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Tips for making smart benefit choices at work

During open enrollment, use this guide to help you make important money decisions about your health coverage for 2019. PLUS: Are you taking full advantage of your retirement plan?

If you have health insurance through your job, open enrollment season is generally your one chance to reevaluate your coverage, decide whether it still fits your needs, and explore other benefits and options that could affect your healthcare — and your finances — for the rest of the year. Unfortunately, 41 percent of employees find open enrollment to be confusing, and 49 percent of employees feel that making health insurance decisions is always stressful.1

That’s too bad, because the choices you make are important and needn’t be a source of discomfort or confusion. Follow the checklist below to help you make the most appropriate benefits selections for you and your loved ones.

  • Your employer is required to provide a “Summary of Coverage and Benefits” that fully explains the details of the plans available to you, including your plan’s cost-sharing requirements. This document is a great resource for your benefits assessment.
  • Learn the differences between a traditional health plan and a high deductible health plan (HDHP). Here’s a quick snapshot:
    • Traditional health plans such as Preferred Provider Organizations (PPOs) or Health Maintenance Organizations (HMOs) have higher monthly premiums with lower deductibles and apply co-pays to every doctor visit. If you need health care, but are likely to come under the out-of-pocket maximum, or can’t afford the higher deductible, then this option may work for you.
    • HDHPs generally have lower monthly premiums but require you to pay out-of-pocket until you reach your “higher” deductible. Preventive care such as a vaccinations and general wellness visits are 100% covered. HDHPs are compatible with Health Savings Accounts (HSAs) that allow you to put aside money on a tax-free basis specifically for covering medical costs. If you are healthy and don’t use your insurance frequently, an HDHP may be an appropriate option.
  • Evaluate your health history, including the kinds of services you have needed in the past and any medical procedures and/or care you may need or have planned in the near future. If your current plan covers all of this, you may not need to make a change. If not, keep these issues in mind as you shop for a new plan. Either way, you should always consider all choices carefully and consult with your health care advisors if you're not sure.
  • Review your plan’s dependent coverage so you can calculate the impact of any changes to dependents. Marriage or a new baby can increase costs while a dependent who moves off your plan can decrease them.
  • Familiarize yourself with your insurance plan’s online services, from websites to mobile apps. If you like the idea of self-service, knowing what your current plan has to offer will give you a baseline for comparison with other plans’ online service options.
  • 41% of employees find the open enrollment process extremely confusing.

  • Does your plan offer money-saving incentives for exercise or weight loss? If not, and this kind of program motivates you, look for one during open enrollment.
  • As plan offerings change, doctors and medicines often slip in and out of network and coverage. Review a list of your doctors and medications to ensure they still fall within your current plan, or are covered in a new plan you may be considering.
  • Consider your spouse’s health benefits. Though your employer’s offerings may be extensive, his or her employer may offer different options that are a better match for your family’s needs.

Regardless of how thorough you are in your research, it’s unlikely that one plan will fully cover every medical expense. To fill in the gaps you may want to also consider opening one of these savings accounts, which could help you pay for unexpected costs.

  • Flexible Spending Account (FSA)– FSAs are funded with pre-tax dollars, and can be used to pay for qualified medical expenses – such as your deductible or co-pays. These accounts are only available through your employer. For 2018, your contributions are limited to $2,650 for the year, and you may forfeit any unused funds at the end of the year.
  • Health Savings Account (HSA)– HSAs can be funded with pre-tax contributions and can be used for qualified medical expenses, but in order to open an HSA you must be enrolled in a qualifying HDHP. HSA accounts are often provided by employers who offer HDHPs, but you can also open one on your own. HSA contribution limits are typically higher than an FSA, and funds can be rolled over indefinitely. They can be a great option to save for future healthcare expenses, such as those you may encounter in retirement.

Open Enrollment and your 401(k)

While your medical coverage might be top of mind during open enrollment, don’t forget your retirement plan. Most 401(k) plans allow you to make changes throughout the year, but open enrollment is a great time to review your retirement benefits as well. Like healthcare premiums, 401(k) contributions are typically pre-tax deductions. If your employer offers a matching contribution, consider contributing enough to receive the full match. Additionally, review your investments and rebalance, if necessary. If you’re unsure of which funds to choose, see if your plan offers an investment service or tool to help you manage your retirement account. Now is also a good time to review your beneficiary designations to account for any changes in your circumstances or family situation.

The 2017 Aflac WorkForces Report found that 92 percent of U.S. workers don’t make annual adjustments to their benefits packages, even when the benefits themselves have changed. If you’re still working with benefits decisions you made a couple of years ago, now’s the time to take a closer look at what your employer currently has to offer to ensure you’re getting the most for your money—and your family.

3 Questions to Ask Your Advisor

  1. How can I prepare for unexpected out-of-pocket health expenses?
  2. Are my retirement savings on track, or should I increase my 401(k) contributions?
  3. How might I use any funds left over in my HSA when I've retired?

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1 Jellyvision Lab, Inc., “What Your Employees Think About Your Benefits Communication,” September 2016, page 19

This material should be regarded as general information on health care considerations and is not intended to provide specific health care advice. If you have questions regarding your particular health care situation, please contact your health care, legal or tax advisor.

Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

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