Understanding Your Open Enrollment Options

Getting Ready for Open Enrollment

Fall is open enrollment season for most employers and it’s the time of year when you can make changes to your employee benefits without a qualifying event (getting married, having a baby, switching jobs, etc.). Companies usually make changes to their benefits during this time so here are a few items to keep on your radar as you start to get those emails from HR. 

Health Insurance

High Deductible Plans

These types of plans have high deductibles and lower monthly premiums. They are good options for individuals who are relatively healthy and don’t anticipate a lot of health expenses in the upcoming year.

High deductible health care plans are the only health care plans that allow an individual to contribute to a health savings account (HSA). Many times your employer will contribute to the HSA on your behalf. The contribution limits have increased for 2022 so make sure you max out your contributions if you have an HSA.

Other Health Care Plans

Preferred Provider Organizations (PPOs) and Exclusive Provider Organizations (EPOs) and health care plans like these usually have higher premiums, but lower deductibles. These types of plans are good options if you expect to have a lot of healthcare expenses in the upcoming year (e.g. having a baby, have a lot of prescriptions, etc.).

Healthcare Flexible Spending Accounts (FSAs) and Dependent Care Flexible Spending Accounts (FSAs) 

Healthcare FSAs

Healthcare FSAs are use-it-or-lose-it accounts so make sure you spend the funds in those accounts by the end of the year. Some plans have carryover features due to legislation passed during the pandemic; check with your employer to see if your plan qualifies for this extension. The contribution limits for these accounts for 2022 haven’t been established (as of the date of this publication) but the 2021 limit was $2,750 per individual.

Dependent Care FSAs

These pre-tax benefit accounts can be used to pay for services such as daycare, pre-school, summer camps, and before/after-school programs. If your employer increased the contributions limits in 2021 (due to the American Rescue Plan passed on March 11, 2021), be aware that these limits will be reduced in 2022. 

The 2021 annual limits for pre-tax contributions could be as high as $10,500 for single taxpayers and married couples filing jointly, and up to $5,250 for married individuals filing separately. The maximum will reset back to $5,000 for single taxpayers and married couples filing jointly, and $2,500 for married individuals filing separately.

Disability Coverage

Disability coverage provided through your employer is one of the best ways to protect your ability to earn income. One thing to check is the elimination period, which is the period you will need to cover on your own before the insurance starts to pay (which you would cover using your emergency fund).

Short-Term Disability Coverage

This type of coverage is usually paid for by your employer and would cover an injury or illness for a short period of time (for example, 60% of your pay for 12 weeks). Expecting a baby? This coverage comes into play when taking maternity leave and coordinates with state coverage (in states like California).

Long-Term Disability Coverage

This type of coverage is also usually paid for by your employer and typically starts once your short-term disability coverage ends. It typically covers 60-70% of your pay but you may have the option to increase your coverage amount. If you have the option to pay the premiums for this insurance, we highly recommend it. If you’re not sure, talk to your BPFP team to see if this is a good option for you.

Life Insurance

This is a good time to revisit the beneficiaries on your group life insurance policies available through your employer. Did you obtain private life insurance policies in the last year? Your BPFP team will determine if reducing your work life insurance is appropriate in your situation.

We typically recommend that our clients obtain private life insurance policies, because your group policies are not typically portable (meaning you can’t take them with you if you leave) and because your premiums go up every 5 years. We typically do not recommend AD&D insurance, even though it is pretty cheap. The reason is there are so many exclusions with this type of insurance that it rarely pays out.

Other Benefits

Legal Plans

These are great plans that provide you with access to a network of attorneys for a low price. If you haven’t already prepared your estate planning documents, consider enrolling in this benefit during open enrollment.

If you used a legal plan to prepare your estate planning documents this year and your estate plan is complete (or will be done by the end of 2021), don’t forget to unenroll.

Commuter Benefits

Are you heading back to the office next year? This could be a good time to opt back into these benefits and could help you pay for tolls, parking, metro cards, bus passes, etc.

Wellness Programs

Check out these benefits as companies will sometimes offer monetary incentives/reimbursements to do things you are probably already doing like buying exercise equipment or enrolling in fitness classes.

Please reach out to your BPFP financial planning team if you have any questions or need help changing benefits during open enrollment!