Manisha’s MoneyZen Blog

Avoid These 4 Critical Mistakes During Open Enrollment

In the world of personal finance, we are often told what we should do. Alas, with the seemingly endless number of positive steps you can take, that approach can sometimes leave you feeling overwhelmed.

Today I’d like to focus on something concrete, tangible, and finite that you can do to make the most of your employer’s benefits offerings. Specifically I want to help you avoid four common mistakes.

A recent Harris Interactive/Aflac survey showed 77 percent of people made mistakes at open enrollment and 42 percent say those mistakes cost them money. I don’t want this to be you! So here are the top four open enrollment don’ts.

(1) Don’t assume the benefits package you had last year will work again this year.

Life moves fast (too fast sometimes!) and your needs may have changed. Perhaps you have a new medical condition that you are grappling with or the aging process is kicking in and your teeth or eyes need some extra TLC. The specific options you need to optimize for your well-being this year may be very different from last year.

Additionally, in these rough economic times employers are shifting more costs to employees. Per an Aon Hewitt study, employees are projected to contribute an average of $2,306 more towards their overall health care premiums in 2012. This represents a whopping 11% increase over 2011. As such, you want to make sure you are aware of any material changes in your coverage that would affect your overall self-care strategy.

(2) Don’t forget to sign up for valuable tax savings accounts

Many people tell me when they hear the word “tax” their minds start to glaze over — even when the word following “tax” is “savings.” That’s why I’ve teamed up with WageWorks, a provider of tax-advantaged programs, to raise awareness about valuable employee benefits that include health care FSAs, dependent care FSAs and commuter benefits.

Don’t let the alphabet soup of names throw you. These three employee benefits enable you to save up to 40% on qualified expenses.

What shocks me is that only 1 in 5 people eligible for these valuable benefits actually sign up for them. My hunch is that many feel confused about how these accounts work and others simply forget to re-enroll (you must opt-in to these accounts every year).

Here is a quick overview: these accounts enable you to set aside money from your paycheck BEFORE taxes so that every dollar you contribute goes towards health care, dependent care or commuter expenses, and 0% goes to Uncle Sam.

For a more information, I would encourage you to visit SaveSmartSpendHealthy.com. The site includes a comprehensive list of eligible expenses and calculators for predicting your savings. You should also read my article on saving big and making the most during open enrollment.

(3) Don’t skip on health care FSAs for fear of losing money

Participating in a health care FSA is like standing in line at the pharmacy with a basket of goods you have to purchase and having someone hand you a coupon for up to 40% off.  When I ask people why they don’t sign up for this benefit, a very common response is fear of the “use it or lose it” rule. If you plan in advance and make a conservative estimate, this is not a rational fear.

According to Aon Hewitt’s analysis, employees will spend an average of $2,275 in additional out-of-pocket costs while seeking medical care in 2012. If your family’s experience is anywhere close to the average you could be saving nearly $900 a year by participating in a health care FSA. For those who have never participated, even setting aside a small amount of money is a good way to get started without concerns about any risk.

(4) Don’t be shy about asking for help

The world of open enrollment and employee benefits can make any sane person’s head spin. So please don’t hesitate to reach out for help. Your Human Resources or Benefits departments are in-house experts on what your employer offers, what has changed since last year, and the specific nuances of the sign up procedure. Their job is to help, so take them up on it!

Comments

  1. Wow. It’s good to know there are still some employee benefits out there. Most people I know are relieved to be running a cash register somewhere. Benefit package? A paycheck. 

  2. As a self-employed person, boy do I hear you, Hanelse :). That’s part of the reason I’m so passionate about open enrollment. Pains me to see folks who still have the opportunity to take advantage of these great savings miss out because it feels to overwhelming or complicated.
    Am fascinated by the “full circle” were engaging in as a society… for years as hunter / gatherers we depended upon ourselves and each other. Then there was the era of corporate big brother (where we didn’t have to think about anything from healthcare to pensions as The. Corporation. took care of it.). Now we’re circling back to a state of more self-determination… and I’m deeply hopeful that it will bring us closer and help us come up with solutions t some very pressing problems facing our planet. If that ends up being the silver lining… all this pain may be worth it!!

  3. As a self-employed person, boy do I hear you, Hanelse :). That’s part of the reason I’m so passionate about open enrollment. Pains me to see folks who still have the opportunity to take advantage of these great savings miss out because it feels to overwhelming or complicated.
    Am fascinated by the “full circle” were engaging in as a society… for years as hunter / gatherers we depended upon ourselves and each other. Then there was the era of corporate big brother (where we didn’t have to think about anything from healthcare to pensions as The. Corporation. took care of it.). Now we’re circling back to a state of more self-determination… and I’m deeply hopeful that it will bring us closer and help us come up with solutions t some very pressing problems facing our planet. If that ends up being the silver lining… all this pain may be worth it!!

  4. This article came to my email inbox at just the right time!!! I just started a new job this past Monday and the company is doing their open enrollment now. I’m literally starting my working life over from scratch! My divorce was final two years ago after a 27 year marriage. I spent most of those years as a wife and mother. I have a degree and tons of skills but it took me almost 3 years to find a job. It’s a low level position but I get fantastic benefits starting Nov. 1st, and it’s a permanent position with future potential. I’m 59 years old and most of the time I am healthy but I can tell my body is “slightly” older! lol I haven’t had any insurance for years and need to do a lot of catching up like total checkup, dental work, vision etc, the list goes on! I have to sign up within 45 days so I need to figure this out quickly!

  5. This article came to my email inbox at just the right time!!! I just started a new job this past Monday and the company is doing their open enrollment now. I’m literally starting my working life over from scratch! My divorce was final two years ago after a 27 year marriage. I spent most of those years as a wife and mother. I have a degree and tons of skills but it took me almost 3 years to find a job. It’s a low level position but I get fantastic benefits starting Nov. 1st, and it’s a permanent position with future potential. I’m 59 years old and most of the time I am healthy but I can tell my body is “slightly” older! lol I haven’t had any insurance for years and need to do a lot of catching up like total checkup, dental work, vision etc, the list goes on! I have to sign up within 45 days so I need to figure this out quickly!

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About Manisha’s Money Zen Blog

This blog chronicles my quest to identify simple, joyful methods that we can all use to feel calmer and more balanced in our relationship to our money.

Despite the abundance of personal finance books, magazines, radio programs and TV shows that have exploded into our lives over the past two decades, most of us struggle to find financial sanity, security and serenity. Rather than help us eliminate money pain, all this information has left us feeling overwhelmed and confused. We need fresh wisdom to break out of the cycle of despair and create lives of abundance.

Here’s hoping these short pieces will help you craft a uniquely rich and rewarding life.

To Your MoneyZen,
– Manisha