Many people do not realize the need to opt-in to these plans because the employer does not pay for coverage.
Other Benefits
Your employer may offer additional fringe benefits that you can take advantage of. These can include childcare reimbursement, stock purchase plans, tuition assistance, or athletic facilities. The open enrollment period is where you should be researching all of these.
I don’t expect you to understand every piece of information that came in your open enrollment packet. The purpose of this post is to make sure you understand that this is more than just a piece of mail from your employer telling you that you can update your health insurance. Employers can offer these benefits at a much lower cost than if you were to go shop for them yourself. Some of it may even be tax-free! Still have questions? Contact your HR department or an advisor that can help you sort through the information. Don’t let the enrollment period pass and miss out on saving money!
Mike Zeiter, CPA/PFS
