Open enrollment season is your annual opportunity to review your employer-provided benefit options and make elections for the upcoming plan year. To get the most out of what your employer has to offer, take some time to read through the enrollment packets or information before making any benefit decisions.
Review your health plan options
Even if you’re satisfied with your current health plan, compare your existing coverage to other plans your employer is offering for next year. Premiums, out-of-pocket costs and benefits offered often change from one year to the next and vary among plans. You may decide to keep the plan you already have, but it doesn’t hurt to consider your options. The decisions you make during open enrollment season are important because generally you are locked into those options until the next open enrollment period. The exception to this is a “qualifying event” such as marriage, divorce or the birth of a child in which case you are able to make changes outside the window.
Some tips for reviewing your health coverage:
- Start by reading plan materials you’ve received in your open enrollment packet and find out as much as you can about your options. Look for a “What’s New” section that spells out plan changes.
- List your expenses. These will vary from year to year, but what you’ve spent over the course of the last 12 months may be a good predictor of what you’ll spend next year. Don’t forget to include co-payment and deductibles as well as dental, vision and prescription drug expenses.
- Reevaluate your coverage to account for life changes. For example, getting married, having a baby, changing jobs or retiring are events that should trigger a thorough review of your health coverage.
- Consider all out-of-pocket costs, not just the premium you’ll pay. For example, if you frequently fill prescriptions, you may save money with a plan that offers the broadest prescription drug coverage with the lowest co-payments, even if it charges a higher premium than other plans.
- Compare your coverage to your spouse’s if he or she is eligible for employer-sponsored health insurance. Will you come out ahead if you switch to your spouse’s plan? If you have children, which plan best suits their needs?
- Take advantage of technology. Some employers offer calculators or tables that allow you to do a side-by-side comparison of health plans to help select the best option.
Decide whether to contribute to a Flexible Spending Account (FSA)
You can help offset your health-care costs by contributing pretax dollars to a health flexible spending account (FSA), or reduce your child-care expenses by contributing to a dependent-care FSA. The money you contribute is not subject to federal income and Social Security taxes (nor generally to state and local income taxes), and you can use these tax-free dollars to pay for health-care costs not covered by insurance or for dependent-care expenses.
If your employer offers you the chance to participate in one or both types of FSAs, you’ll need to estimate your expenses for the upcoming year in order to decide how much to contribute (subject to limits). Your contributions will be deducted, pretax, from your pay check. One thing to watch out for this open enrollment season – because of a change to the “use-it-or-lose-it” rule, employers may now allow participants the chance to roll over $500 of health FSA funds that are unused at the end of one plan year to the next plan year. So before you decide how much to contribute, read through your employer’s materials to see whether this change will apply to you. Employers are not required to adopt this new carryover approach. If your employer has not, you’ll lose any contributions you don’t spend by the end of your benefit period (including any grace period). And remember, you must enroll in a health or dependent-care FSA each year; enrollment is not automatic.
Determine if your plan is eligible for a Health Savings Account (HSA)
A health savings account (HSA) is a savings vehicle established to set aside funds tax free to pay for health care expenses. HSAs may be established by any qualified individual covered by a high-deductible health plan (HDHP). Contribution limits for single coverage for 2017 is $3,400 and for family coverage is $6,750. A catch-up contribution of $1,000 is also allowed for those 55 and older.
The main differences between the FSA and HSA are the contributions in an HSA are not use-or-lose. You may continue to own money in the HSA even if you change health plans or terminate employment. The contribution limits are higher in an HSA, but they are only available to members enrolled in a high-deductible health plan.
Below are a few other helpful insights about health savings accounts that may be of interest:
- HSA accounts can be used to pay medicare premiums if you are 65 or older.
- HSA accounts can be used to pay for long term care insurance premiums (amount is limited and should be confirmed).
- Funds can be withdrawn from an HSA at any time after age 65 and are only subject to ordinary income tax (there is no penalty);
- You can continue to contribute to an HSA as long as you are not on medicare (even if you are over 65).
- Health Savings accounts can be used to pay expenses for up to a year after one’s passing. After that, funds are passed per your designated beneficiaries or they become a part of your estate (this raises the importance of making beneficiary designations).
- You can transfer IRA dollars into your HSA (one-time). You may not transfer HSA dollars into an IRA
Find out what other benefits and incentives are available
Many employers offer other voluntary benefits such as dental care, vision coverage, disability insurance, life insurance and long-term care insurance. Even if your employer doesn’t contribute toward the premium cost, you may be able to conveniently pay premiums via payroll deduction. To avoid missing out on savings opportunities, find out whether your employer offers other discounts or incentives. Common options are discounts on health-related products and services such as gym memberships and eye glasses, or wellness incentives such as monetary reward for completing a health assessment.
Take a close look at your retirement plan options
This may also be a good time to review your employment retirement plan if applicable – 401(k), 403(b), 457 or SEP. If your income will be similar next year and you find yourself in the 28% marginal tax bracket or above, you should likely save into the traditional, pre-tax savings options. If you are in a lower marginal tax bracket, you may consider a Roth option if available. If you are maximizing your contributions ($18,000 in 2016 for under 50 years old, $24,000 with the catch-up), verify your contributions continue throughout each pay period to ensure you receive the full matching contribution if applicable. In most cases, if you fully fund before the end of the calendar year, you may miss the opportunity for the employer match unless there is an annual true-up match provision in your plan. This scenario typically applies to highly compensated employees with a large percentage contribution and/or who make 401(k) contributions from bonus income early in the year. If the limit is reached and contributions cease, the administrator will have only matched for those pay periods with a contribution. The True Up Match allows for the employer to provide the full match had you contributed over the full 12-month period.
Get the information you need
Ask your benefits administrator for help if you have any questions about your benefits, the options available to you, or enrollment instructions or deadlines. You generally have only a few weeks to make important decisions about your benefits, so don’t delay.
We stand by ready to assist as you navigate open enrollment season and questions arise. As always, we welcome your feedback.
Posted on Thu, October 27, 2016
by Kimberly Pauley filed under