Benefits Open Enrollment: Your Annual Check-Up for Financial Health
Here are the key areas teachers should focus on during benefits open enrollment:
By: Jeff Venables
1. Healthcare Plans: Dig Deep into the Details
This is often the biggest decision during open enrollment, and it’s essential to look beyond just the monthly premium.
- Review Your Current Usage: Think back to the past year. How often did you visit the doctor? Did you have any unexpected medical expenses? Do you anticipate any major medical events (e.g., surgery, new prescriptions, a growing family)?
- Compare Plan Types:
- HMOs (Health Maintenance Organizations): Generally lower premiums, but require you to choose a primary care physician (PCP) and get referrals for specialists.
- PPOs (Preferred Provider Organizations): More flexibility in choosing doctors and specialists without referrals, but often come with higher premiums and deductibles.
- HDHPs (High-Deductible Health Plans) with HSAs (Health Savings Accounts): These plans have lower premiums but higher deductibles. The HSA is a powerful, triple-tax-advantaged savings account (tax-deductible contributions, tax-free growth, tax-free withdrawals for qualified medical expenses). If you’re generally healthy, an HDHP with an HSA can be a fantastic long-term savings vehicle.
- Understand Key Terms: Deductibles, co-pays, co-insurance, and out-of-pocket maximums are crucial. Know what you’ll pay before your insurance kicks in, your share of costs, and the absolute most you could pay in a year.
- Check the Network: Confirm your preferred doctors, specialists, and hospitals are in-network for any plan you’re considering. Out-of-network care can be significantly more expensive.
- Prescription Coverage: If you or a family member takes regular medications, verify coverage and costs under each plan.
2. Dental and Vision Insurance: Don’t Overlook the Essentials
Often treated as an afterthought, dental and vision coverage are important for overall health and can save you money.
- Dental: Review what’s covered (cleanings, fillings, orthodontics, major procedures), deductibles, annual maximums, and waiting periods for major work.
- Vision: Check for coverage of eye exams, glasses, and contacts, including allowances and frequency limits.
3. Life Insurance: Is Your Family Protected?
Your employer likely offers a basic life insurance policy, but it’s often not enough to fully protect your loved ones.
- Assess Your Needs: Calculate how much coverage your family would need to cover debts (mortgage, student loans), replace your income for several years, and fund future goals (college, retirement). A general rule of thumb is 5-10 times your annual salary.
- Evaluate Employer-Provided vs. Supplemental: Your employer’s policy might be free or low-cost, but consider purchasing supplemental coverage through work or an independent policy to bridge any gaps. Term life insurance is generally the most cost-effective.
- Update Beneficiaries: This is critical! Ensure your beneficiaries are current and reflect your wishes.
4. Disability Insurance: Protect Your Income
Your ability to earn an income is your most valuable asset. What if you couldn’t teach due to illness or injury?
- Short-Term vs. Long-Term: Understand if your employer offers both, what percentage of your income they replace, and for how long.
- Supplemental Coverage: If employer-provided coverage is insufficient (e.g., only covers 60% of your salary), consider purchasing an individual long-term disability policy to ensure adequate income replacement.
- Definition of Disability: Pay attention to how “disability” is defined in the policy (e.g., “own occupation” vs. “any occupation”).
5. Flexible Spending Accounts (FSAs) & Health Savings Accounts (HSAs)
These accounts offer significant tax advantages for healthcare and dependent care expenses.
- FSAs (Healthcare & Dependent Care): You contribute pre-tax money, which reduces your taxable income. The “use it or lose it” rule generally applies, so accurately estimate your needs. Great for predictable expenses like co-pays, prescriptions, or childcare.
- HSAs (for HDHP participants): As mentioned, these are powerful. You own the account, it’s portable, and the money rolls over year after year. Maximize your contributions if you can!
6. Retirement Plans (403(b), 457(b)): Increase Your Contributions!
While not always a “change” during open enrollment, this is a prime time to commit to increasing your retirement savings.
- Increase Your Percentage: Even a small bump can make a big difference over time due to compounding.
- Catch-Up Contributions: If you’re 50 or older, remember you can contribute an additional amount to these plans.
The Bottom Line
Open enrollment is your annual financial health check-up. Block out dedicated time, review your options carefully, and make informed decisions. The choices you make now will directly impact your peace of mind and financial security for the entire year ahead. It’s an investment in yourself and your future.
Need some help? Consider hiring a 100% fiduciary financial planner.
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