If your open enrollment period for your workplace benefits plan is coming soon, now is the ideal time to review your insurance information and other benefits. When reviewing, watch out for these common open enrollment pitfalls.
The passive opt-in
For some, it’s not uncommon for your original benefits choices to remain in place year after year. Sticking with your default option may be detrimental for two reasons. First, your life situation may have changed. Could this be the year you need more comprehensive health coverage? Do you still need dependent coverage? Check with your tax or financial advisor to see if you can free up more disposable income to contribute to a Health Savings Account (HSA) or Flexible Spending Account (FSA).
Second, your employer may have negotiated better coverage. You’ll only discover these options by speaking with your human resources representative or medical plan provider.
Forgetting spousal benefits
Being covered by both your own and your spouse’s plans could be a serious financial hazard. First, you may be overpaying for insurance. Even worse, being doubly insured could leave you in the middle of a fight between insurance companies. Both will insist the other pay first, leaving you to coordinate benefits.
Adding a spouse to a workplace policy is usually cheaper than having two separate policies. Study both policies and determine which one is more advantageous. If you and your spouse are on different enrollment periods, see if a preview of the planned benefits offerings is available prior to open enrollment. This way you and your partner can review the available options early.
Ignoring HSA/FSA options
Consider if enrolling in an HSA or FSA makes sense for you. Both allow you to contribute pre-tax dollars for expenses related to health care. The principal difference between them is HSAs roll over their entire remaining balance to the next year. FSAs may only roll over up to a certain pre-established limit. The good news is funding an HSA or FSA means less of your take home pay is taxed.
Enrolling in one of these accounts requires estimating your health care costs for the next year. For a planned medical expense, such as a surgery, contact your medical plan provider for an estimate on the procedure, to guide possible contributions.
It’s crucial to revisit your benefits options once a year. Be an active participant in your benefits decision.
The advice provided is for informational purposes only.
Article provided by Local Government Federal Credit Union.