Fall is here, which means open enrollment season is back again.
You probably know the drill by now: You receive a packet of information from your employer detailing your benefits for the upcoming year. But if you’re like one third of U.S. employees, you might be signing up for benefits that you don’t fully understand.
Not reviewing or understanding your benefits could be costing you thousands of dollars every year. But don’t worry; most companies appoint an HR representative or other professional to help employees understand which benefits might be best for them.
The best thing you can do is to prepare before you re-enroll. Here’s what you can do to get ready:
Review your year and know your needs
Take some time to understand what did (or didn’t) work for you over the past year. Did you understand how your benefits worked? Did you receive any reimbursements you were owed? Did you experience any life changes that could affect your benefits next year?
You could also look at what coverage was worthwhile, or what you might have been missing. For example, you might have discovered that you would have saved money by adding vision insurance, or you want to add an HSA. If you come into open enrollment with some idea of what you want, you’ll be ahead of the game.
Take advantage of all of your benefits
Even if it looks like your benefits haven’t changed since last year, it’s important to read the fine print. Even slight differences can add up to large expenses or savings, so it’s worth taking a closer look.
Here are some areas you should definitely look out for:
- 401(k) – Check and see if you are able to do after-tax, non-Roth contrbutions, like I discussed here.
- Company investments
- Employer 401(k) match – Many employers will contribute money to your 401(k), and some also offer a Roth 401(k) match. Keep in mind that employers can match in different ways, and with the Roth 401(k) option, your employer’s contribution is placed in a separate traditional 401(k). Upon distribution, that Roth match is taxable. So be aware of the tax implications when you’re looking into your employer’s match options.
- Employer health insurance coverage amount
- Deferred compensation election amounts
- Childcare support
Other ways to maximize your benefits
There are some open enrollment benefits extras that can make a big difference in your health, dependent or wellness care spending throughout the year. Some of these include:
- Flexible Spending Account (FSA) – Dependent care flexible spending accounts are an important consideration for anyone who pays for childcare. FSAs are set up by employers and allow you to use pre-tax dollars to pay for eligible expenses. In the case of dependent care FSAs, those expenses include childcare costs.
- Projected 2024 account limit: $3,200
- Health Savings Account (HSA) – HSAs have a triple tax benefit, but they are also an investment option that serves as a hedge against inflation. The money in your HSA can be rolled over to the next year. Read more in my HSA post.
- 2024 account limits: $4,150 for self and $8,300 for families, plus $1,000 catch-up payment for anyone aged 55 or over.
- Disability insurance – Anyone who depends on their income from work should seriously consider disability coverage. Many employers offer long and short term disability coverage, so it’s smart to have an idea of which would be best for you going into open enrollment. Read more about disability insurance here.
- Spousal coverage – If your spouse also has insurance and other benefits covered through work, make sure you compare both plans to see which benefits are the best for your family.
Do you need help planning for your financial future? Contact me today to set up a meeting to talk about your goals.