Broker Check

Your Guide to Open Enrollment

| November 20, 2023

Open enrollment season is the time each year when employees may elect or change the benefits options available through their employer, such as health, dental, and vision plans, health savings accounts, flexible spending accounts, and, often, a range of voluntary benefits. Most U.S. employers hold open enrollment shortly before the end of the year. Open enrollment is not required to be for a certain length of time. Most employers have an open enrollment period of at least two to four weeks.

The open enrollment process can be a bit stressful for many employees. The terminology used is unfamiliar to most, there are an overwhelming number of choices to make, and your benefits menu typically changes from year to year.  If signing up for employer-provided benefits is on your to-do list, don’t just select the same benefits as last year - as tempting as that might seem.

Here are some key steps to take to ensure that you make the most of your benefits package.

Review Your Financial Position

Prior to reviewing your employee benefits and making election decisions, you will want to review your overall financial situation. Understanding your personal cash flow or household budget is a great starting place to begin understanding what benefit elections might be best for you.

  1. Review your budget and consider what benefits will help you to meet your financial goals or ease your financial concerns.
  2. Understand what benefits are available to you, what portion you will pay, and what portion your employer pays.
  3. Consider the status of health coverage for a working spouse or child.

Consider your Health Insurance Options

Your life now may be different than it was last year. You want to make sure that your new plan fits your existing or anticipated needs. Open enrollment is the time to make those changes. You can pick a new plan or make changes to an existing one. If not much has changed in a year, you could just let your existing plan renew itself, but you may be able to save money by checking out other options.

When it comes to open enrollment for health insurance, there are important considerations. 

  1. Know your deadline to select a new plan
    • For ACA plans (non-employer, state-based Affordable Care Act plans), open enrollment runs from November 1 through January 15 in most states. Your new benefits start on either January 1 or February 1.
    • If you’re on a Medicare plan, open enrollment runs from October 15 to December 7. Your new benefits start on January 1.
    • If you’re on a plan through your employer, open enrollment can happen at different times during the year, although it often happens in the fall.
  2. Understand how your current plan has changed – Typically, the company that runs the plan will notify you of any anticipated changes to the plan. ACA Plans and employer plans provide a summary of benefits and coverage. Medicare plans provide annual notice of plan changes in September.

In addition to reviewing the baseline healthcare coverage options that are available, be sure to read up on any changes to or new ancillary employer benefits that are available to you: vision and dental care, healthcare flexible spending accounts, dependent-care flexible spending accounts, life insurance, and so on. High-deductible healthcare plans, or HDHPs, have been common additions to many employers’ healthcare coverage in recent years.

  1. Select a plan based on your coverage needs - Many individuals overlook important plan coverage features and focus solely on the monthly premium. It is important to consider deductibles, coinsurance, copayments, out-of-pocket maximums, and personal savings.
  2. Determine if your doctor is covered by the plan's network - Health plans have networks or groups that include certain providers and healthcare facilities. If you stay in your plan’s network, your out-of-pocket costs will be less. Check your plan’s website to make sure the doctors you use are in their network.
  3. Review the plan prescription drug coverage for any changes - Find out if your plan has put in new approved drug lists, implemented exclusions, or established new approval process provisions that might mean your drugs are no longer covered. A change in pharmacy benefit managers, or suppliers, might also trigger changes.
  4. Determine how much care/coverage you will need for next year - Now is the time to think about how much you’ve spent on health care and what cost you anticipate next year. If there are upcoming medical events you are planning for, such as having a baby, many plan summaries or provider websites allow you to estimate cost and coverage. You do not need to get projected costs down to the exact dollar amount, but it is helpful to have a rough estimate of costs and understand what portion of those expenses you are responsible for paying.

Typically, you are only able to make changes to your health insurance in the case of a qualifying event. Qualifying events, also commonly called qualifying life events, are circumstances that can significantly impact your personal and financial situation—such as getting married, divorced, having a baby, or adopting a child, and the death of a spouse. Many health insurance contracts contain provisions stating that, if such an event occurs, a special enrollment period will be triggered, and a policyholder can request changes to their insurance policy without needing to wait for the next open enrollment period.

Review Medical Expense Accounts Available 

Since healthcare coverage usually entails at least some out-of-pocket spending, companies frequently offer medical expense accounts, such as health savings accounts or flexible spending accounts, to help cover such costs. Health benefit accounts can seem complicated, but their purpose is straightforward: they help you save money on health care. There are multiple types of accounts and there are differences between each account.

  1. Health savings account (HSA): HSAs offer a triple-tax benefit. Employees make contributions with pre-tax dollars, the account grows tax-free, and there are tax-free withdrawals for qualified medical expenses. HSA funds can also be invested after your account balance reaches a certain limit. Unused funds roll over year to year and you can keep your HSA if you change jobs. You can only participate in an HSA if you are enrolled in a high-deductible health plan. If you are enrolled in a high-deductible health plan but don’t have access to an HSA through your employer, you can access an HSA through a third-party provider.
  2. Flexible spending account (FSA): FSA allows you to set aside money on a pre-tax basis to pay for eligible health care expenses, like medical, dental, vision, hearing, and prescription expenses, plus copays, coinsurance, and over-the-counter items. These accounts generally have spending time limits, so it’s important to use your funds by the deadline. Reminder: you cannot have an FSA if you have a health savings account (HSA) account; however, you can pair a limited-purpose flexible spending account (LPFSA) with your HSA.
  3. Health reimbursement arrangement (HRA): An HRA is a tax-free account funded by your employer. You can use the money in the account to pay for eligible health care expenses, such as copays, medical supplies, and all eligible health care expenses selected by your employer.
  4. Dependent Care Flexible Spending Account (DCFSA): A dependent care flexible spending account (DCFSA) is a pre-tax benefit account used to pay for eligible dependent care services, like preschool, summer day camp, before or after school programs, and child or adult daycare. With a DCFSA, you can use untaxed dollars to help pay for dependent care while you work.
  5. Limited purpose flexible spending account (LPFSA): LPFSA is a pre-tax benefit used to pay for eligible dental and vision expenses and is designed to pair with a health savings account (HSA).

Review Life Insurance Coverage

Many employers offer life insurance coverage as a benefit. There is typically a small amount of life insurance available as an included benefit, however, often the coverage amount does not meet the life insurance needs of an employee. Determine your life insurance needs and be sure to select an amount of coverage that fits your needs. Consider the portability features of an insurance policy through your employer in that case you were to leave the company.

Don’t Forget About Other Benefits Available

Open Enrollment touches on a lot of employee benefits. Dental, Vision, Disability, and pet insurance are all common insurance options available during the enrollment period. These types of benefits may provide coverage that is important to you and your family. Understanding what is covered and the cost of each benefit is an important part of navigating the open enrollment period.

It is important to take stock of additional benefits that might be on offer, including dependent-care FSAs, student loan repayment programs, public transit assistance, and long-term-care insurance. Your employer’s menu may change from year to year, and so might your own needs. There may be benefits you have a need for that are not offered by your employer. In many cases, you can find the coverage you need through an outside provider.

Reach out to your advisor if you are interested in an employee benefits review or searching for benefits that are not provided through your employer.