Navigating Open Enrollment
Open Enrollment, which varies by company but generally takes place in the Fall, can often be a stressful time as trying to make sense of your company’s benefits can seem like a daunting task. It is an important time however, as it allows you the opportunity to adjust your benefits based on any changes that have taken place or might take place over the coming year. Many employers may make slight changes to their plans and it is important that you review them to ensure you are taking advantage of all your options and getting the coverage you need. On occasion, some employers may even require action on your part in order to stay enrolled. It is important to carefully review the documents provided to you so you can be sure to make the necessary adjustments to options that best fit your needs and keep your coverages current. Open enrollment is also a great time to review the amount of money you are contributing to retirement and seeing if you can increase it as well as review beneficiaries to make sure they are up to date on life insurance or 401k plans.
A few important things to consider:
What Changes Have Taken Place to The Plans Offered?
It is important to look at not just the difference in premiums for the plans, but also the more detailed changes such as coinsurance and copayment amounts. You should also check to see if there is a different deductible amount. These offerings can vary depending on the size of your employer and you may have several different options to choose from. Depending on your situation a plan with a higher deductible may make sense for you however, if you are planning on having a child within the next year, a more traditional plan with a lower deductible may make more sense. You will want to weigh the out-of-pocket expense to you for each plan and consider the likelihood that you will reach those maximums. There may also have been a change in providers which could mean your regular doctor or dentist is no longer in network under the new insurance. You will want to check before going to a doctor to ensure coverages, be aware if pre-approvals are needed, and to avoid out-of-network costs. Lastly, you will want to review life insurance and disability insurance coverages. There may be low cost options available to you for life insurance as well as disability and if you have others depending on you it might be wise to take advantage of these offerings.
Have My Needs Changed This Year or Will They Change Over the Next Year?
It is easier to make changes and sign up during open enrollment. For example, perhaps dental insurance did not make sense when you were single but it may make more sense once you have children. Additionally, you may need to start using that Flexible Spending Account for daycare or health costs or utilize Dependent Care Flex Spending if it’s offered. Contributions to both are tax-free as well as withdrawals made for qualified expenses. You will need to tell your employer how much to take out from your gross pay for the year. You will also need to use this money within the year as it does not roll over like an HSA. With an HSA, which is typically offered with a high deductible health insurance policy, the money is tax deductible, earnings are tax-free, and withdrawals used for qualified medical expenses are also tax-free. The other benefit of an HSA is it’s a portable account, meaning if you change jobs, the money will go with you.
How Will Things Affect My Take-Home Pay?
For existing employees, this is the time to ensure you are taking full advantage of any 401k plan your company offers. Many employers offer a company match (up to a certain percentage) that is free-money you should not leave on the table. You should consider how this will affect your take home pay when deciding how much you can contribute. Insurance premiums, contributions to HSA’s and 401k’s should all be factored into your budget so you are sure your money is going to work for you in the best possible way. It is important to remember that many of the benefits will come out before your taxes as this lowers your taxable income and may make it so that you do not notice the changes as much.
Final Thoughts
There may be other options offered during open enrollment as well. For instance, they may offer a legal plan to assist in your preparation of estate documents. When it comes to additional coverages though, be sure to read the fine print and don’t be fooled by marketing language. Make sure to review the coverages and cost in detail to be sure there is real value to you. Fully understanding the benefits is key to ensure you are making informed decisions and fully taking advantage of the benefits your employer provides. Is your open enrollment period approaching? As always, Lighthouse Financial Advisors, Inc. is here for you and ready to assist you navigate through the process.
