Open Enrollment Survival Guide: Everything to know about choosing benefits for 2016-2017


For benefits managers, open enrollment is like the Super Bowl — their time to shine. For you, it might feel more like three emails you ignore, opportunities you miss and money you lose.

According to a recent study by the Society of Human Resource Managers, 41% of workers say open enrollment is "extremely confusing," half say choosing health care is "very stressful," and 20% are left with regrets about what they ultimately chose.

In other words, to do better than the herd, you'll really need to pay attention — and engage with your benefits.

But wouldn't it be nice to get a little help?

To give you a hand, here's an overview of what's at stake during open enrollment season, as you select a health care plan, adjust retirement account contributions and otherwise explore all your options.

You can use it like a sort of checklist as you make choices — so you feel good about them in the end.

When is open enrollment, exactly?

Open enrollment is the window of time when health insurers take on new participants in their plans and let current enrollees make changes to coverage.

While the time for open enrollment is set — from Nov. 1 to Jan. 31, 2017 — for those buying plans direct from insurers or through marketplaces, employers set their own open enrollment windows for health care and other benefits.

So find out your company's dates and get those dates on your calendar, first thing. Then set a reminder.

Skipping enrollment can have unintended consequences. Employees who don't log in to their benefits system, for example, may see choices from last year roll over. In fact, some employees might not even know about this — because the benefits manager set them up with default settings

Luckily, some organizations are shifting to "active" enrollment periods, during which employees must log in and select a new plan, or actively re-select existing benefits.

Now, your company might annoyingly offer a smaller number of health care plans to choose from than the open marketplace (though that depends on which state you live in) and you can and may want to shop outside your employer-offered plans.

But remember that your company then won't subsidize any costs, and you may have to pay for the whole thing.

What benefits can I change during open enrollment?

You could have open enrollment elections to make in the following areas: 

Health insurance. You can add to, drop or otherwise alter your coverage. You can also change from one plan to another or update the size of your household.

Flexible savings account or health savings account. FSAs and HSAs are not the same but behave similarly — they both let you stash away a few thousand dollars in pre-tax cash for expenses like out-of-pocket health care costs.

Dentalvision and life insurance and short-term or long-term disability coverage. You can add, drop or otherwise alter your coverage or switch to a new plan.

Retirement accounts. Open enrollment season is also a popular time to change the way you elect to save money for retirement through a 401(k) or similar account — though you can generally make adjustments year round.

How do I find cheaper — or better — health insurance?

Many Americans lack employer-based health care and need to buy an Obamacare plan — aka insurance from the marketplaces established by the Affordable Care Act — or shop outside of the exchanges. 

That can be overwhelming, especially if you have heard premiums for these ACA plans are going up, some by as much as 116%

No matter where you get your insurance, you'll want to know what's going on with your premiums, meaning the monthly cost you pay for health insurance.

This cost will depend on a variety of factors, including your age, location, and the extent of your coverage; the national average cost of a premium is $230 to $254 monthly for a 21-year-old.

But premiums are only part of the health care picture.

Even after you pay your premiums, there can be complicated ongoing costs in health plans. As premiums go down, other expenses — like what you pay out of pocket — typically go up.

Shopping around means figuring out the right balance.

Here are five factors to consider, other than premiums:

• Your co-pays, or what you pay out of pocket with each visit to a doctor. If you have a chronic condition, these can add up quickly so you may want to look for lower co-pays specifically.

• Your deductible, or how much you pay before your health insurance starts to kick in. For example if you have a $1,000 deductible, you will need to pay $1,000 out of pocket before the insurer begins to pay.

• Your co-insurance, or the amount you're responsible for after the deductible is covered. For example, if after you have paid the $1,000 deductible you have 20% coinsurance, you'll be expected to pay 20% of each medical bill. The insurer will cover only 80%.

• Your out-of-pocket maximum, or the most you may be expected to pay in one year, out of pocket, for your care. Your health care covers 100% of the rest after you reach that limit — which for 2016 plans sold on the marketplace was $6,850 for an individual and $13,700 for a family.

• Your drug benefits. If you regularly take medicine, you will need a plan that offers comprehensive coverage. Also watch out for any restrictions around name-brand versus generic drugs if you have a preference.

In general, the rule of thumb is to buy only as much insurance as you need: If you're not planning to have a baby in the next year, skip the plans with robust maternity offerings.

And if you don't care about generic versus name-brand medicine, look for cheaper plans that offer only generic drugs.

Finally, don't miss the deadline.

When the open enrollment period is closed, you're out of luck and will need to wait till next year to make changes to your policy — unless you experience a qualifying "life event" between now and next enrollment season.

What are flexible spending and health savings accounts, exactly?

There are tax perks if you pay for health care expenses using certain accounts: Again, FSAs and HSAs both let you save pre-tax cash for out-of-pocket health care costs.

But one main difference is HSAs let you contribute more — up to $3,400 for individuals in 2017 — than FSAs, which let you save up to $2,600. Another is that HSAs require you to be on a high-deductible health plan, while FSAs do not. And money put into FSAs must be spent within the year, while HSA funds can be rolled over.

Read up on other differences before you choose to use one of these accounts.

Your benefits package might also include other options that help you save, like medical savings accounts and health reimbursement arrangements. They each target different needs, but generally function similarly.

Ask if your employer offers any of these plans, in case you may have missed them.

Their best feature — and the reason they are worth your trouble — is that they offer a triple tax advantage.

What triple tax advantage means is that you are putting away pre-tax income, your earnings on the account aren't taxed — and you don't pay taxes when you withdraw the money.

What insurance do I need?

Your employer may offer add-on health plans for dental and vision insurance.

Plans like these are generally for those who need the extra coverage, so it is worth doing the math to see how much coverage you truly need.

Dental insurance is most useful for people who are anticipating big-ticket tooth care — fillings, crowns or root canals — and vision insurance is best for those with ongoing eye-care needs like contacts or glasses.

Life insurance can be hard to get your mind around — it is inherently morbid — and so it's tough to figure out how much you need.

Often the basic life insurance offered by an employer may not be adequate to cover a family following the loss of a wage-earner: The initial costs of death can be shocking, especially if you don't have an emergency fund.

The value of disability insurance, whether long-term or short-, depends on your salary and how many people depend on you — and who would be affected by the loss of your income. Insurance generally becomes necessary if you have kids.

How do I save for retirement the right way?

Unlike with health care choices, adjusting your retirement plan is not a now-or-next-year thing. 

Most employers allow you to tweak your contributions throughout the year. But since you might be overhauling your budget to make room for health insurance costs, open enrollment season is a logical time to improve your retirement savings, too.

How much should you save?

Always contribute enough to maximize any company match. Some experts suggest saving at least 15% or more of your income each year if you hope to retire early — though one study suggests you'll be in big trouble if you aren't saving at least 22% of your income every year... just to retire on time.

When you look into your 401(k) account options, you're likely to see a long menu of funds: Keep these three ideas in mind: "diverse," "age-appropriate" and "cheap."

You don't want to overpay. Look for funds with lower-than-average expense ratios or fees, which otherwise eat away at your savings; less than 0.5% is smart. 

Diversification means that you own a mix of bonds and stocks, large and small companies, and domestic and international stock — all appropriate for your age and risk tolerance.

A relatively conservative (if imperfect) backup option is to put your money in a low-cost target-date fund pegged to your approximate date of retirement.

These funds, offered by many employer plans, automatically adjust away from higher-earning-but-riskier investments over time.