6 Things to Check During Open Enrollment

Your favorite season is just around the corner: open enrollment season! I mean, who doesn’t love being hounded by the HR team to make benefits selections in a small window of time? Better yet, who doesn’t love wading through some of the convoluted financial jargon inherent in these plans? 

Jokes aside, your company’s benefits package is a key part of your financial plan. As you enroll in benefits, be sure to pay attention to these six benefits: 

1. Health Insurance

Generally I see company health insurance plans divided into two camps: High Deductible Health Plans (“HDHP”) and… everything else.

HDHPs are oftentimes better for healthier clients because they cost less on a per-paycheck basis. However, in the event of a medical emergency, they may result in higher overall out-of-pocket costs. HDHPs also give you access to my favorite type of savings account: the HSA (more info in the next section)!

The remaining types of plans likely have higher costs on a per-paycheck basis but may cover more in the case of routine medical expenses or a medical emergency.

Either way, keep an open mind as you analyze your health insurance options. Do the math as it relates to the costs of all your plans. (We can help with that!)

2. HSA and/or FSA

The choice between an FSA and HSA is one I’m asked about frequently. Both can be used for healthcare-related expenses, but they are uniquely different.

The HSA, or Health Savings Account, requires you to be enrolled in a High Deductible Health Plan (see #1). Unused funds can be rolled over every year and invested just like your retirement plan! The HSA is my personal favorite financial account because of its tax benefits and usefulness in retirement and beyond.

The FSA, on the other hand, is a “use-it-or-lose-it” Flexible Spending Account. There are different types of FSAs, including ones for healthcare and ones for dependent care. Be very careful with the FSA because all unspent funds are forfeited at the end of the plan year.

3. Life Insurance

Companies oftentimes provide their employees with basic life insurance. The coverage is frequently quoted as a flat rate (i.e., “$50,000 of coverage”) or a factor based on salary (i.e., “2x salary”). Most individuals then need to supplement their company’s coverage with a plan purchased on the marketplace. Check the Life Insurance Calculator at LifeHappens.org to see if you need additional life insurance coverage!

4. Long-term Disability Insurance

Long-term Disability Insurance provides you with a percentage of your income if you cannot work due to illness or injury. This group benefit is oftentimes quoted as a percentage of your salary (i.e., “60% of income” means you will receive 60% of your salary, before tax, if you become disabled). If individuals need additional coverage, they will then supplement their company’s coverage with a policy purchased on the marketplace. Learn more about disability insurance and calculate your needs at LifeHappens.org.

5. Retirement Plan Elections

Now’s a great time to double check your retirement plan contributions. Many companies will often match their employee’s retirement contributions. For example, companies will state that their contributions are “50% up to 6%,” which means that if you contribute 6% of your salary to your retirement plan, they will contribute 3% (50% of 6%). This is a great opportunity to boost your retirement savings if it’s offered by your employer. And if you have any excess cash flow, we challenge you to bump up your own contributions by 1%!

6. Beneficiaries

Double check to make sure that the beneficiary designations for any life insurance and your retirement plan are updated, especially if anything in your life has changed over the past year! Those accounts will pass to your designated beneficiary in the event of your death.

We get it – open enrollment can be confusing and time consuming. However, these elections are a key part of your financial plan. Be sure to take a screenshot of your elections and save them in your financial files just in case you need to refer back to them throughout the year. 

As you are completing your benefit elections, let us know how we can help! We’re here to help you #MoneyConfidently.