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Open enrollment is the time of year when you can sign up for new health insurance plans on the state and federal health insurance markplace.
It's also the name of the period when many workplaces have you to pick your employer-provided coverage. This is when you can review your benefit options and make adjustments for the year to come. Whether you accept the benefits or not, open enrollment is a mandatory process at most companies. It can be nerve-wracking, too!
We’ve made this quick guide to help you make the best choices for you and your family for health insurance, life insurance, disability insurance and more.
Health insurance is the meat of open enrollment. Unless you go through a qualifying event like childbirth or marriage, it’ll be the only time you can sign up for or change your health insurance plan until open enrollment next year.
Even if you like your current plan and your employer is keeping it, you’ll still need to re-enroll. This is a great opportunity to make sure the plan you’ve used in the past is still the best choice for you.
It helps to have a realistic picture of how often you go to the doctor. Think through how often you went in the past year (and what you spent) and how often you could expect to go in the next year. Did you meet your deductible this past year? Did you come close? Do you have any specialist appointments coming up? Obviously you can’t plan for everything, but you can at least think about the expenses you know are coming.
For many people, it makes sense to choose network type first. This is largely a question of personal preference. Is your doctor covered by the plan? Are there in-network doctors available near you? Is it important to you to be able to go to any doctor?
To get an idea of annual costs for each plan: • Add all premium payments for a rough estimate of what you’d pay in a totally healthy year • Add all premium payments plus the deductible for a rough estimate of what you’d pay in a higher-cost year • Add all premium payments plus the out-of-pocket maximum for a rough estimate of what you’ll spend in a worst-case scenario year
Other factors to consider: • How often you go to the doctor (if you go often, then a higher premium/ lower deductible plan may make sense for you) • Prescription coverage (if you take name-brand prescriptions, you want to make sure your plan covers them) • Savings balance: You should be able to cover your out-of-pocket max
Remember, there is no single “right answer” when choosing your health insurance plans — there are always trade offs. The best thing you can do is make an educated decision based on what your costs have been in the past — and what you expect them to be in the future.
Learn more about the basics of health insurance.
Many employers offer options for dental insurance and vision insurance as well. Again, it’s a good idea to take any coverage offered to you for free. Then think through how you’ve used these services in the past year, and how you’re likely to use them in the future, to decide whether you should opt-in to pay for additional coverage.
Health savings accounts and flexible spending accounts each allow you to store some of your pre-tax income to spend later on health-related expenses.
A health savings account is only available if you have a high-deductible health insurance plan. (For 2020, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. Remember that the deductible is how much you have to pay out of pocket before your insurance will cover anything.) The 2020 HSA contribution limit is $3,550 for an individual and $7,100 for a family. There are no deadlines to use these funds and they carry over year to year.
If your employer offers a flexible savings account, you’re eligible regardless of which health plan you choose. An FSA is another good way to save pre-tax money for health related costs, but your savings generally must be used during the calendar year. Some employers may offer a $500 rollover limit or extend the reimbursement claim deadline two months into the next year, but other than that, the account is “use it or lose it.” The 2020 FSA contribution limit is expected to be $2,750 for an individual.
If you have kids who will be under age 13 for at least part of the year, check whether your employer offers a dependent care FSA. These accounts allow you to use pre-tax dollars for some childcare costs, but make sure you understand the rules. Not every type of expense is covered. You can’t move funds between your FSA and the dependent care FSA.
You should accept any free life insurance coverage that your employer offers, but it’s important to understand that accepting that coverage doesn’t mean that “life insurance” can be crossed off your list. Thankfully, open enrollment is the perfect time to reassess your coverage needs.
Most people need 10 to 12 times their annual salary in life insurance coverage, but most employers only offer one to two times your annual salary (and some offer even less), meaning that your life insurance coverage through work isn’t enough.
While many employers offer the possibility to purchase additional coverage during open enrollment, it’s generally better to purchase your own personal life insurance. Here’s why: You can get better rates by shopping on your own, plus your personal policy won’t be tied to your employment.
If you purchase life insurance through your job and then leave your job, you might have the option to convert your work coverage to a private plan, but it will be much more expensive than if you had simply purchased your own personal plan in the first place. And it's always best to purchase life insurance early (rather than waiting until you leave your job, for example) becuase life insurance prices go up 8% to 10% every year you age. You’ll lock in a better rate if you get additional coverage now during open enrollment than if you put it off.
Start here to get fast and easy life insurance quotes at the best rates for your personal health history.
Disability insurance is another type of coverage that you should opt into if your employer offers it for free. Most employers, however, only offer short-term disability insurance. Open enrollment is a great time to evaluate whether you need additional coverage like longterm disability insurance.
Group disability insurance is often capped at a low benefit amount, and has more coverage restrictions than an individual policy. It’s a good idea to have a supplemental individual policy to fill in the gaps and have with you throughout your career.
During open enrollment, your employer will likely ask you to revisit your retirement contributions. If they offer a match, you should definitely contribute up to the match – don’t leave that money on the table. If they don’t match, or if you’re wondering if you should be saving more, it can help to remember that the more you can save through a 401(k) or individual retirement account, the more you’ll save on taxes. Try to contribute the maximum amount allowed, or as close to that as you can afford. Not sure? Read more about how to boost your retirement savings.
Image: Nastia Kobzarenko
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