Some employers will require you to take action at open enrollment time to avoid being unenrolled from your plan. It is important to carefully read the documents they give you so that you can make the necessary changes and keep your employee benefits. Open enrollment is also a great time to look at the amount you are contributing to retirement and see whether 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, if you are in your early 20s, you may be on your parents’ health insurance. However, once you turn 26 you will need to get coverage of your own. It is easiest to sign up for your own plan during open enrollment. Also, dental insurance may not make sense when you are single, as the premiums are usually close to the amount that it will cover. But once you have children and add them to your plan, dental insurance will probably get you more for your money. Additionally, you may need to start using the flexible spending account for daycare or health costs if your needs have changed.
What Are the Changes 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 not just the premiums for the plans, but also 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 plans to find one that is best for your situation.
What Are the Changes 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. There may also be changes in how the plans are administered. Some things 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. For instance, if you do not have a family history of cancer, then you can likely skip the cancer insurance. Similarly, if you do not need glasses, you could decline vision insurance. You can always add it at the 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 change jobs. When you are younger—in your 20s and early 30s—you may not need long-term disability insurance. When you reach your 40s, though, you may want to consider getting it.
How Will Things Affect My Take-Home Pay?
The final thing you need to consider is how your benefits will affect your take-home pay. It is important to realize that many of the costs, such as premiums, will come out before 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. However, they may not affect you much if you were already budgeting for the expenses, since the costs 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.
