Some companies choose to have employee benefits open enrollment in October and some in November, which has this topic top of mind in our house. As we head into the end of the year, we do a lot of talking and thinking about what we want most for the year ahead.
While I cannot speak to the exact options that you have available where you work – every company offers different benefits – I can provide you with reminders to make your employee benefits selection process as smooth as possible.
You Cannot Predict the Future with 100% Accuracy
Let’s start with a thought from the field of positive psychology. Having the right mental approaches to selecting employee benefits can help take some of the pressure off of getting everything perfectly correct. Remind yourself you are doing the best you can to choose what is right for you with the information you currently have. There is no way you can predict what 2022 has in store for you with 100% accuracy.
Taking time to think through what you want in the next year can help you make more informed decisions. At the end of next year you may go, man I wish I would have known xyz was going to happen, but remind yourself that today there is no way of having that perspective. Sometimes we have analysis paralysis because we try to consider too many things. Consider what is most likely going to happen based on your goals and the information you have today and move forward based on that understanding.
Choose to be an Active Participant in Employee Benefits Open Enrollment
Most employers set up the employee benefits enrollment period with the understanding that if you choose to do nothing, you’ll have the same benefits from the previous year. Choose not to let your employer make decisions for you. Most employers provide educational sessions on what is changing and/or they may post information to an internal website. Take time to review this information.
Employee benefits are changing, what’s covered is changing, and reviewing the information can help ensure you really understand the options that are available for you. Don’t assume that just because something has worked in the past that it must work in the future. Understand your options and choose what is best for you now.
Know What You Can or Can’t Roll Over
Some employee benefits can roll over from year-to-year and that is even more relevant this year with additional options employers had the option to select. It’s important to understand what you can rollover because that may impact what you choose to set aside during 2022.
Health Care and Dependent Care Flexible Spending Accounts (FSAs)
Due to the pandemic, the IRS made changes to dependent care FSAs because a significant number of individuals changed dependent care plans and unanticipated changes to health care costs. If your employer offers health care or dependent care flexible spending accounts, they had the opportunity to select if they are allowing employees to roll over unused amounts into 2022.
Typically, FSAs have a “use it or lose it” rule, where if you don’t use the money to cover approved expenses you lose or forfeit the money at the end of the year. If your employer chose to continue the “use it or lose it” scenario, you must use the funds and cannot roll them over into 2022.
However, if your employer is allowing you to roll funds over in either a health care FSA or dependent care FSA, know what limits (if any) there are for rolling over funds and assess how much you intend to rollover into 2022. This may impact how much you want to have withheld in 2022 for a health care FSA and/or a dependent care FSA.
Most employers allow you to roll over some amount of unused vacation time up to a limit. It may be 40 hours or 120 hours that can be rolled over. Anything over that amount left at the end of 2021 is lost. Don’t lose vacation time!
Because of the pandemic, most individuals have taken fewer days off. Now is the time to assess where you are at with unused vacation time and use time over the amount you can rollover between now and the end of the year. Don’t feel guilty for using this time, you have earned it.
If you have unused time that you cannot rollover, think about goals you have and what would be necessary and fun uses for the time (i.e. catching up on routine medical appointments, taking care of a home maintenance project) or fun things (i.e. watching a movie you’ve wanted to see, catching up with someone you haven’t had time to, going on a small getaway if you feel comfortable doing so). Using vacation time makes you a better employee, according to research by the Society for Human Resources Management
Don’t Only Focus on the Bottom Line
If your employer offers multiple options in a category, like health insurance, it’s easy to want to select the lowest premium option. However, that may or may not be the best option.
High deductible health insurance plans are becoming increasingly popular; however, if you expect that you are going to have major medical expenditures (i.e. pregnancy and birth of a child, cancer treatments, high medicine costs) in 2022, a high deductible plan may not be the best option for you.
Make sure you understand your typical and expected needs and compare policies based on your needs. Paying a little more for better insurance, if you have lots of medical needs, may actually save you money in the long run in 2022 if more is covered under the insurance. Take time to do the analysis to choose what is best for you, don’t just default to selecting the lowest premium insurance.
Consider All Options
Choosing employee benefits can be challenging because you are looking at them as a suite of options. Generally speaking, working through an employer plan is a great place to get many different kinds of benefits. However, make sure you are considering other options. Trends show that employers are providing less coverage and passing on more cost to employees.
This trend makes it more prudent to consider alternate options to ensure we are really being savvy.
A logical first place to start is by reviewing your employee benefits with that of a spouse. Consider your spouse’s employee benefits package and how you can get the best coverage for the least cost between what each of your employers offer.
Additionally, consider other sources to meet your needs. For example, often companies offer an employer paid life insurance benefit, typically at a level based on a multiple of your income. MPower Co highly recommends you select the full amount of the employer paid benefit for life insurance. However, if you purchase supplemental insurance through work, understand the costs and assess if you could buy the insurance elsewhere (say through a professional organization) for a lower cost. Don’t simply assume your employer rate is the best rate in the market.
Don’t Hesitate to Ask Questions
Some reading this may feel confident in what employee benefits fit your needs. However, I find selecting employee benefits to be very complicated, and I’m trained in understanding the differences between options and also applying them to my individual situation. Policies get more complex year over year.
It is important to ask questions and get assistance in assessing what critical language means if you aren’t confident in your understanding. Your employer has individuals responsible for selecting employee benefits, and either has an individual or a team responsible for the open enrollment period. If you aren’t sure what benefits fit your needs, do not hesitate to ask questions. Set up confidential meetings with the right personnel to discuss your needs and options. It is their job to help you make the best choices.
Don’t select something because it feels right or because it’s what you’ve always had. Your needs today are likely different than the original time you selected benefits. Know that you have the information to be confident in your decisions.
Pay Attention to Trends for Your Specific Benefits in Relation to Your Income
The last tip on this list of employee benefits tips is to keep track of how your benefits options are affecting your bottom line. I mentioned earlier that research by the Society for Human Resources Management has shown that employers are providing less and that is hurting the bottom line for employees. Know your specifics. If your premiums increase, copays increase, etc., understand how that actually impacts your bottom line.
My best advice here is “don’t get mad, get even.”
Don’t be mad that employers are following trends. Don’t take it out on your boss – they aren’t making the changes and are likely impacted as well. It is frustrating, but it is a reality. Living a bitter, frustrated life is not what we are about here at MPower.
Instead we are about is keeping that information and using it to your advantage. Having specific facts about how changes have impacted you and using it as leverage in a negotiation is savvy. Your bottom line is one negotiation tool you can use when asking for a raise or a point of conversation to make during an annual review. Don’t hesitate to bring it up to your supervisors and make it clear that corporate changes are affecting you and your financial abilities. Make others aware of your knowledge in a professional manner.
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If you found this article on tips to choosing employee benefits helpful, MPower co also has a free resource that you’ll love! It’s all about how to become a millionaire next door. Becoming a Millionaire Next Door takes focus and time and using money wisely, like you are now set up to do with the tips above on being a savvy consumer! Click on this link to get your free download to be more financially savvy.