5 Things to Consider With Open Enrollment
Open enrollment is an important time each year because it gives you the opportunity to adjust your employee benefits. It allows you to sign up for health insurance, add a child or make changes to other benefits. Many employers will slightly change their plans and the things that they offer during open enrollment, you may need to adjust according to the plans that are currently being offered to you. Some employers will also require action on your part or you may be unenrolled from plans. It is important to carefully read the documents that are given to you so that you can make the necessary changes and keep your employee benefits.
Open enrollment is a great time to look at the amount you are contributing to retirement and seeing if you can increase it.
How Have My Needs Changed This Year?
First, you need to determine if your needs have changed over the last year, or if they will change over the next year. For example, you if you are in your 20s, you may have been on your parents’ health insurance, but if you are turning 26 you will be aging out and you need to get coverage. It is easier to sign up during open enrollment. Also, dental insurance may not make sense when you are single, since the premiums are usually close to the amount that it will cover, but it may make more sense once you have children to put on the plan.
Additionally, you may need to start using the Flexible Spending Account for daycare or health costs if your needs have changed.
What Are the Change in Plans?
When you receive your open enrollment materials, you will need to look for changes in the plans that are being offered. You may see differences in more than just the premiums for the plans, but also detailed differences in the coinsurance and copayment amounts. You should also check to see if there is a different deductible amount. Depending on the size of your employer, you may have several different plans to choose from. Your employer may offer a high deductible health insurance plan or a traditional health insurance plan.
You should consider your overall out-of-pocket costs for each plan and the likelihood that you will meet those maximums. This may change from year to year. For example, if you are healthy and single, a high deductible plan may be a cost saving option, since you rarely go to the doctor. However, if you are planning on having a child in the next year, you may save money by choosing the traditional health insurance plan. You can add up the costs of the different plan to find one that is better for your situation.
What Are the Change in Providers?
You need to also consider if there are changes in the providers of your benefits. Your employer may switch insurance companies depending on the overall cost for them for coverage. If there is a change in insurance providers, your doctor or dentist may no longer be covered under the new insurance plan. You will need to check with your insurance company before you go to the doctor to make sure you are covered and to avoid out-of-network costs or denied claims. There may also be changes in how the plans are administered.
Somethings may need pre-approval that did not before. You may also need to file your claims yourself for some procedures. (This is more likely to be the case with vision or dental insurance.)
What Insurance Do I Actually Need?
It is also important to consider the insurance that you actually need for coverage. If you do not have a family history of cancer, then you can likely skip the cancer insurance. Similarly, if you do not wear glasses, you do not need the vision insurance. You can always add it in your next open enrollment if you need it later on. Term life insurance should be purchased independently of your job so that your coverage will continue if you are changing jobs and you do not have to worry about now having coverage.
When you are younger and in your 20s and early 30s, you may not need long-term disability insurance, but when you reach your 40s, you may want to consider getting it.
How Will Things Affect My Take-Home Pay?
The final things you need to consider is how your benefits will affect your take home pay. It is important to realize that many of the benefits will come out before your taxes. This lowers your taxable income and may make it so that you do not notice the changes as much. Money that you take out for your Flexible Spending Account to help cover things like medical expenses and daycare may reduce your take home pay, but not really affect you because you were already budgeting for the expenses, but they are spread over the entire year.
You may also want to consider how the cost of using your health insurance will affect your budget. It is a good idea to have money set aside to cover your deductible so that you can use your health insurance when you need it.