6 Tips to Help You Make Smart Benefit Elections
Not only is fall the season of colorful leaves, football and pumpkin-spice everything, it’s also benefits open enrollment season. If your standard approach to refreshing your benefits is to check all the same boxes as last year, you may want to slow down and reevaluate.
These days, employers are making more frequent changes to their benefits lineups, so it’s important to understand all your options. Also, just as your financial plan should be regularly revaluated and updated as your circumstances change, so should your benefits (such as health insurance, spending accounts, life and disability insurance, etc.).
The following tips can help you navigate your employer’s annual open enrollment period.
#1 – Review your health insurance options.
Is your current plan still the best option? It may not be if its provisions, coverage or premiums have changed since last year. Reevaluate your health insurance options with the following questions in mind.
- Have any plan provisions or options changed over the course of the year? Consider plan costs, including premiums, deductibles, out-of-pocket expenses, copays, etc.
- How often will my family members and I likely see a doctor over the next year? Are we planning on any large medical expenses?
- Will we have any additions to our family, such as a new baby or spouse?
- Are our preferred doctors and hospitals in-network providers of our plan?
- Do we need prescription coverage?
- Have there been any changes to our health over the course of the year, or do we anticipate changes next year? Consider any new chronic conditions, pregnancies, upcoming surgeries, etc.
Keep the answers to these questions in mind as you reassess your health insurance options, as they can help you choose a plan that best meets your family’s changing needs.
#2 – Evaluate your dental and vision coverage options.
Some employers offer separate elections for dental and vision insurance. When evaluating your dental insurance options, consider how often you typically visit the dentist and whether those visits are for regular preventative care or more severe issues. If you have any complex dental procedures on the horizon, such as a root canal or oral surgery, you may want to elect more comprehensive coverage.
As you evaluate your vision insurance options, be aware that there are typically two types of plans:
- Vision discount plans typically have the lowest premiums but only offer a percentage discount on services offered by eligible providers.
- Vision benefit plans operate in a similar manner to traditional health insurance in that you pay a premium in exchange for coverage. Your plan may also offer an allowance to help pay for eyeglasses.
#3 – Contribute to a flexible savings account.
Health savings accounts (HSAs) and flexible savings accounts (FSAs) provide a tax-advantaged opportunity to save for medical expenses. While both types of accounts allow pre-tax contributions directly from your paycheck, there are some big distinctions between the two.
- FSAs – In 2023, participants may contribute up to $3,050 to an FSA, which can be used to cover expenses for yourself or your dependents. The FSA election made during your open enrollment period typically cannot be changed throughout the year, unless you experience a qualifying life event.
In addition, any portion of the account balance not used by the end of the year is automatically forfeited (while employers are permitted to allow up to $610 to be rolled over to the next plan year, or offer a two-and-a-half month grace period, they aren’t required to do so).
- HSAs – In 2023, the HSA contribution limit is $3,850 for individuals and $7,750 for families. Those age 55 and older are eligible to make an additional $1,000 catch-up contribution. Some employers also provide an additional HSA contribution to help employees cover medical expenses.
Unlike FSA contributions, contributions to an HSA can be rolled over from one year to the next, which allows you to build up a balance in the account over time. This balance can even be saved to help pay for medical expenses in retirement.
One caveat to an HSA is that you must be enrolled in a high-deductible health insurance plan in order to be eligible to contribute.
#4 – Increase your retirement plan contributions.
Are you on track to contribute enough to your employer-sponsored retirement plan during the year to receive the maximum employer match? If not, now may be the time to increase your contributions. Even if you’re eligible for the full employer match, you may want to consider upping your contributions by 1% to 2%. You’ll be unlikely to feel the impact on your take-home pay, yet these small increases can have a big impact on your retirement savings over time.
#5 – Evaluate other types of insurance.
Be sure to review other insurance coverage offered by your employer, such as life, disability and accidental death and dismemberment. While it’s never fun to consider the circumstances under which these policies may be necessary, it’s important to ensure your family is protected should the unexpected occur.
#6 – Review your beneficiaries.
Your employer’s annual benefits enrollment period is a great time to review and update your beneficiary designations. This is especially important if you’ve recently experienced a major life event, such as having a baby, getting married or getting divorced.
Would you like some help evaluating your employer-sponsored benefits options in light of your overall financial situation? Creative Planning is here for you. Our experienced professionals work to ensure every aspect of your financial life is well cared for and helping you achieve your long-term goals. Schedule a call to learn more.