Fall is here, and for many of you, that means it’s open enrollment season once again. You probably know the drill by now: you receive an information packet about your benefits, you look over them, and you have the chance to make changes to your plan.
Unfortunately, many people end up skimming the benefits, guessing which plan is best for them, and sign up without much consideration. There’s a lot of risk in doing that, especially if you’d had any big life changes recently.
Open Enrollment: Get Prepared
Taking the extra effort now to make sure you fully understand the benefits you’re getting can pay off massively throughout the year. It might not make for light reading, but many companies bring someone in to answer questions specifically for open enrollment. Or, they might appoint someone in the HR department to talk to employees about their benefits. Either way, someone should be available to help you choose the best coverage for you.
You also want to be sure your coverage hasn’t changed since last year. Even if your benefits are through the same company, there may have been shifts within your coverage. Make sure your preferred hospital and physicians are still within network, and if not, be prepared to shop around.
Finally, have an idea of what you’ll need. The coverage you need if you’re single is going to be very different from what you might need if you have a family, a baby on the way, or specific medical needs. Take a look at the upcoming year and note any important changes, health plans, etc. That will help you make a decision when it’s time to compare plans.
Open Enrollment: Take Advantage of Your Benefits
Health insurance is often the focus of open enrollment, but don’t forget about the other important benefits offered, like:
- Health Savings Account (HSA) – HSAs are savings accounts funded with pre-tax contributions. They also have tax-free earnings and tax-free withdrawals for qualified medical expenses. An HSA is a smart option if you have a high-deductible plan and want to take advantage of the triple-tax benefits that come along with it. If you don’t spend the money in your HSA, don’t worry; it will continue to roll over to the next year until you use it.
2023 account limits: $3,850 for self and $7,750 for families, plus $1,000 catch-up payment for anyone aged 55 or over.
- Flexible Savings Account (FSA) – Like HSAs, FSAs are funded with pre-tax money and can be deducted from tax-free for qualifying health and medical expenses. These accounts are offered through your employer and are a good option if you are not eligible for an HSA. Unlike an HSA, FSA accounts do have a “use it or lose it” rule, so you will lost out on any unspent money in your account. (Some employers do allow a grace period of up to 2.5 months to spend that money, or up to $610 in rollover money.)
2023 account limits: $3,050
- Dependent Care FSA – A Dependent Care FSA offers the benefits of an FSA for child or adult care expenses. This FSA allows you to use your account money for things like daycare, preschool, after-school programs or summer camps. Check with your employer for specific rules and guidelines they might have.
2023 account limits: $5,000 per year per household, or $2,500 for married filing separately.
- Disability insurance – Disability insurance is a frequently forgotten but very important benefit. It’s meant to replace your income in the event of an illness, injury or other disability that prevents you from working. Read my post about disability insurance here.
- Life insurance – Many employers offer a life insurance option, and this is a great starting point. It’s often necessary to supplement that insurance with other life insurance sources, but you should still learn more about what is offered through your employer. Read my post about disability insurance here.
Need more information about open enrollment? Here is a collection of previous years’ posts that should help you get started:
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes you too should have access to financial resources and fee-only financial planning. For more information on the services offered, contact Katie today.