7 tips for open enrollment this year
Every year from October to Thanksgiving, company employees can make changes to their employee benefits. The enrollment period is the one time per year when employees can make changes to nearly every aspect of their benefit programs. With inflation rising, these benefit programs may be able to help you save money, too. Here are seven tips to consider when electing benefits during open enrollment:
1. Attend the open enrollment meeting
Whether in person or virtual, live or recorded, attending the open enrollment meeting at your company allows you to learn about your company’s benefit plan. When else are you going to make the time for that? Yes, you are busy at work and have got meetings and deadlines, but this is about you. Invest in your well-being and get benefits that will help you by learning about your options. Besides, it is one of the best places and times to ask questions about your benefits.
2. Compare the costs of your benefits versus buying the benefits outside of your employer plan.
Many employers offer health, life and auto insurance to employees at discounted rates. Often your employer is able to negotiate a lower rate for you because they are bringing a lot of potential customers to the insurance company or other provider. Insurers will often discount their rates because they don’t have to spend a lot on marketing because they have direct access to a large number of employees. However, cost is just one aspect. Be sure you are working with a good quality provider that is known for good customer service, too. Cheap doesn’t matter as much if you have a hard time reaching the company when you need them.
3. Get a paper copy of your enrollment package and your benefits summary
I know you want to save a tree, but it is a lot easier to review your benefits package if it is sitting on the kitchen table and not saved to a file folder on your laptop. Also, it may be easier to share the info with your spouse or partner so that they can coordinate benefits between your employer and their employer (if you are both eligible for benefits through work).
4. Confirm your beneficiary designations
If something happens to you, your employer needs to know who to send the life insurance or 401(k) check to. This is usually serious money that your family is depending on. Keeping your beneficiary designation up to date is especially important if you have had a recent life change such as marriage, divorce, or birth of a child. Its easy, too. Most updates can be done online.
5. Review flexible spending accounts
Employees can use FSAs to lower their taxable income, therefore increasing their take home pay. The only times you can sign up are when you are first hired or during benefits open enrollment. So, each year you should review how much in qualifying expenses you will have. Because FSAs are a “use it or lose it” type of account, selecting the right amount each year is important.
6. Increase your 401(k) contribution by 1%
With the costs of everything going up, it can be hard to put aside a few more dollars for retirement, especially if it is years away. But retirement will arrive before you know it and a one percent increase is pretty manageable for most people. Then, keep increasing it until you max out. In 2023 the new salary deferral limit for 401(k)s and 403(b)s will be $23,000. If you are turning age 50 in 2023, you’ll be able to put in an additional “catch up” amount of $7,000 for a combined total of $30,000.
7. Other things that are really important
Adjust tax withholding - A lot of taxpayers were surprised with large tax bills in 2021 because they had big capital gains that resulted in large tax bills. While predicting your capital gains can be tricky, salaried employees with steady income and few other sources of income can usually predict their income for next year. To make sure you have the right amount of tax withheld from your paycheck, fill out a new W-4 and submit to your employer. If you do that now, you have a good chance that you won’t owe too much at tax time.
Update home address – If you moved recently, be sure that your employer and all of your benefits providers have your new address (and phone number and new email, if applicable). Your W-2 and correspondence is going to be sent to the address they have on file for you. Don’t wait until you are searching for the form. Make sure your info is updated with them now.
Check emergency contacts – We hope you or your employer never need to use this information but if they do, be sure that they have the most up to date contacts. If you have moved, married, divorced or had other changes, you should check these contacts to be sure they are current.
This is a partial list of important items to review during your employer’s open enrollment period. If you have questions about your employee benefits, give me a call. You can also schedule a quick call with me by clicking HERE.
Lyman H. Jackson
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Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. FPS provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client after entering into an advisory relationship. Information herein includes opinions and forward-looking statements that may not come to pass. Information is derived from sources believed to be reliable. Information is at a point in time and subject to change without notice. Such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.