3 smart decisions to make during open enrollment season


It's open enrollment season at many companies, when workers can pick or change employer-offered benefits for the upcoming calendar year.

Benefits you might assess during open enrollment include health insurance, vision and dental coverage, pretax accounts for child care and medical expenses, and wellness or lifestyle programs. Such benefits make up about 31% of the total compensation for U.S. workers, according to data from the Bureau of Labor Statistics.

Among the top trends for 2020 are modest cost increases for health care and an expanded lineup of mental health benefits, according to a survey of large employers conducted by the National Business Group on Health. So making the right choices could mean saving thousands of dollars.

"Pay attention and ask questions — you owe this to yourself," says Chad Parks, founder and CEO of Ubiquity Retirement + Savings.

Here are three ways to make smart open enrollment decisions:

1. Look past premiums when comparing health-care plans

If your employer offers multiple health coverage options, don't focus solely on the monthly premiums. The deductible, which is an amount you must pay out-of-pocket before insurance coverage kicks in, is just as important when figuring out your costs.

More than 80% of U.S. workers covered by their employers have a deductible, and the average for a single person is $1,655, according to a 2019 employer health benefits survey conducted by the Kaiser Family Foundation.

"Something as simple as not understanding how deductibles work could immediately result in a huge unexpected expense," says Jina Etienne, a certified public accountant and a member of the AICPA's national financial literacy commission. For example, a plan with lower premiums may have a higher deductible, resulting in more out-of-pocket costs for you over the course of the year.

Something as simple as not understanding how deductibles work could immediately result in a huge unexpected expense.
Jina Etienne
certified public accountant

2. Think about expenses in the year ahead

It's tempting to automatically select the same benefits that you did last year, but that's problematic for two reasons: The options may have changed, or you may have.

"People often rely on their experience from recent years probably too much," says Adam Johnson, vice president of health navigation at Alight Solutions, which assists companies with their benefits packages. "You need to really think about what the upcoming year is going to look like."

The most common example Johnson sees: someone failing to consider all the additional medical expenses that come with starting a family. Factor in other changes as well, like a recent diagnosis of a condition that might require a series of doctor's appointments, a surgery, or ongoing prescription medications.

If you're having trouble making a decision on your health-care options, consider asking for help. Many companies offer assistance, either in the form of someone who's available to talk through options on the phone or an online tool.

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3. Consider voluntary benefits

More companies are offering an increased lineup of voluntary benefits such as critical-illness insurance, identity theft protection, pet insurance, long-term care insurance, student loan refinancing, and wellness programs. And nearly 80% of employers believe these types of benefits are an integral component of their benefits strategy, according to the results of a 2018 survey conducted by Willis Towers Watson, an advisory company.

These offerings are usually less expensive to obtain through your employer than if you went out to get them on your own, Etienne says: "A great example is life insurance, where you might be able to qualify for coverage through an employer plan regardless of preexisting conditions or without having to undergo a medical exam."

Just be sure to think through whether you'll actually use these benefits, and how much you'll pay, Johnson recommends. "If people are thoughtful about them, there's a ton of value there," he says. "The cost savings can be enormous."

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