10 open enrollment opportunities you might be missing out on

Hey MTG Reader,

I came across these statistics recently and found them interesting -

91% of employees tend to stick with the same health plan each year

77% of employees have expressed that they just want someone else to tell them what the best plan is for them

Honestly, the stats aren't surprising, but here’s the downside –

Your health, financial, and family circumstances change on a year-to-year basis. You should review your health plan and other benefit elections on an annual basis to ensure they're keeping up with your changing life.

Also, your HR manager is not a financial advisor. Yes, they know the features and benefits of the plans your employer offers, but they don’t know your personal circumstances and how your benefit package can help you achieve your financial goals.

I’m not saying you need to hire a financial advisor to help you with your open enrollment decisions, but I do think you and your family deserve a better strategy than, “same as last year.”

That’s why I’m dedicating the next three editions of Master the Green to sticking your approach to open enrollment season this year, starting with 10 open enrollment opportunities you may be overlooking.

I hope you find them helpful. 

Let’s tee this one up!

Simple, not easy

“Simple, not easy” is one of my favorite mental models with a wide use of applications. 

Similar to Occam’s razor, which states “among competing options, the one with the fewest variables is the best choice,” Simple, not easy emphasizes simplistic solutions over the complex.

Both encourage you to focus on fundamental principles and straightforward approaches.  However, simple, not easy goes one step further in acknowledging that execution of a decision often requires significant effort and dedication.

Complexity in golf

Homer Kelly’s Golfing Machine lays out 24 different components of the golf swing – a process we execute in less than three seconds.  What could possibly go wrong?

Mastering your golf swing is complex, and it’s something we as amateurs will probably struggle to accomplish our entire lives. 

However, decision making on the golf course is entirely within our control and it’s probably something we could all benefit from by simplifying. 

When tackling complex problems, the "simple, not easy" approach encourages:

Breaking down issues into simpler components

• Play your round one stroke and one decision at a time.

Focusing on fundamental solutions rather than overly complicated strategies

• Avoiding situations that will cost you strokes (hazards and out of bounds) is easier to accomplish than hitting the perfect shot.

Recognizing that implementing solutions may require sustained effort and patience

• Stellar course management with poor execution will still lead to subpar results.  There’s no substitute for practice.   

Building wealth is simple, not easy

At the core, there are really only four things you can do with money –

• You trade your time to earn money
• You spend some of those earnings and you save the rest
• You invest some of that savings to grow it
• Eventually you use those investments to buy back your time

These are the four equations of wealth.  Each carries its own set of complexities when trying to execute, which is why it’s important to focus on simplistic principles at each stage.

You trade your time to earn money:  Know the value of your time, trade it for an appropriate wage, and protect it from unforeseen interruptions.    

You spend some of those earnings and you save the rest:  Maximize your spending that’s in alignment with your values and minimize taxes, fees, and unintentional spending. 

You invest some of that savings to grow it:  Focus on a long-term investing strategy that’s aligned with your risk tolerance, capacity, and need.   

Eventually you use those investments to buy back your time:  Make sure your time is worth something when you buy it back. 

Ten open enrollment opportunities you shouldn’t overlook

Open enrollment is a prime opportunity to execute on some of these principles. 

Here are 10 you might want to consider capitalizing on if your employer offers them:

Opportunities to protect your income

1.  Group Term Life Insurance

Group term life insurance is a type of life insurance offered by your employer to protect you for a specified period, typically for as long as you remain with the company. If you pass away during the coverage period, a tax-free death benefit is paid to your beneficiaries. 

It's usually less expensive than individual life insurance and often does not require a medical exam. However, your coverage typically ends when you leave the company or retire, which means you should have a plan if either of these things happens. 

2.  Short-term Disability Insurance

Short-term disability insurance provides income replacement for a limited duration (typically a few months) if you cannot work due to a temporary illness, injury, or pregnancy-related condition.

It will cover a portion of your lost wages during recovery and offer you some financial security until you can return to work or transition to long-term disability insurance, if needed.

3.  Long-term Disability Insurance

Long-term disability insurance provides income protection over an extended period.  It functions similarly to short-term disability insurance, but it covers a longer period of time, often years or until retirement. 

Again, it replaces a portion of your lost income, which can help you cover essential expenses when you cannot work.

