Ask Jill:

What You Should Know About Open Enrollment (Part I)

A monthly Q&A with Jill Schlesinger, CFP®, host of the Jill on Money podcast

Disclaimer: Jill Schlesinger is an ambassador for Marcus by Goldman Sachs and has received financial compensation. However, all thoughts and opinions are hers.

Marcus by Goldman Sachs is the sponsor of the Jill on Money podcast, featuring Jill Schlesinger, a Certified Financial Planner, CBS News Business Analyst and author of the new book “The Dumb Things Smart People Do With Their Money”. Listen to her podcast on Apple and Stitcher.

The Scenario:

Open enrollment season is quickly approaching and the choices can be overwhelming.

The Question:

What do I need to know for the upcoming open enrollment season to make the most out of my employer’s benefits?

Jill’s Take:

It’s that time of year, when you are confronted by open enrollment nudges from your employer and in some cases, from the government. The choices can be dizzying, so to help you make more informed decisions, let’s break it out into broad categories.

Up first: healthcare and insurance coverage.

Healthcare coverage

Employer coverage: For 153 million Americans, a Kaiser Family Foundation survey found that this year annual premiums reached $7,188 for single coverage and $20,576 for family health coverage.  

While the headline numbers are eye-popping, you probably care more about your contribution. In 2019, the average annual dollar contributions by covered employees are $1,242 for individuals. For families, average contributions are $6,015, a whopping 25 percent jump since 2014 and 71 percent since 2009. 

Of course it doesn’t stop there. The dreaded deductible can add up to significant additional outlays toward the cost of health care. The average deductible among covered workers for single coverage is $1,655, up 36 percent over the past five years and 100 percent over the last ten years.

So what can you do? Shop around!

Yes, it’s tedious, but it could save you money. Start by reviewing your current plan and what you spent this past year. Then try to project your healthcare costs for the year ahead. Compare the plans your employer offers and determine what they cover, how much they cost (including co-pays and deductibles), and whether your doctors are in-network. 

... insurance companies often change what they cover from year to year, so it behooves enrollees (maybe with the help of family members) to update coverage. 

If you're generally healthy and don’t want to pay high premiums, High Deductible Health Plan (HDHP) paired with a tax advantaged Health Savings Account (HSA), may be an attractive choice. Or if you're near retirement, it may make sense because the money in the HSA can be used to offset costs of medical care after retirement.

HDHPs offer lower premiums and HSAs allow you to set aside pre-tax money to pay for qualified medical expenses. The trade-off is that HDHPs have a high deductible (at least $1,350 in 2019).  

So on the other hand, if you think you might need expensive medical care in the next year and would find it hard to meet a high deductible, it might not be your best option. The IRS has specific contribution and deduction rules about HSA contribution limits, so be sure to check them out.

Flexible Spending Accounts (FSAs) – which differ from HSAs – do not require that you have an HDHP. FSAs allow you to set aside $2,700 in pre-tax dollars in 2019 (2020 limits have not yet been announced) to pay medical expenses not covered by other health plans. These expenses may include co-pays, deductibles and a variety of medical products and services ranging from dental and vision care to eyeglasses and hearing aids. If the plan allows, the employer may also contribute to an employee’s FSA. 

FSAs are subject to a “use-it-or-lose it” provision, which means that employees often must incur eligible expenses by the end of the plan year or forfeit any unspent amounts. If a FSA plan has a carryover option, employees can carry over up to $500 of unused FSA funds to the following plan year. 

Medicare: Open enrollment for the nation’s health care plan for those over age 65 runs from October 15 through December 7. While most continue whatever coverage they have, they do so at their own risk. The reason is simple: insurance companies often change what they cover from year to year, so it behooves enrollees (maybe with the help of family members) to update coverage. Visit the Medicare Plan Finder to compare plans and select what is right for you.

Affordable Care Act (ACA): The 2020 Open Enrollment Period runs from November 1 to December 15. If you miss the deadline because of certain life events, you may be able to qualify for a Special Enrollment Period.

Insurance coverage

If you’re thinking about getting life insurance, there’s a good chance you might need it. Many companies offer affordable group rates for life, disability and long term care insurance, so you should definitely explore these options.

This is a case where the buying power of a big group (aka your employer) can help you find coverage that may not be available in the open market. This is especially true when it comes to disability and long term care insurance, both of which are notoriously expensive in the private market.

The most important thing to determine is whether the coverage is "portable", which means that you can take the policy with you if you leave the company.

This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.