By Kelly Metzler, CFP®

While we often associate the last few months of the year with the holidays, there’s another important season upon us: open enrollment. For executives who are offered competitive benefits packages from their employer, you’ll want to review a few key benefits this open enrollment season including health insurance, disability insurance, and life insurance.

Let’s take a look at what happens during open enrollment and considerations to make about your current coverage.

What Is Open Enrollment?

Open enrollment is the time when employees can add or make changes to their employer-sponsored benefits. Companies (and their benefits providers) choose when the open enrollment period will be, but typically it occurs toward the end of the calendar year. 

In most cases, changes that are made during open enrollment will go into effect on January 1 of the new year — though again, this can differ depending on your employer’s policies.

You cannot make changes to your benefits outside of the open enrollment period unless you experience a qualifying life event and are eligible for a special enrollment period.

Why Is Open Enrollment Important?

As your life evolves, so will your needs for coverage. Open enrollment periods allow you to review your options and make the necessary changes to ensure your financial life reflects where you are today.

Here are considerations you can make regarding changes to your health insurance and other benefits during open enrollment.

Health Insurance

As you approach the open enrollment period, think about your previous year’s health needs. Did you meet your deductible, or were your expenses minimal? Did you receive a new diagnosis or have a change in prescriptions?

The plan that fit your needs last year might no longer be the best option moving forward, especially if your employer added new options to the lineup.

Compare your current plan to other options by reviewing your:

• Monthly premiums

• Deductible

• Coinsurance and out-of-pocket maximum

• Covered procedures

• In-network vs. out-of-network facilities

In addition, your employer may offer HSA- or FSA-eligible healthcare plans. A health savings account (HSA) can be a great savings tool for those who have a high-deductible health plan (HDHP). Contributions to an HSA reduce your taxable income, and investment earnings and withdrawals are tax-free as long as they’re used to pay for eligible medical expenses. Unused HSA balances roll over each year, and you can take the account with you if you leave your employer.

An HSA can also be a powerful retirement savings vehicle as money in an HSA can be invested and therefore get tax-free growth. For 2024, participants can contribute $4,150 for self-only or $8,300 for family coverage, and an additional $1,000 catch-up contribution if age 55 or older.  

A flexible spending account (FSA) is another way to pay for medical expenses with pre-tax dollars, and you don’t have to have an HDHP to use one. With an FSA, you are generally required to use the money before the end of each plan year or forfeit any remaining balance back to your employer. Similarly, if you leave your job you’ll forfeit any unused money in your FSA account.

Long-Term Disability Insurance

Many employers will offer employees the option to obtain long-term disability (LTD) insurance during open enrollment. Having a safety net in the event of unexpected illness or injury is critical for high earners.  

LTD coverage will differ depending on your company’s provider, but coverage can last anywhere from two years to retirement age and typically pays out between 60% and 80% of your salary. Group disability policies offered through your employer are likely to be less expensive than obtaining a private policy.

When deciding how much disability insurance coverage you need, it’s important to know who is paying the premiums, as that will impact whether any disability payments will be taxable income or tax-free. If your company pays the premiums, then you’ll be taxed on any benefits paid out from the policy. If you pay the premiums with after-tax dollars, any future payouts from the policy wouldn’t be taxed. This can make a material difference in the amount of take-home, and may influence how much income-replacement you opt for during open enrollment.  

Life Insurance

Again, your employer may offer you the option for group life insurance during the open enrollment period.

While this can be good coverage to have, keep in mind that it may not be enough to meet your own protection needs. As a high-income earner, you likely have others who depend on your income (like a spouse or child), and what’s offered through your employer may not be enough to replace your lifetime earnings. In addition, you may lose your group life insurance coverage if you ever leave your employer.

This is a good time to evaluate your life insurance needs and ensure your loved ones will have enough financial support in the event something happens to you. If your group life insurance coverage is insufficient or you just want to have a policy that is not tied to your employer, consider buying a supplemental private policy.

Should You Make Changes This Open Enrollment Season?

It’s likely your life looks different today than it did a year ago, and your policies might be due for a change this upcoming open enrollment season. As a financial advisor, I can help you review the policies discussed above, as well as other benefits offered through your employer. Employer-sponsored benefits are just one piece of an executive’s financial puzzle – if you’re ready to consider how these benefits fit into your protection plan, reach out and schedule time to talk.