Open enrollment for next year is here! I just received the email from my employer’s HR department that open enrollment for next year’s benefit elections have started. Every year, I get geeked out to find out if any cost saving opportunities or other benefit changes have been made for the upcoming year. At the very least, open enrollment gives me a chance to re-affirm my current selections, make changes on things that won’t magically change on their own (e.g. my 401K and HSA deductions), and see if any new benefits, plans, or perks have been added that I can take advantage of.
You may have recently received a similar note from your employer that open enrollment has started. If you’ve been happy with your benefits, your first reaction is probably to archive the email and move on with your day-to-day. Big missed opportunity!
I did this a few years back (and every year since), and it led to me switching from a PPO to an HDHP, which has saved me significant money.
If you don’t at least look at your benefit changes, you’re doing yourself a great disservice. Ignorance is not bliss when it comes to benefit enrollment. Your employer is not going to automatically change your benefit elections to the most optimal selections for you – YOU need to do that.
Here’s just a partial list of benefit changes that could be happening at your employer:
- Changes in benefit coverage to your health, dental, and vision plans.
- Change of in-network health professionals for health, dental, and vision.
- Change in premiums, deductibles, and maximum out-of-pocket amounts for your health, dental, and vision plans.
- FSA and HSA maximum contribution changes (when the maximum annual HSA contribution amount increases, if you would like to max out, you’ll need to change your payroll deduction).
- The maximum 401K contribution amount increases (you’ll also need to change your payroll deduction).
- Remember, the IRS now has a carryover rule on FSAs (employer eligibility may vary) – if you’ve previously been scared off by the “use-it-or-lose-it” rule, maybe you no longer should be.
- Supplemental life insurance coverage offerings and premium changes.
Separately, there could be changes in your personal situation that would impact a number of possible election changes you may want to make for the coming year:
- Your income is (hopefully) increasing, which could allow you to increase your 401K, FSA, or HSA deductions.
- You may have had a life changing event (marriage, divorce, child birth, disease, etc.) that could impact your choice of health, dental, and vision plans.
- You may want to change your beneficiaries.
- You may want to change your voluntary group insurance options (i.e. life, disability, etc.).
Open enrollment is also a good time to review your tax withholding. Most employers allow you to do this at any time, however, open enrollment is a great time to automatically do this (kind of like checking your smoke alarm on daylight savings). If you have or will come across a big change in income during the year, it would be wise to review your number of exemptions to see if it makes sense to contribute more or less taxes throughout the year. You don’t want to get hit with a huge tax penalty or get too big of a refund come tax time. The ideal time to do this is probably right after you submit your taxes for the previous year. Open enrollment is another good time to do so.
I’ll leave you with one more motivational thought. You work your ass off, right? Yes, you get paid to do so, but a big part of your total compensation package comes from the benefits that you have been offered. To not optimize your benefit elections to your own personal benefit is no different than turning away money that is being handed to you for your work. You wouldn’t turn away monetary compensation, right? Well, your benefits are just an alternative form of monetary compensation (although in cases like HSAs or 401Ks, it could even be in the form of cash contributions). So why would you suddenly get lazy with them?
So, pay attention! Open enrollment deserves it. You deserve it.
What big changes in benefit options are you seeing or making this year? And why?
Annual enrollment at my company just finished last week! For the second year, I opted to go with an HDHP/HSA instead of a PPO/FSA. I save $2000/year on premium reductions and company HSA contributions. This year I’ve spent about $200 more on health expensees than I would have with a PPO, so net savings of ~$1800. The downside is that if we need to go to the hospital or have any serious procedures, that $2000 in savings will be completely eaten up. While I’m in my child bearing years, I’ll likely switch to the PPO during years when I expect to have a baby…
FYI – my company allows me to change my 401K contributions and HSA contributions at any time. I make a point to review them during annual enrollment though.
Wonderful post. I do HR for my company and we actually have an April open enrollment. We do this because it gives us power while negotiating with providers. Most other companies start their open enrollment before the end of the year, so we aren’t competing with all those rates.