Maximize Your Employee Benefits – Five Ways To Sail Through Open Enrollment
By Michael Hollis
Open enrollment season is a pivotal time for employees to reassess their benefits package and make informed decisions that align with their personal and financial goals. Your employee benefits go beyond just health insurance coverage; they encompass a range of offerings that can meaningfully impact your overall financial health, from group life insurance to tax-advantaged health expense savings. Yet, the complexity of options and the jargon can often make open enrollment seem overwhelming. We’ve got five practical tips for maximizing your employee benefits and confidently navigating open enrollment.
Keep Your Eyes Peeled
Over the last several months and leading up to open enrollment, your HR department has been hard at work formulating the benefits for the coming plan year. In the next several weeks, you’ll start hearing the buzz and probably seeing email notifications. Stay on the lookout for that communication, and don’t miss the opportunity. Accept the invite, put it on your calendar, and notify your manager that you plan on attending.
2. Remember Your Perks
Now is the time to recall what you selected last year. If you forgot, the first way to re-familiarize yourself is to pull out your latest pay stub and look at your deductions. That’s the foolproof way to know what you voluntarily selected for your benefits. If you have trouble keeping all those line items straight or the terminology on your paycheck isn’t clear, lay them out on paper or in a spreadsheet with their cost and a brief description of what you are paying for. Your HR Management System is the authoritative source to know what you selected and read a more detailed explanation of the benefits you see on your paycheck. Matching up the deduction amounts from your paycheck against what you see in the HR system is a tried and true way to clarify each item.
Your HR system will also typically delineate benefits that you receive that are fully company-paid. It’s essential to understand what your employer provides for free to decide whether adding voluntary coverage is in your best interest. For example, your company has basic term life insurance coverage. Maybe this is enough in your situation, or you have a term life policy you purchased outside of work, so you don’t need additional voluntary term life insurance.
3. Understand Your Options
If your company offers an in-person meeting or webinar to give you an overview of the upcoming benefits, take advantage of that. You might be busy or feel like attending this information-gathering session isn’t part of your job description, but it’s OK to go. It’s part of the employer/employee relationship. Because you have already completed the review of your current benefits (hint, hint), it might be quite obvious what has changed in the last year that will cause you to consider adding, dropping, or changing coverage. One more thing: don’t miss hearing about the included extra benefits you don’t have to pay for, like legal assistance, estate planning, or wellness credits and subsidies – like a gym membership.
Pay attention if there’s a significant plan change to your health insurance. Listen closely for any deductible, co-pay, or maximum out-of-pocket cost changes. Likely, your premium rose. Study the plan summary fact sheet to understand these changes, but don’t let a reasonable premium increase deter you from staying with your plan. Don’t be afraid to change if one of the other plans is more attractive and fits with changes that occurred in your situation in the last 12 months.
If you don’t know the terms HSA (Health Savings Account) or FSA (Flexible Spending Account), these are great tax-advantaged ways to set aside funds for healthcare expenses. HSAs are better in the long run because the funds can be rolled over annually, whereas your employer probably only allows you to carry over a small amount of your FSA.
Life and Disability insurance are other necessary risk mitigation benefits that you should consider. Many employers have some coverage as a built-in benefit, or you can add these protections to your tray of the buffet of voluntary benefits. It’s necessary to cover lost wages if you can’t work due to a long-term disability (LTD). Disability insurance through your employer will be less expensive than obtaining it on the open market. If you leave your job, you’ll need a new policy because the coverage is tied to your job (not portable). It’s OK because many employers have a voluntary option for LTD coverage. For life insurance above any basic employer-provided amount, I like having my own policy instead of a group term policy. Group term policies can increase rates as you age, whereas my individual term policy has a locked-in rate for the entire term. While group-term insurance is portable, it’s nice to know that my employment doesn’t affect my life insurance coverage. You also don’t have to deal with the hassle of porting to an individual policy or the unknown cost because your employer may have subsidized your premium.
What about unnecessary employer benefits? I don’t aim to call anyone out who is in HR, but some of the benefits offered aren’t worth it. I’m discussing accidental death, child life, critical illness, cancer, and supplemental hospital insurance. Most of this insurance comes off as me betting against myself, believing I’ll likely have a tragic incident. Picking a solid medical insurance plan and having an emergency fund to help cover unexpected expenses is the better solution. These unnecessary benefits tend to have a small cost on each paycheck but add up over time when you don’t need them. Instead, pocket all those extra deductions from your paycheck or increase your automatic investment.
4. Talk It Out
With Your Family
I always follow up on understanding our options by talking to my wife. I’m the nerd in our family, so I usually want to learn the nuts and bolts of each option. Tanya thinks it’s essential and wants to participate, but to her, workplace benefits are like eating a piece of HAM on Christmas (She hates meat, BTW, but especially Ham. Although she does like a good ole’ Culvers single from time to time). If I’ve done the legwork and can easily explain the options, that helps her participate so we can make a family decision. Further, your spouse may have benefits from their employer, and because open enrollments usually overlap to some extent, you can use your conversation to determine if one of you has a better deal available. If you’re going to use an FSA, take time to determine an election amount that you know you’ll use during the plan year.
With Your Advisor
Here at The Dala Group, we always look at paystubs, so we are adept at discerning each item on your paycheck and giving you quick answers. If you’re struggling to know how the choice of your health plan will affect your finances, we have the expertise and network of professionals who can answer your questions. We can help you determine how much additional life insurance you need above your basic employer policy. We can examine your disability options with your employer and give you a recommendation. This is part of our comprehensive financial planning service to all our ongoing wealth management clients. Engage with us soon if you’re already a client so we can come alongside you during this open enrollment season, or if you aren’t a client yet, schedule an intro call today to see if we are a good fit for you and your family.
5. Make Your Deadline
I’m sure any HR manager reading this will thank me for this piece of advice. Don’t miss the deadline. Make your selections using your HR department’s process and click Submit. Maybe you have indecision or some other emotional or relational block in getting your benefit selections done. Even if you’re not changing benefits, you must re-affirm your previous year’s choices to make it official. If you miss the deadline, your employer is not legally required to do anything, and the terms of some benefit plans may prohibit them from making an exception. The only allowance at that point is if you have a qualifying life event and can take advantage of a special enrollment period. The bottom line is that you don’t want to miss it and create headaches for HR or you and your family.
