If you haven’t read about the moon eloping near Nestle, no shame. It hasn’t… yet.
If you love anagrams, perhaps you’ve already caught on that it’s time to be on alert for Open Enrollment Season.
Whether you’re an employee deciding between health plans or an employer looking to structure a competitive benefits package, now’s the time to make decisions that will impact you in the year ahead.
Here’s a breakdown of key benefits to review, plus some practical advice for employers on how to manage 401k plan costs.
For Employees:
- Health Insurance:
It’s easy to stick with the same health plan year after year, but your needs – and your plan options – might have changed.
Review what’s available and ask yourself if your current plan still makes sense.
- High Deductible Health Plan (HDHP) + HSA: If you’re generally healthy and can handle higher out-of-pocket costs, consider an HDHP. The upside? These plans often have lower premiums, and they let you contribute to a Health Savings Account (HSA).
- HSAs = Triple Tax Benefit: Contributions are tax-deductible, the money grows tax-free, and distributions are tax-free so long as used for qualified medical expenses.
- Your HSA can become your healthcare 401k.
- Legal Benefits:
If your company offers a legal plan, it’s worth considering.
Many people put off creating essential documents like a will or power of attorney simply because they don’t want to deal with it or pay lawyer fees. Legal plans can help you get these done at a fraction of the cost.
- What to look for: A legal plan that covers the basics—wills, trusts, and powers of attorney. Even if you don’t need one immediately, having access to affordable legal help when you do can be invaluable.
- Flexible Spending Accounts (FSAs):
An FSA lets you put away pre-tax dollars for medical expenses, but there’s a catch—you typically need to use the money by the end of the year. Make sure you only contribute what you’ll actually spend.
- Dependent Care FSA: If you have young kids in daycare or elderly family members who need care, a dependent care FSA can save you a significant amount in taxes. Just like with a healthcare FSA, be careful not to overestimate what you’ll need, since unused funds usually don’t roll over.
- Vision and Dental:
Don’t skip the vision and dental coverage, even if you think your teeth and eyes are in good shape. Regular checkups can catch problems early and save you money down the line.
- Vision: Yearly eye exams are often covered, plus you might get a discount or annual stipend for glasses or contacts.
- Dental: Your oral health is important! Dental coverage is a smart investment as it often covers preventive care like cleanings while also reducing costs for major procedures.
- Retirement Plans:
Open enrollment is also a good time to check in on your retirement plan.
- Review your contribution %: If your employer offers a 401(k) match, make sure you’re contributing enough to get this free money.
- Review your investments: Are they still aligned with your risk tolerance, retirement goals, and broader portfolio? If you haven’t checked in a while, it’s worth a review.
For Employers
As an employer, open enrollment season is a great time to review your health & employee wellness benefits.
One often overlooked area to consider giving some attention:
Retirement Plan Costs
Retirement plans are a cornerstone of a good benefits package, but the costs can add up—especially for owners with large accounts compared to their employees.
Make the most out of your plan:
– Pay plan expenses directly: If you’re a business owner with the largest account in your plan, it often makes sense to cover certain fees (like 3(38) or 3(21) fiduciary fees) through the business, rather than having them deducted pro-rata from employee 401(k) accounts. This keeps costs down for employees and gives you a potential business tax deduction.
– Review 401(k) admin fees: If you haven’t reviewed your plan’s fees recently, it might be time to renegotiate or shop around for a better deal. Lowering administrative costs benefits both you and your employees.
Final Thoughts
Open enrollment isn’t just a routine checkbox – it’s a chance to set yourself (or your employees) up for success. Take the time to review your options, adjust where needed, and make the most of the benefits that are available.
