During open enrollment at work, we’re faced with the often confusing task of evaluating the benefits options our employers offer. Often, these benefits can change from year-to-year, complicating things even more. While you may be tempted to just let your previous benefits selections “roll over,” it’s critical to take time to review and understand what’s being offered and make any necessary updates to your insurance and other plan selections to meet the changes you have—or will have—in your life.
According to a recent survey conducted by LIFE and LIMRA, among the top financial concerns of Americans today are
- having enough money for a comfortable retirement
- paying for medical expenses
- being able to support themselves if they become disabled and unable to work
Open enrollment gives you the perfect opportunity to review your financial and insurance plans to make sure you have a foundation in place to help prepare for these types of potential expenses. These eight tips will give you a helping hand:
1. Choose your options carefully. Barring a major life change, such as marriage, divorce or the birth of a child, most benefit plans do not allow you to make changes to your coverage elections more than once a year, during open enrollment season. Be sure to consider your plan options carefully so that the choices you make meet your current needs.
2. Don’t assume that doing nothing will maintain your status quo. Allowing your benefits options to just roll over from one year to the next can seem like an easy decision when you’re faced with numerous open enrollment choices. But not taking the initiative to evaluate new or changing options could mean missing out on plans that could potentially save you money or could leave you in a program that no longer meets your needs.
3. Consider a high deductible health plan. Review your health plan options to see if your employer offers a high deductible health plan. These plans can be less expensive if you don’t plan to use your coverage often. However, you’ll want to take the money from your lower premiums and save it. If you should incur medical expenses, you may need that money to pay for them because you will have to pay a larger deductible up front. If you don’t have high medical expenses, you will have saved that money.
4. Look for cost-effective ways to increase your life and/or disability insurance. Many companies offer their employees group life and disability insurance. Sometimes employers will provide a basic life or disability insurance benefit at no cost to their employees. They may also offer an option to supplement coverage through a voluntary payroll deduction. It is important to review the options available to you to maximize any opportunities where you may be able to increase coverage in a cost-effective way.
5. Re-evaluate the amount of insurance coverage you need. If you’ve recently had a child or been married or divorced, it is important to update your insurance policies to account for these life changes. When the number of people who depend on you changes, it’s likely that your health, life and disability insurance coverage will also need to change. The LIFE website offers several calculators, including a Life Insurance Needs Calculator and a Disability Insurance Needs Calculator, to help you determine how much coverage you should have.
6. Make sure your beneficiary information is up to date. Marriages, divorces, births or adoptions can often be overlooked when people are reviewing their policies and the beneficiaries designated for things like life insurance or a 401(k) account. You’ll want to be sure that your beneficiary information is updated based on your current life situation to avoid any confusion or potential problems during the claims process.
7. Calculate your out-of-pocket healthcare expenses. As health-care costs continue to rise, it’s important to consider taking advantage of a flexible spending account (FSA) or health saving account (HSA). These types of accounts allow you to set aside a portion of your pre-tax earnings to pay for qualified expenses, such as doctor co-pays, prescriptions, daycare or even mass transportation and parking—depending on the type of account being offered. If you currently contribute to a FSA or HSA, you may want to increase or decrease your contribution based on your current needs.
8. Ask for help. Talk to your human resources representative or your company’s employee benefits advisor about your benefits options during open enrollment. You’ll also want to review your options with your spouse—some benefits packages are better than others, so you may want to consider being added to your spouse’s plan as a dependent or vice versa.