Each year, open enrollment arrives with a familiar checklist of forms, including plan comparisons and contribution elections. Most employees begin the process by opening the benefits guide and reviewing the available options. While that approach seems logical, it may actually lead to the wrong question.
Rather than starting with the benefits themselves, consider starting with what’s happening in your life and what you’re striving for.
Financial planning works best when your decisions are driven by goals and values rather than products and features. The same philosophy applies to open enrollment. Before comparing premiums, deductibles, retirement plan options, or insurance elections, take a step back and evaluate what has changed over the past year. Have you welcomed a child? Experienced a promotion? Started thinking more seriously about retirement? Encountered new healthcare needs?
The answers to these questions matter far more than the details on page one of your enrollment packet.
Open enrollment can help ensure you have the benefits available to support the life you are living today and the life you hope to build in the future.
With that perspective in mind, here are some important areas worth considering during this year’s enrollment season.
Your Health Insurance Should Reflect Your Reality
Health insurance is often the first decision employees confront during open enrollment, but it is also one of the easiest areas to oversimplify.
Many people immediately focus on premiums because they are the most visible cost. However, health insurance is ultimately about managing financial risk, not simply minimizing monthly expenses. A lower-premium plan can sometimes prove more expensive if it exposes you to higher out-of-pocket costs throughout the year.
That’s why your healthcare decisions should begin with an honest assessment of your circumstances. A healthy individual who rarely visits the doctor may have very different needs than a family with young children, a person managing a chronic condition, or someone anticipating a major medical procedure.
Consider what the coming year is likely to look like. Do we have known upcoming surgeries, specialist visits, or prescription expenses? Has your health changed since last year? Have your dependents’ healthcare needs evolved?
These questions are often more important than comparing individual plan premiums.
One of the most common planning mistakes is choosing a healthcare plan based solely on what worked in the past. Healthcare needs do not remain static. What made sense three years ago may no longer align with your current reality.
Open enrollment provides an opportunity to revisit assumptions and evaluate whether your coverage still supports your family’s financial and healthcare needs. The goal is to find the option that provides the most appropriate balance between affordability, flexibility, and protection.
Your Benefits Should Support Both Current and Long-Term Savings Goals
Open enrollment often focuses on the next calendar year, but some of the most important decisions involve much longer time horizons.
This is particularly true when evaluating Health Savings Accounts (HSA), Flexible Spending Accounts (FSA), and retirement plan contributions.
Many individuals think of an HSA as simply a place to set aside money for upcoming medical expenses. While that is certainly one use of the account, it may be more helpful to view an HSA as part of a broader financial strategy.
Healthcare expenses most likely will remain a significant consideration throughout retirement. An HSA offers a unique, tax-efficient way to prepare for those future costs. Contributions can reduce taxable income today, assets have the opportunity to grow tax-free, and qualified medical withdrawals remain tax-free as well.
In many respects, an HSA allows you to bridge today’s healthcare decisions with tomorrow’s retirement needs.
If an HSA isn’t available to you, a Flexible Spending Account may still provide a valuable opportunity to reduce healthcare costs on a tax-advantaged basis. FSAs allow you to set aside pre-tax dollars to pay for eligible healthcare expenses. The primary consideration when selecting an FSA contribution amount is estimating your expenses carefully, as these accounts are typically subject to a “use-it-or-lose-it” rule, meaning unused funds may be forfeited at the end of the plan year. Reviewing prior years’ medical, dental, and vision expenses can provide a helpful starting point. The goal is to contribute enough to capture the tax savings without significantly overestimating your expected healthcare spending for the year. These tax savings could add up over the long run.
Additionally, open enrollment is a great time to revisit contribution rates, employer match elections, and, in some cases, Roth versus pre-tax choices. While contribution rates can be adjusted throughout the year, open enrollment is a good time to check on any changes to next year’s employer matching contributions. We want to ensure that we are taking advantage of the full employer match when possible.
Protect What Makes Everything Else Possible
For many working families, future earning power is one of their largest assets. Without it, retirement contributions stop, savings goals become more difficult, and long-term plans can change dramatically.
This is why disability insurance deserves thoughtful review during open enrollment financial planning.
Although disability coverage is commonly offered through employers, employees may spend little time evaluating how the benefit actually works. They might assume coverage exists and move on. Yet it can be valuable to understand how much income would be replaced, whether benefit caps apply, and how an unexpected illness or injury might affect household finances.
Life insurance deserves similar consideration.
Needs evolve as life evolves. Early in a career, life insurance may not be a primary concern. That often changes with marriage, children, mortgages, business interests, or other financial responsibilities. What constituted adequate coverage five years ago may be insufficient today.
Ultimately, insurance decisions should not be driven by fear. They should be driven by clarity. Open enrollment provides an opportunity to ask a simple but important question: If the unexpected occurred, would my family and financial plan remain secure?
While these conversations are not always pleasant, they are among the most important discussions a family can have.
Don’t Overlook New and Emerging Benefits
Employee benefits have evolved significantly over the last decade. In an effort to attract and retain talent, many employers have expanded their offerings beyond traditional healthcare and retirement plans. As a result, open enrollment can be an excellent opportunity to review benefits that may not have existed when you first joined your company or that you’ve simply overlooked in previous years.
Depending on your employer, you may find resources designed to support many different areas including:
- financial wellness
- student loan repayment
- mental health
- identity theft protection
- legal services
- family planning
- fertility treatment
- caregiver assistance
- elder care support
Identifying which benefits might serve you in this upcoming year will enable you to take full advantage of what is available. Keep in mind that what may have seemed irrelevant a few years ago could be highly valuable today.
The Most Important Question Isn’t About Benefits
It is easy to become consumed by plan comparisons, enrollment deadlines, and enrollment portals. Yet those details, while important, are ultimately tools rather than objectives.
The more meaningful question is whether your benefits align with the life you want to build.
Do your healthcare choices support your family’s needs as they have evolved? Are your savings decisions moving you toward financial goals? Have you taken reasonable steps to protect those who depend on you?
These are planning questions, not enrollment questions.
When viewed from that perspective, open enrollment financial planning becomes much more than an annual administrative task. It becomes a checkpoint to review where you are, where you’re headed, and whether the tools available through your employer continue to support that journey.
Below, find a quick-reference financial planning checklist that can aid in your enrollment decision-making. Before making your elections, ask yourself:
- Have my healthcare needs changed?
- Am I maximizing available employer matching contributions?
- Should I increase HSA or FSA contributions?
- How can my family be financially protected if something unexpected happened?
- Are there employer benefits I have overlooked or never used?
- Do my benefits support my current goals and future plans?
The benefits guide is important, but it shouldn’t be the starting point. Your life should be.
Because the best open enrollment financial planning decisions don’t begin with a comparison chart. They begin with a thoughtful understanding of your goals, your family, and the future you’re working to create. From there, the benefit choices often become much clearer.
TCI Wealth Advisors, Inc. is an SEC registered investment advisor. This material is provided for informational purposes only and should not be construed as investment advice or a recommendation. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. TCI is neither a law firm nor a certified public accounting firm, and this material should not be construed as legal or accounting advice. Moreover, you should not assume that any discussion or information contained herein serves as the receipt of, or as a substitute for, personalized investment advice. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if TCI is engaged, or continues to be engaged, to provide investment advisory services.
The opinions expressed herein are those of the firm and are subject to change without notice. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of author, may differ from the views or opinions expressed by other areas of the firm, and are only for general informational purposes as of the date indicated.
