Six questions when making open enrollment choices
Each year, employers offer an open enrollment period — a window of time to select your benefits package for the coming year. It’s easy to overlook this opportunity and maintain the status quo, but this could be a costly mistake given the significant role benefits play in your financial life. This year, resolve to review your options with a fresh perspective.
Consider these six questions to get started:
Have you experienced a major life change recently?
If you’re on the verge of having a child, recently sent a college graduate off on financial independence or the job status of your spouse has changed, reconsider your health insurance options to accommodate your current situation. If you are experiencing or anticipating major health expenses, you might decide to choose a health plan with a lower deductible. Or, perhaps you may decide you are better off paying a lower monthly premium with a higher deductible.
How do your employer’s benefits selections compare to those offered to your spouse?
Employers change their offerings from time to time, so make it a priority to compare your options every year. If you’re considering changing healthcare providers or opting in for legal assistance, check to see if your current professionals are covered under the new plans. If not, consider the cost and whether you want to work with someone new as you make your decisions.
Is a Health Savings Account worth considering?
If you choose a high deductible health plan, you may be able to set up a Health Savings Account, or HSA. With an HSA, you defer pre-tax dollars into the account. The money can be used to pay out-of-pocket costs (such as deductibles and co-pays for medical services) that are not covered by your health insurance. The maximum amount you could contribute in 2018 was $3,450 for an individual and $6,900 for a family?(1) Any unused dollars can be carried over to the following year.
Is there value in a Flexible Spending Account?
Out-of-pocket costs not covered by insurance, ranging from deductibles and copays to prescription drugs, eyeglasses and dental work, can be reimbursed through an FSA. By directing pre-tax dollars into this account, you can reduce your net out-of-pocket costs. However, unlike HSAs, these dollars do not carry over from year to year. Any leftover money is lost, so you’ll want to plan in advance to determine an appropriate amount to save in the account.
Are there other benefits I should contemplate?
Benefit options vary by employer. Depending on where you work, you might have the ability to enroll in benefits such as dental coverage, eye exams, legal assistance, term life insurance or other specific services that may be useful. Carefully weigh these options to see if they are cost effective.
Consider your financial goals
Kick off open enrollment season by reviewing your financial goals. If you’re married, talk to your spouse and realign on key priorities for the next year. Having a clear vision can help you evaluate benefit options with your lifestyle and financial situation for the coming year at the forefront. If you would like additional support, consult a financial advisor before you finalize your enrollment form.
(1 ) “2018 HSA contribution limit for individuals with family HDHP coverage,” Internal Revenue Service. https://www.irs.gov/forms-pubs/2018-hsa-contribution-limit-for-individuals-with-family-hdhp-coverage