Life and disability insurance should be the “core” of your insurance strategy, but your employer may offer some supplemental policies as well.  These policies are typically more restrictive, only covering a specific set of circumstances, but they can be useful if you’re finding yourself short on cash reserves and faced with a catastrophic loss.   

4.  Accident Insurance

Accident insurance is a type of supplemental insurance that provides financial benefits in the event of an accidental injury. It typically pays a lump sum benefit to you or your beneficiaries to help cover medical expenses, such as hospital stays, surgeries, or doctor visits, resulting from an accident.

This coverage is distinct from health insurance and can be used to offset out-of-pocket costs or non-medical expenses like transportation or childcare during recovery.

5.  Critical Illness Insurance

Critical illness insurance is a specialized policy that provides you with a lump-sum payment upon diagnosis of a severe medical condition listed in the policy, such as cancer, heart disease, or stroke.  It offers financial support during a critical illness, helping you cover medical expenses, treatments, and other costs, even if you have other health insurance.

Unlike health insurance, it pays out a one-time benefit, allowing flexibility in how you use the funds.  Critical illness insurance can provide a financial safety net if you’re ever faced with a serious health crisis.

And for your mental game…

6.  Employee Assistance Programs

Employee Assistance Program (EAP) – whether it’s a bad round or a bad year (thanks, 2020), we could all use a little help sometimes.  An EAP is a workplace benefit that provides that support and safeguards your well-being and work-life balance by helping you address personal challenges effectively.

While there’s no monetary benefit, it does cover confidential and short-term counseling and support services if you’re facing any of a number personal or work related challenges like stress, mental health challenges, substance abuse, or family problems, all of which could impact your ability to earn.

You typically don’t pay for this benefit or have to sign up for it, but it’s important that you know the opportunity exists if you ever need it. 

Opportunities to save on taxes

While your open enrollment decisions primarily focus on insurances to protect your earning power, you may also have some opportunities to keep more of what you earn by diverting some of your income to a tax-efficient spending accounts.   

Here are three of the more common savings accounts offered by employers that you might want to consider -

7.  Flexible Spending Account (FSA)

This is a tax-advantaged account that allows you to set aside pre-tax dollars to cover eligible medical expenses.  Provided you use the funds for qualified expenses, like doctor's office co-pays, prescription medications, or dental and vision care, you won’t be taxed on any of the dollars, which is a huge opportunity. 

But be aware of the “use-it-or-lose-it” feature of these accounts.  You will forfeit any funds remaining in the account at the end of the plan year.  However, there are exceptions to this rule.  Your employers may offer either a grace period or allow you to carry over a limited amount of unused funds to the following plan year.

8.  Dependent Care Flexible Spending Account (DCFSA)

This version of a flexible spending account allows you to set aside pre-tax dollars to cover eligible childcare or dependent care expenses. These funds can be used to pay for daycare, preschool, after-school care, or care for elderly dependents.  By using pre-tax dollars, you’re reducing your taxable income and keeping more of your money while helping to cover the costs of caring for dependents.

Just like the traditional FSA, there is an annual contribution limit, and unused funds typically do not roll over from year to year, so it's essential to estimate your expenses carefully.

Opportunities to save money

9.  Legal Assistance Plans

Not all employers offer legal assistance plans, also known as a legal services plans, but they are gaining in popularity.  These plans provide employees with access to legal services and assistance for a variety of legal issues. These plans typically offer the following services:

• Legal Consultations
• Document Review
• Legal Research: Attorneys can conduct research to provide guidance and information on specific legal issues.
• 24/7 Legal Hotlines

They’re designed to provide affordable and convenient access to legal expertise and can be particularly useful for issues such as estate planning, family law matters, landlord-tenant disputes, and more.

10.  Wellness Programs

Some employers offer wellness programs and incentives for participation. Employees decide whether to participate in these programs, which may include health screenings, fitness initiatives, or smoking cessation programs.

Which opportunities should you take advantage of? 

As is the case with most financial planning questions, the correct answer is, “It depends.”

You can make the most of the opportunities open enrollment presents by having a plan –

Know how much insurance you need and determine if you should opt for coverage via your employer or a private carrier.

Review your previous year’s health care expenses.  Would you benefit from using a flex spending account to cover some of those expenses?

Do you pay tuition to a daycare provider for your children or an elderly parent?  Would you save some money on taxes if you funded a dependent care FSA?

Have your plan ready and stick your approach to open enrollment this year!