The 5 Biggest Mistakes In Benefits Open Enrollment
While listing “5 Mistakes of anything….” is always a catchy title, it’s also extremely limiting. So, this is just an overview of 5 areas we see people making uninformed, or lazy choices. There is so much to learn in this space for the average employee, so please use every resource your employer provides. That said, here are our 5:
1.) Not Understanding or Funding Your Health Savings Account (HSA) – While not every employer offers a high deductible, HSA-eligible health plan, for those that do this is often the first option an employee should consider. Why?
a. It is typically the lowest priced option for the employee to purchase
b. It allows you to put away thousands of dollars per year on a pre-tax basis
c. It can be used to pay medical, dental, vision & other expenses tax-free
2.) Over / Under Funding a Flexible Savings Account (FSA) – If you don’t use an HSA, then the next best option for tax savings and tax-free spending is an FSA. These are trickier than an HSA in that you have to estimate your expenses in advance and you generally lose any unused funds. Most employers allow just over $500 to roll over from year to year, which is the IRS maximum. FSAs can pay for medical expenses and up to $5,000 of dependent care expenses tax-free. If you are paying for childcare, really look at this item!
3.) Buying Too Much / Little Coverage – The big problem here is nobody knows what the next year holds for their health. That said, looking back over your past usage is often a good indicator of future usage. If you historically have great health and rarely go to the doctor, maybe buying a posh health plan is not the best use of funds. Conversely, if you take an expensive medication, have health issues, or know of an upcoming health event (think maternity, knee replacement) buying up could well make sense. Ask your benefits enrollment advisor or account manager for help!
4.) Not Understanding the Confusing Insurance Terms or Jargon – Insurance is loaded with confusing terms, but consumers really need to understand them. Use your open enrollment material, or Google and make sure you understand terms like:
a. Deductible
b. Co-insurance and/or Copay
c. Out of Pocket Maximum
d. Premium
e. Provider Network
5.) Defaulting to Last Year’s Plan or Missing the Deadline – You only get one chance per year to make a benefits election. This is an area where a choice can save or cost you thousands of dollars. Think about this decision with at least as much energy as you would the purchase of a new TV!
As always, if you have any questions or if we can help in any way, please reach out!
Call us at (805) 687 - 3225, or send us an email at info@petersmilam.com. We can't wait to hear from you!
-Dave Peters & Steve Milam
