The Basics of Open Enrollment
Ugh. That’s the likely reaction from many people when its open enrollment season. I know it’s been mine every year. Most employers offer this once-a-year opportunity to select from various employee benefits and insurance choices. But if you’re one of those employees, it likely means looking through a relatively dense packet of materials to figure out what the best options are and whether you need them (full disclosure, I have my financial planner do it for me!).
But what’s missed in this annual chore is that many employers offer benefit packages that are worth signing up for and it’s in your best interest to take the time to understand your options.
About half of the US population gets medical insurance through their employer. Assuming you’re one of those, you probably want to make sure you’re getting the best coverage you can for the lowest cost. Some things to consider and look out for:
- Did your health care provider or package change from last year? Since the cost of health insurance continues to rise, it’s always worth checking.
- How much did you use your health care last year? The answer may affect your choice for next year. If you know you’ll need more coverage in the future (having a baby, know of an upcoming medical or dental expense, etc.), consider all the plan options available to you and what’s covered.
- Is a family plan right for you? I know, now you have to go through TWO dense packets. But switching to a spouse’s health insurance plan might give you better coverage and reduce your annual costs, especially if you have children.
- Take the time to learn more about Health Savings Accounts (HSAs) and Flexible Savings Accounts (FSAs). If you have a high-deductible plan, high copayments, prescription drug costs, or other regular medical expenses, taking advantage of these options can save you money.
Short- and Long-Term Disability
Some employers provide some basic short- and/or long-term disability insurance for their employees, but most people learn the hard way when they don’t have enough. Disability insurance pays cash benefits to the policyholder in the event the insured is unable to work due to sickness or injury, usually as a percentage of your salary. If your living expenses or those of your family are dependent upon your income, it’s important to carry these types of coverage.
Another paid benefit that some employers provide to employees, but always worth knowing what may be employer-paid and what options you have for supplemental coverage. I know many people don’t like thinking about the need for this type of insurance, but no one is immortal. Open Enrollment is also a good time to designate or update beneficiary information for any policies you might have. Once again, it’s important to consider who else (family or friends) may be relying on your income.
Employers are constantly competing for top talent and as a result, can offer benefits you want to take advantage of that you may not even realize:
- Transportation: some employers subsidize parking or public transportation costs, especially in larger cities. It can be a pre-tax benefit as well.
- “Wellness” benefits: this can take the form of free or discounted gym memberships, access to legal planning services to manage things like estate planning, and some businesses are even offering access to financial planning services!
- Retirement plan match: while this typically falls outside of open enrollment periods and tend to be available year-round, many employers offer a 401k or retirement plan funding match. It’s free money. While most of us should be saving more for retirement than we currently do, make sure you’re at least taking advantage of any company match.