A Comprehensive Guide to Navigating Open Enrollment: Part One

According to the US Bureau of Labor and Statistics, a substantial 31% of employee compensation is derived from benefits. However, many individuals tend to quickly breeze through these benefits without a thorough review. With November just around the corner, open enrollment season is approaching, and BPAS is here to help you navigate the critical aspects of your company benefits.

Medical Insurance: Your Essential Protection

Were you aware that among all the benefits your employer provides, health insurance is their most substantial expense? To put it another way, your Paid Time Off (PTO) costs your employer less than your health insurance coverage. Choosing the wrong plan could potentially lead to higher costs for you and your family.

When reviewing options, consider the premiums, deductibles, and copays. High Deductible Health Plans may seem attractive because they offer a low premium and therefore, a higher paycheck. Coupled with a Health Savings Account (more on that in a moment!), an HDHP can be beneficial for someone who uses little health care as it’s an affordable option that does double duty as a long-term savings strategy. On the other hand, if you’re a person who frequently requires healthcare services, reviewing the HDHP as well as your other options may help you plan your 2024 healthcare budget. In addition to the premium, consider your copays on an HMO or PPO type of plan and the frequency of your doctor visits.

Truly assessing your needs by considering factors like overall health, anticipated medical expenses, and any life changes (like a new baby or new job) will help in determining the level of coverage required.

HSA/FSA: For your Financial Health

Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) offer various advantages. Both HSAs and FSAs empower you to take more control over your financial health and plan for your future. It’s important to consider the differences between an HSA and an FSA, as an employee might find them confusing.

Health Savings Account (HSA)

An HSA, which stands for Health Savings Account, is a special kind of savings account that comes along with a high-deductible health insurance plan. It’s a way for you (and possibly your employer) to set aside money specifically for medical costs. The unique part is that you get a tax break for the money you put in, and what’s even better is that whatever you don’t use this year can be saved for future medical expenses. To qualify for an HSA in 2024, you need to be enrolled in a High Deductible Health Plan and your insurance deductible must be at least $1,600. The maximum you can put into this account is $4,150 if you’re covering just yourself, or $8,300 if you have a family plan. As the money can roll over from year to year, contributing the maximum can help you with unexpected or future medical expenses.

An HSA is the only account with a triple tax advantage, making it an attractive option for an employee. You can put money into an HSA without paying taxes on it, and any earnings it generates also stay tax-free. Plus, if you use the funds for approved medical expenses, you won’t be taxed when you take the money out. The IRS has a broad range of expenses that qualify, and for a detailed list, you can check out Publication 502 on their website. If HSAs are new to you, we have resources available on BPAS University that explain some of the benefits and features. One important thing to note, however: you can typically invest a portion or all of the money you save in your HSA. Be sure to review your account’s parameters and investment options and select the investments that best correlate with your spending and savings strategy.

Flexible Spending Account (FSA)

An FSA, or Flexible Spending Account, is another type of special savings account designed to help with approved medical costs. Unlike an HSA, you don’t need a high-deductible health plan to have one. However, there’s a key distinction: FSA funds usually can’t be carried over from one year to the next. This means you should use the money you put into it within the same year, or you might lose it. In 2023, the most you can contribute to an FSA is $3,050. We’re still waiting for the contribution limits for 2024 to be announced – bookmark this link for the updated amounts when they’re released!

Seeing Clearly and Smiling Bright: The Vital Importance of Vision and Dental Insurance

Vision and dental insurance are supplemental policies that can help you cover the costs of eye care and dental treatments. These insurance plans typically include regular check-ups, preventative services, and various procedures, ensuring you maintain your overall health by addressing specific needs often excluded from standard health coverage.

Vision Insurance: This type of coverage typically includes benefits for eye exams, glasses, and contact lenses. Regular eye exams can detect vision problems and even underlying health conditions. Vision insurance makes these essential check-ups more affordable.

Dental Insurance: Dental insurance provides coverage for various dental services, including preventive care (such as cleanings and check-ups), basic procedures (like fillings), and major treatments (such as root canals or crowns). Dental health is closely connected to overall well-being, so having dental insurance can help you maintain a healthy smile and address dental issues promptly.

Stay tuned for part two of our open enrollment blog, where we’ll discuss additional forms of insurance and walk through the many ways to maximize your workplace retirement plan. In the meantime, check out BPAS University for more coverage of related topics, including quick videos and financial calculators.

Post contributed by Dalton Lehnen, CERTIFIED FINANCIAL PLANNER™  | Trust Officer