It’s that time of year again! Fall is upon us and annual open enrollment is in full swing for a majority of companies. Open enrollment is a great time to reevaluate what makes sense for you and your family’s health. It may be tempting to just breeze through enrollment and stick with the same elections you have had year after year, but you should take advantage of the onetime per year you have to make changes. As you consider the plans that are available to you, it’s important to remember that your elections will remain in effect until the next open enrollment period. You will not be allowed to make any changes for the remainder of the plan year unless you experience a life event. Life events are typically categorized as a marriage, divorce, birth or death of a plan member or loss of coverage of an employee or dependent. These decisions have a significant financial impact for you and your family, so it is important to weigh your options carefully.
When open enrollment rolls around, there are a few things to keep in mind. First, you should re-familiarize yourself with the plan you selected last year. Did you use the plan at a high capacity? Was there a routine expense that was continuously out of coverage? Taking stock of how you utilized your plan last year will help you decide if any changes need to be made for the next year and what those changes should be. If you underutilized the plan, you may want to look at a base plan to save money in monthly premiums and if you over utilized, you may need to switch to the buy up plan to receive more coverage for the services used throughout the year.
When evaluating what plan works best for you, it’s helpful to look beyond the monthly premium cost. You should review all the plan details for the different plans that are offered by your organization. When doing so, review the copay amounts, deductible amounts and out of pocket maximum of each plan. The deductible is the amount you will need to pay before your plan coverage starts to kick in and your insurance begins paying for the services you use at the maximum coverage amount. Typically, the only services completely covered before you reach your deductible are diagnostic testing and preventative services, but this can vary with each plan. So, look at the services covered before you reach your deductible as well as the percentage of coverage for services after you reach your deductible and are working toward the out-of-pocket maximum. The out-of-pocket maximum is the most that you will pay for the plan year.
When reviewing the plans, another thing to consider is your current health and the health of those covered under the plan. Have you had any health-related changes in the past year? Are you on any expensive medications? Do you have a surgery for a family member on the plan coming up? This is a good time to change your plan to a buy up plan with a lower deductible or out of pocket maximum as this will limit the cost you endure in the long run and will make the higher premiums every month worth paying so that those high-cost services you are expecting are covered at a higher rate. However, if you are young and healthy and will have low usage of your plan, a high deductible health plan may make more sense for you since the monthly premiums are typically lower and this would decrease the amount of money that comes out of your paycheck each week.
In addition to health care plans, open enrollment usually includes enrollment for a Health Savings account (HSA) or a Flexible Spending Account (FSA). Don’t forget to sign up for an HSA or an FSA if one is available to you. This allows you to set aside pre-tax dollars to pay for qualified health care costs. You are eligible for an HSA if you have a high deductible health plan (HDHP). You qualify for an FSA if your employer sets up a plan on your behalf. Another perk of enrolling in an HSA or FSA is that many employers will also contribute an allotted amount to this account for you to use every year so it’s a great opportunity to take advantage of this extra benefit. However, take note that you cannot have both an HSA and an FSA, you may enroll in one or the other for the year. A dependent care FSA is another great way to help save you money. This allows you to use pre-tax dollars to pay for out-of-pocket dependent care expenses such as before and after school care for children under 13, daycare, preschool, summer day camp and more. This is an opportunity you do not want to miss out on if it is available to you and you have children since this is essentially a tax-free childcare fund.
Open enrollment can be an exciting time. It’s an opportunity to revisit your company benefit plan options, potentially save money and learn more about any additional perks or programs your company offers such as an Employee Assistance Program (EAP) or other employer paid benefits. Be sure to take note of any additional benefits provided that can be of use to you throughout the year and select your benefit plan options with care! Happy Open Enrollment season!
Next Steps:
Not a Plancorp client? No problem.
There are many complex decisions to make when it comes to finances. If you haven't already done so, we invite you to complete our brief 9-question financial analysis to discover your biggest areas of opportunity to improve your finances. After submitting your analysis, we'll share tailored insights with you based on your results.
Do you already have an advisor?
Whether you already have an advisor or may be evaluating options, this complimentary eBook will help you evaluate your current situation, consider what might be missing and share insight on what you should expect from your financial team. We also invite you to check out our blog posts on Questions to Ask Your Financial Advisor and How to Find a Financial Advisor That Works for You.
Are you a Plancorp client?
If you're not sure where to start, reach out to your Wealth Management team to create or review your estate plan, help set up new financial goals or to check in on your existing goals.
Disclosure:
This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.
Plancorp is a registered investment advisor with the Securities and Exchange Commission ("SEC") and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. SEC registration does not imply a certain level of skill or training. Please refer to our Form ADV Part 2A disclosure brochure and our Form CRS for additional information regarding the qualifications and business practices of Plancorp.
