10 Oct 2024 Open Enrollment Checklist

As Fall settles in, many people start to think about their favorite seasonal activities: visiting the State Fair, carving pumpkins, enjoying bonfires, or simply savoring the crisp air. For financial planners, this season also signals the approach of year-end tasks, like required minimum distributions (RMDs) and charitable donations. Among these important responsibilities, don’t overlook your employer’s open enrollment period, typically held at the end of the calendar year. It might be tempting to stick with last year’s selections, but this is a prime opportunity to explore valuable updates and changes. Here’s a quick rundown of key items to consider when looking at your open enrollment.

Health Insurance
This entire brief could be written about health insurance, which we have done in the past, but I wanted to touch on a few key points. When examining different plans, be sure you are comparing them fairly. Don’t just look at one variable, but think about how much the plan costs monthly, your deductible, and your out-of-pocket max. Knowing those three numbers will give you the minimum a plan will cost (if you only pay for the plan, but never have expenses) up to the maximum you will pay (the monthly cost plus the out-of-pocket max). The deductible can make a difference in the middle of those two variables.

Of course, it is hard to know what you will spend over a year, but take a look at your previous years health expenses to have a gauge for how much you will spend. Also, be aware that if you are changing plans how it will impact your in-network vs out-of-network providers.

Lastly, be aware of Health Savings Account (HSA) eligible plans. You shouldn’t blindly pick the plan that has an HSA, but it is one of the best accounts tax wise you can have. If two plans are close, it may make sense to let the HSA eligible plan be your selection.

Disability Insurance
Often overlooked, disability insurance is one of the more important pieces for risk management in your financial plan. It is a little more complex than life insurance. Typically, you have options for short-term (up to a year) and long-term (benefits until you are retirement age). Some employers will pay for this coverage for their employees, while others just give the option to purchase it. You may even be able to ‘buy up’ more coverage. If your employer pays for the premium, the benefit (60% of your salary is common) will be taxable to you. If you pay with after tax dollars yourself, the benefit will not be taxable.

If you are working and plan to continue working, this is an easy benefit to accept if your employer is covering it. If you are paying the premium, it still likely makes sense, but would need to be evaluated against other options. Regardless, be aware of how much coverage your disability insurance would provide if anything were to happen to you.

Life Insurance
This is a little more straight forward than disability insurance coverage. Often employers will cover a certain amount of insurance (1x or 2x salary is common) and then allow their employees to buy additional coverage. It is an easy decision to take what your employer is covering, but some additional evaluation may be needed if you want to buy more coverage.

An important note here is that most of the time work life insurance coverage will not go with you once you leave that job. Be aware of that if you consider purchasing additional coverage. It may make more sense to take your employer provided coverage and then purchase a term life insurance policy outside of your employer. This way you have the coverage locked in for as long as you need it. This is an item we are always happy to discuss with clients.

Other Benefits
There are a plethora of other options that you may have the option of opting in for. It is worth reviewing your full benefits guide to see if any are worth utilizing for your specific situation. Some common ones we have seen in the past:

• Legal Services – A great option to get legal assistance through your employer benefits. If you don’t have estate documents, this is typically a quick way to get them completed with little or no cost to you.
• Wellness Programs – This benefit is often intertwined with health insurance, but some companies will decrease your health insurance premium or reimburse you for fitness classes if you meet certain criteria.
• Volunteer Days – Many companies will give you time off throughout the year if you are spending your time volunteering. Similar to this is companies that will match donations to nonprofits.
• Career Development – Employers love to see their employees growing professionally and will often cover the costs of career development activities, like attending a conference or a workshop.

It is easy to coast on the decisions we have made in the past, but open enrollment is a really good time to revisit your employer benefits to see if there is anything worth changing. It can be complicated to compare all the different options and understand how they fit into your financial picture, but if you are a Beacon client, do not hesitate to reach out to discuss your open enrollment. We are always happy to discuss how the different options can impact your financial plan or if certain insurance coverage makes sense for you.

The content above is for informational and educational purposes only. The links and graphs are being provided as a convenience; they do not constitute an endorsement or an approval by Beacon Wealthcare, nor does Beacon guarantee the accuracy of the information.