Open Enrollment is quickly approaching for many employees. To get you in the spirit, we’ve boiled it down to four things to remember this enrollment season—so that you can navigate your benefits decisions like a pro:
1) Don’t forget your spouse. If you’re married, it’s always good to compare your benefits options with those of your partner. Take the time to look at all available plans to ensure that you maximize your coverage and minimize your costs. If each of you are covered separately under your own employer’s plans, does it make sense for one of you to be covered as a dependent on one plan instead? When evaluating Consumer-Directed Benefits, such as a Healthcare Flexible Spending Account (FSA), remember that pre-tax funds you set aside can also be used to pay for eligible healthcare expenses for your spouse (and dependents). Important item to note: If your company’s Open Enrollment period differs from your spouse, many employers will share their benefits plan details ahead of time to allow you to review the options side by side.
2) Opt-out of the passive opt-in. If your employer has a “passive” Open Enrollment—automatically renewing your previous selections, unless you actively make changes —it doesn’t mean you should be passive about your decision. Review plan options and details, as there may be significant changes in coverage or premiums from year to year. There may be additional coverage possibilities, and contributions on pre-tax benefit accounts may have increased. Be sure to do your homework.
3) Do the math. Looking at the costs—and cost savings opportunities—of benefits is a must. What are you paying per paycheck for premiums? What are your anticipated out-of-pocket healthcare expenses for the coming year? How much is the deductible? When evaluating health plans, do a best case and worst case scenario with potential out-of-pocket costs. You may discover that a high-deductible health plan, if offered by your employer, is a more affordable option, particularly if a Health Savings Account (HSA) is offered in combination. An HSA delivers big tax advantages, allowing you to use tax-free money for eligible healthcare expenses, accrue non-taxable interest on HSA funds, and withdraw money at any time for qualified expenses—without penalty. It’s like a 401(k) for healthcare, just even better!
4) Look at pre-tax benefits. HSAs, FSAs, and Commuter benefits allow you to pay for eligible expenses with pre-tax dollars, resulting in significant savings over time. If your employer offers pre-tax benefits, they are a great way to pay for critical expenses, such as co-payments, prescriptions, childcare and getting to and from work via public transportation. Deductions are taken from your pay before taxes. As a result, your take home pay ends up being more than if you were to pay for the same expenses on a post-tax basis. In other words, you lower your taxable income and increase you spendable income—a win-win.
Remember these tips as you head into Open Enrollment and you’ll be more aware and better prepared!