Seasonally appropriate for many, we’re going to start off a series of posts on Open Enrollment.

First, what is open enrollment? And why do I care? The basics.

Open enrollment typically happens once a year. It is the on-going employee’s opportunity to take a guess at the best fit of their employer-provided benefit options for the next 12 months, for themselves and likely their spouse and younger dependents. This may also be known as benefit elections. This is a chance to make better plans to keep more money in your pocket, by choosing plans with lower premiums, or lower total costs, and/or to save on taxes (federal, state, Social Security, and Medicare). And if somehow you’d forgotten to include dependents (spouse, children) to your coverage, do that now too!

What types of benefits are usually included in Open Enrollment?

• Medical insurance
  • traditional low deductible health care plans, which may be referred to as 80/20 plans
  • high deductible healthcare plans (HDHP’s)
• Cafeteria plans (eg a dental/vision/hearing aid plan(s))
• Health care flexible spending accounts (HCFSA’s)
• Dependent care flexible spending accounts (DCFSA’s)
• Health savings accounts (HSA’s)
• Pre-elect to sell PTO at 100%, instead of a reduced percentage on-demand

If some of these are unfamiliar to you, fear not, that’s upcoming information.

What is open enrollment NOT?

Open enrollment is usually not an opportunity to re-assess some employer-provided benefits that were available to you during the first 30 days of employment. You typically can’t add group life insurance coverage or increase how much group life insurance coverage you have, add or increase your accidental death & dismemberment insurance coverage, or add/increase long term care insurance. This isn’t how you get tuition reimbursement, or disability insurance, or relocation assistance.

Who does open enrollment effect?

This is for all on-going, benefit eligible employee (that’s often people earning W2 income as an hourly or salary employee, working 0.5 FTE or more). If you work as an independent contractor, owning your own business, and are paid on IRS tax form 1099, then this likely isn’t for you.

When is open enrollment?

A typical open enrollment schedule would look something like this:

• September or October – notification of upcoming benefit changes, Human Resources provides a plethora of paperwork for you to review and compare to your family situation.
• First ~2 weeks in November – the employee does their paperwork. Often this is done online only, and may be only available behind the firewall (so if you’re the paperwork guru in the family, but your spouse is the employee of reference, that may take some doing).

When do the choices I make in open enrollment take effect?

The choices you made about 1-2 months previously, take effect for the next 12 months. So if your employer offered Open Enrollment elections for the first half of November, then those likely are in effect January 1st – December 31st of the next year. eg November 1-15 2019 elections are in effect January 1-December 31st 2020. For those of you working for a school district, that may be May benefits changes communication, June open enrollment, and July-June benefit elections are in place.

Where do I go for open enrollment information, and to complete the open enrollment actions?

You have to go through your employer for this. Your employer will provide documentation on the choices this year (if you’re lucky, that will include documentation on what the changes are, rather than just leaving you to dig through old vs new documentation – you did save your old documentation, right?). Your employer will provide the paper-forms or web-forms for signup. And after the new benefits year has begun (sometimes not until multiple months into that new year), they will make available the full documentation (think 80 page technical report) on your new medical insurance plan – but they won’t tell you it’s available, you’ll need to put it on your calendar to go dig it out of your HR’s website.

What if I made the wrong choices?

Sorry, options for changing your benefits elections occur rarely, generally once a year. If you chose a high deductible health care plan (eg the one with the smallest premiums but large total out of pocket), and then in January you end up in a whole-family car accident while traveling out of network back from your holiday vacation, it’s potentially now a rough financial year for you and you can’t go back to your employer to ask for a change.

A possible exception, depending on your situation, may be a Qualifying Life Event (note that their examples are for Affordable Care Act marketplace plans, and not all of those triggers are likely true with your employer, read your employer’s documentation carefully). Another caveat here is that you may have to re-begin your deductible under your new plan, if you do change plans with a Qualifying Life Event, so it may not be the big saving grace you were hoping it to be.

What if I forgot to do the paperwork in time, or refused to participate?

Your employer will make some assumptions, and exactly what those will be will depend on your employer. Some portions may roll-over as-is (eg you were on a high-deductible plan this year, so you’ll be on a high-deductible plan next year). Other portions likely will not (eg the $5000 dependent care flexible spending account you had this year won’t be set aside for you pre-tax next year).

Conclusion

As you can see, open enrollment is an important time of year. It’s time to do the best you can to predict your next year needs, while limiting your downside (your risk) at a reasonable semi-known cost. Like so many things in your financial life and non-financial life, we won’t know the “right” choice until after the fact.

Choose your odds, and weigh the upsides and downsides, carefully.