It's Open Enrollment Season—Do These Six Important Things
Reading time: 6 Minutes
October 27th, 2020
Are you ready for open enrollment season? Every year, there's a window of time—generally from the beginning of November through mid-December—when employees can enroll or make changes in their company's health, dental, vision, life and/or disability insurance plans.
Open enrollment is usually the only time that employees are able to change their coverage or enroll in supplemental health insurance plans except for qualifying life events, such as a marriage, divorce, birth of a child, death in the family, moving to a new location or the involuntary loss of previous insurance coverage.
Even if you think you've already set up your plans the way you like them, employers often modify their insurance plans and the features offered from one year to the next, so it's prudent to revisit your policies and make sure you're still adequately covered, even if you're not necessarily expecting to make a change.
We understand that figuring out insurance plans and deciding what moves to make can be daunting, so here's a quick guide of key to-dos during open enrollment season.
1. Don't miss the deadline
It may be obvious, but be sure to submit your insurance enrollment or changes well before the open enrollment window ends, to give yourself enough time to file all the necessary paperwork. If you need to revise any of your insurance plans, opt out of certain policies or sign up for supplemental health insurance or supplemental life insurance, it's crucial you do so as soon as possible. Once this window of time closes, you'll need to wait until next year to register for new insurance plans or make any adjustments. Don't wait until the last minute, in case the process takes more time than expected; you don't want to risk not having medical coverage or financial security with a plan that isn't the right fit for you. Or worse, end up with no plan at all.
2. Understand your options—and yourself
Deciding which insurance plans are right for you often depends on your knowledge of your own medical history and needs. Numerous factors—such as how often you tend to visit the doctor, whether you take regular prescription medication and whether you anticipate changes in the health care needs of you or your family (for example, if you're expecting a new baby)—can help you determine which coverage options make the most sense for your situation.
Similar factors can help you select the extent of your dental and vision insurance. Do you need to regularly maintain specific eye care coverage, such as eyeglass frames or contact lenses? When considering dental coverage, are you prone to oral cavities or root canals?
Compare the health plans offered by your employer to make sure you're getting the coverage you need at a price you can realistically afford, taking into account co-payments and deductibles in your financial planning. Regardless of which plan you choose, double check to confirm that your preferred doctors, specialists and hospitals are still covered by your selected network.
3. Decide if you may want a FSA or HSA
To help offset some out-of-pocket medical expenses, many employers offer different programs that can help you save by using pre-tax funds set aside from your paycheck to cover eligible health expenses, such as deductibles, premiums, over-the-counter medications, prescription eyeglasses and so on.
The two main types of accounts are flexible spending accounts (FSA), which are employer-owned accounts and usually require people to forfeit any unused funds at the end of each year; and health savings accounts (HSA), where funds can be rolled over and the money can be invested, because these accounts are owned by the individual.
If you decide to sign up for either of these plans, be sure to make the most of it. FSAs and HSAs grant you tax-free funds to pay out-of-pocket medical expenses throughout the year, which can help lower your taxable income at the end of the year. In 2020, the IRS allows employees to contribute up to $2,750 a year towards health care FSAs, as well as $3,550 a year for individual coverage and $7,100 a year for family coverage towards HSAs.
4. Add grown kids to your health insurance policy
The Affordable Care Act permits adult children up to age 26 to be added to a parent or legal guardian's health insurance coverage. A child is eligible to be covered under your plan whether the child is married or not, even if they don't live at home and even if they're not listed as a dependent on your taxes. This rule applies for all health insurance plans, either through your employer or in the individual market.
5. Consider supplemental insurance
Do you have enough insurance to cover you as well as your family? It can be prudent to bolster your existing coverage with supplemental health insurance or supplemental life insurance.
Accident insurance plans typically offer lump-sum cash benefits as insurance against commonplace injuries that can happen regularly (and when you least expect them), such as slips, falls or sports injuries. At a time when 40 percent of Americans would struggle to come up with $400 to pay an emergency expense, accident insurance can help provide financial security and a safety net to cover both medical expenses as well as non-medical expenses that accompany accidents, such as rent, groceries and childcare.
Accidental death and dismemberment insurance (AD&D) typically pays out if a person dies or gets seriously injured in a major accident (for example, a car crash) that results in the loss of a limb, sight, speech, hearing or coma. This type of policy is often a sensible precaution, especially for individuals who work in high-risk jobs. It's important to remember that accidental death and dismemberment insurance should be a supplement to life and disability insurance, not a replacement. If your family would be in a difficult financial situation without your income if you suddenly passed away, buy life insurance. If you would be in a difficult financial situation if you were unable to work due to injury or illness, buy disability insurance.
6. Update your beneficiaries
Make sure your retirement and insurance policy beneficiaries are up to date, especially if you've recently gotten married, divorced or had a child or grandchild. Beneficiary designations may supersede wills, so keep in mind that even if your will has recently been updated, your loved ones may not inherit your accounts if you don't also change your beneficiary designations.
Open enrollment season comes at the end of the year, which, with the holidays approaching, can make it a busy time for many. Still, it's a good idea to set aside a couple of hours to review your financial situation to see if any changes are needed. It could really pay off in the new year.
Insurance products are not a deposit; not FDIC insured; not insured by any federal government agency; and are not guaranteed by Bank of Hawaii or any of its affiliates. Neither the information nor any opinions expressed herein should be construed as a solicitation or a recommendation by Bank of Hawaii or its affiliates to buy any insurance products.
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