Open Enrollment Made Easy: Essential Money Topics Every Employee Should Know
- Johnathan Sheffield
- Oct 30
- 5 min read
Open Enrollment (OE) is an important period for employees, where choices about health coverage, tax savings, retirement plans, and paychecks come together. This time can feel overwhelming, but with the right information, employees can navigate OE with confidence. This blog post serves as a guide to simplify the process, providing straightforward, vendor-neutral insights into the essential money topics that matter most to employees today.
1) Picking a Health Plan Without Guesswork
What employees ask: “Which plan actually costs me less?”
Quick explain: When choosing a health plan, it’s essential to compare the total yearly cost instead of focusing solely on the premium. The total cost includes annual premiums plus expected out-of-pocket expenses. Consider factors such as past doctor visits, prescription needs, and your worst-case financial risk, which is represented by the out-of-pocket maximum.
Action steps:
List past healthcare usage: Include last year’s doctor visits, medications, and any planned procedures. For example, if you visited the doctor five times and took three prescriptions, note these down.
Use the plan’s cost estimator: Input the same usage into each plan’s estimator to see how costs differ.
Don’t overlook the out-of-pocket maximum: This figure caps your worst-case expenses, protecting you from unexpectedly high medical bills.
HR can help:
Supply a “Total Cost Worksheet” that simplifies calculations.
Share links to plan comparison tools and in-network pharmacy searches to enhance decision-making.
Organize a 30-minute Q&A session that uses real-world examples, like “Which plan end up costing less for frequent doctor visits?”
2) HSA vs. FSA (and Dependent Care FSA)
What employees ask: “Should I fund an HSA or FSA—and how much?”
Quick explain:
HSA (Health Savings Account): This account is portable, and funds roll over year to year, allowing for potential long-term tax advantages. In 2023, individuals can contribute up to $3,850, while families can contribute up to $7,750.
Healthcare FSA (Flexible Spending Account): Includes pre-tax dollars for eligible expenses but must typically be used within the plan year. The limit for 2023 is $3,050.
Dependent Care FSA: Employees can use pre-tax dollars for daycare and elder care, with limits set at $5,000 for single filers or married couples filing jointly.
Action steps:
Estimate known expenses: Calculate known costs such as co-pays, deductibles, regular medications, and childcare to guide your funding decisions.
Fund thoughtfully: Aim for a contribution level that you are confident will be used, and consider revisiting this in six months if your plan allows.
Keep solid records: Store receipts for eligible expenses, using a specific app or separate debit card for clear tracking.
HR can help:
Explain the differences in carryover and grace periods in simple terms work.
Provide clear lists of eligible expenses, and guidelines for filing claims to streamline the process.
3) Retirement Contributions: Match First, Then Save
What employees ask: “How much should I contribute to my retirement plan?”
Quick explain: Employees should prioritize contributions that allow them to get the full employer match. This money is technically free and adds up quickly. For instance, if your company matches the first 4% of your paycheck, contributing at least that amount is wise. After securing the match, employees should evaluate the possibility of increasing their contributions aligned with their financial goals.
Action steps:
Review the employer’s matching policy: Determine what percentage of your contribution is matched and how much you need to contribute to take full advantage.
Set future goals: Regularly assess your long-term financial objectives and plan to increase contributions as your fiscal situation improves.
HR can help:
Provide clear communication on the matching policy and any contribution limits to help employees plan effectively.
Offer resources or workshops on retirement planning, allowing employees to understand their investment options better.
4) Understanding Tax Implications of Benefits
What employees ask: “How do my benefits affect my taxes?”
Quick explain: Various benefits like HSAs and FSAs come with tax advantages. By understanding how these accounts operate, employees can maximize their tax savings. For example, contributions to an HSA reduce taxable income, allowing you to save up to 30% in taxes depending on your tax bracket.
Action steps:
Review the tax implications: Evaluate how each benefits option affects taxable income during OE.
Reach out for expert advice: Consider consulting with a tax professional to gain personalized insights on optimizing benefits and tax efficiency.
HR can help:
Provide educational resources that break down the tax benefits of various accounts in an accessible way.
Host informational sessions that focus on tax planning strategies, helping employees feel informed and prepared.
5) Evaluating Life and Disability Insurance
What employees ask: “Do I need additional life or disability insurance?”
Quick explain: Assessing current coverage is crucial. Employees must determine whether they need added life or disability insurance based on their personal and financial responsibilities. For instance, if you have dependents or significant debts, additional coverage may provide peace of mind.
Action steps:
Evaluate existing coverage: Review your current life and disability insurance policies to understand what is already in place.
Consider personal circumstances: Analyze factors such as family size, debts, and future expenses to decide if additional coverage is necessary.
HR can help:
Provide resources that explain coverage options and help employees understand what they currently have versus what they need.
Facilitate access to financial advisors who can offer personalized assessments tailored to employees' situations.
6) The Financial Impact of Flexible Work Arrangements
What employees ask: “How do flexible work arrangements affect my finances?”
Quick explain: Flexible work options can lead to significant cost savings. For instance, working from home can reduce expenses related to commuting, childcare, and professional attire by as much as 30%. However, employees should also account for any potential extra costs associated with working remotely, like internet service and home office supplies.
Action steps:
Assess savings: Calculate potential savings from reducing commuting and related expenses to see how much could be saved annually.
Evaluate new costs: Consider any costs that might arise when working from home, like office furniture, utilities, or software subscriptions.
HR can help:
Provide clear information on flexible work policies and their financial implications, helping employees understand their choices.
Supply resources that assist in budgeting and financial planning within a flexible work setting.
7) The Importance of Financial Education
What employees ask: “Where can I learn more about managing my finances?”
Quick explain: Gaining financial education is vital. Understanding the ins and outs of different benefits and financial options helps employees make informed choices during OE and beyond. For example, companies that invest in financial education programs can increase employee retention rates by up to 35%.
Action steps:
Seek financial programs: Look for financial education workshops offered by your employer to improve your knowledge.
Utilize online resources: Explore budgeting, saving, and investing tools available on reputable websites to enhance financial literacy.
HR can help:
Provide access to financial education resources and workshops that help employees build crucial skills.
Foster a culture of financial wellness within the organization through regular seminars and information sharing.
Embracing the Open Enrollment Season
Open Enrollment can be a daunting time for employees, but with clear guidance and resources, it is an opportunity for them to make informed financial decisions. By addressing the key money topics that matter to employees, HR managers and employers can empower their workforce to navigate OE with confidence. Offering accessible information, actionable steps, and long-term support not only enhances employee satisfaction but also promotes a financially educated workforce.
As employers, remember that investing in financial education is not just a benefit; it reflects a commitment to the overall well-being of your employees, ultimately leading to a more thriving workplace. Note: Educational use only. This is general information, not individualized financial, tax, or legal advice. Employees should review their specific plan documents and consult a qualified professional for personal guidance
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