Watch Out for These Common Pitfalls When Enrolling in Workplace Benefits
Fall is a time for a change, but there’s one thing people often leave untouched: their workplace benefits packages. Make sure you do not fall for these common mistakes during open enrollment. November is the beginning of the open enrollment period for many workplace benefit plans, making it the ideal time to review your insurance information and other benefits. Make sure you do not fall into these pitfalls when enrolling in workplace benefits. Also, if you need help with Medicare enrollment, we offer free enrollment help for members at Elevate Credit Union. Find out more about a Medicare consultation here: Medicare Help.
1. The passive opt-in
When starting a new job, myriad decisions are overwhelming. Consequently, health insurance decisions often get minimal attention. For many people, those choices remain in place for much of their careers. Sticking with the default option may be detrimental for two reasons. First, your life situation has likely changed. As you age, you need more comprehensive health coverage. You may also need more extensive dependent coverage or have more disposable income to contribute to an HSA or FSA. Second, most companies renegotiate their insurance rates annually. Your employer may have negotiated lower premiums or better coverage. You’ll only discover these options by discussing your coverage for the next benefits year with your HR representative.
2. Forgetting spousal benefits
Being covered by your and your spouse’s plans can be a severe financial hazard. First, you may be overpaying for insurance. Adding a spouse to a workplace policy is usually cheaper than having two separate policies. Study both policies and determine which one is more advantageous. Even worse, being doubly insured frequently leaves you in the middle of a fight between insurance companies. Both will insist the other pay first, leaving you mountains of paperwork for coordination of benefits. Most companies provide a preview of the planned benefits offerings outside open enrollment, so you and your partner can review the available options.
3. Ignoring HSA/FSA options
Enrolling in a Health Savings Account (HSA) or Flexible Spending Account (FSA) can sting, as unspent dollars leave your paycheck. Don’t let that deter you.
HSAs and FSAs are similar in function with important differences. Both allow you to contribute pre-tax dollars for expenses related to health care. The principal difference between them is that FSAs roll over their remaining balance to the next year, while FSAs only roll over to a specific pre-established limit.
Enrolling in one of these accounts requires estimating your healthcare costs for the next year. Assume you’ll spend the same amount you did last year. You can get an estimate to guide your contributions for a planned medical expense, such as surgery.
Funding an HSA or an FSA is free money off your taxes. You’ll have to pay for health care costs; by designating money early, you avoid paying taxes on that money.
It’s crucial to revisit your benefits options once a year so you do not make these common open enrollment mistakes. Save your insurance paperwork and attend the informational policy meetings. Be an active participant in your benefits decisions.
If you need help, we have free help from a dedicated Medicare enrollment specialist. Come in, give us a call or chat online. Like this post? Check out our other posts on the MoneySmart Tips Blog.
