Monday, October 19th, 2009...2:00 am
4 Ways Not to Miss Out on Open Enrollment
Got benefits? Well, make sure that you don’t miss the open enrollment period that comes around every October. This is the one time during the year when you can re-consider your employer-sponsored insurance coverage and not be penalized financially for making any changes.
But guess what? If you don’t at least investigate your options during open enrollment, you could end up penalizing yourself financially. In fact, a recent survey of human resources managers from CareerBuilder showed that employees who don’t bother checking out their open-enrollment options could stand to lose anywhere for $500 to $2,500 a year in benefits.
When asked to identify which benefits employees typically don’t realize that their companies provide, human resource managers pointed to the following:
- Flexible healthcare spending – 43 percent
- Wellness benefits – 45 percent
- Tuition reimbursement – 38 percent
- Banking programs – 25 percent
- Discounts on personal entertainment – 24 percent
- Discounts on technology for personal use – 22 percent
- Discounts on travel for personal use (rental cars, airplane tickets) – 20 percent
- Transit programs – 10 percent
- Help with childcare – 10 percent
So how can you make the most of benefits-savings in the coming year? Here are four tips to consider:
1. Schedule time on your calendar to review benefit options. Make sure to schedule this review early in the process, so you’re not rushing to make a decision an hour before the deadline.
2. Leverage pre-tax dollars. In addition to setting aside pre-tax dollars for retirement through your 401(k), also look at how those dollars can be applied to the near future. Flexible Spending Accounts (FSAs) can help offset rising healthcare costs by putting aside pre-tax money for medical expenses that are not covered by insurance. You can also set aside pre-tax dollars to offset commuting costs through company transit programs.
3. Compare plans by working with your HR representative to compare your coverage to coverage offered through your spouse’s or significant other’s employer. It may make better financial sense to have the whole family covered under one plan. Remember to look for quality, not the cheapest option.
4. Don’t miss out on perks, such as discount programs for stores, technology, entertainment, personal travel, concierge service, dry-cleaning, etc. If your employer offers a wellness benefit, you can apply that to gym memberships, smoking-cessation, acupuncture and more.
Our big task during open enrollment is to figure out the amount of pre-tax dollars we put aside each year to cover out-of-pocket medical expenses. What about you?
As a former HR person, I need to point out open enrollment varies BY COMPANY. Every business has their own fiscal year, which can be any month of the year. They also give usually 2 months from the point of open enrollment so your “new” benefits don’t start right away.
A problem with open enrollment being by company is if you and your spouse don’t have the same open enrollment, there is no way to change insurance unless you have a “qualifying event”, which includes a new baby, changing to a non-benefit employment status like part-time, quitting, or adoption. This is why engaged couples need to carefully look at insurance plans so when they get MARRIED, which is a “qualifying event”, they can figure out where they want to be. Extra important is to look at maternity coverage because if the womans insurance is less than her grooms, but her grooms plan offers a lower deductible and better maternity care, they’re better off canceling her insurance at the wedding and moving to his. Even if they don’t want babies for a few years. They need to run the numbers pre-wedding because the only time they’ll be able to change coverage is AFTER the baby, which doesn’t help the woman in her pregnancy-care.
One “loophole” is if you know you are quitting (to have a baby, or to go part-time and lose benefits), you can enroll for X flex dollars and get all that reimbursed for the medical event (the baby, or perhaps the big Lasik surgery before going part-time.) The business pro-rates your total flex dollars by pay check to get that money back but you as the employee have a right to claim the total pre-tax dollars any time you want. This is part of the risk an employer makes in offering a maximum amount (which is almost always lower than the IRS limit.) I was able to claim $1,800 towards pre-tax dollars, and only had a couple months of money taken from my paycheck before I quit but was able to pay those baby bills with that $1,800.
-Elizabeth
Thanks for this detailed and helpful information.