You know you’ve arrived to the adult world when “Open Enrollment” catches your eye as something important. Unfortunately, the days are gone when “enrollment” is associated with college classes. Instead, we now get to associate “enrollment” with benefits. It’s vital that you’re taking advantage of all the benefits that could provide you value considering it’s already part of your compensation package. Not to mention those benefits are likely key components for your financial plan. Open enrollment marks a prime time for intentional review.
So what is open enrollment?
Open enrollment, also known as annual enrollment, is the period when you are allowed to change certain benefits that are offered to you by your employer. Most notably this is the time when most individuals and families update their health insurance plan. However, this is also the period when employers allow you to make necessary changes to your other benefits as well.
When and how long can I expect my open enrollment to be?
It’s important to note that all enrollment periods vary in length and the period that it’s offered.
However, most employers structure their open enrollments to take place during the 4th quarter of the year in preparation for the upcoming year. Your enrollment period may last one week, two weeks, or even a month. It all varies by employer. It’s important for you to stay informed when your employer announces your specific open enrollment. Benefit elections and changes made during open enrollment will take effect January 1st of the following year.
Note: Open enrollment for the health insurance marketplace is usually November 1st through January 31st.
Why I shouldn’t miss open enrollment
It’s vital that you make necessary changes during this time period because if you don’t you’ll have to wait an entire year, given you don’t have a Qualifying Life Event (QLE), in order to make those changes. Much can happen in 365 days and you don’t want to submit yourself to any more risk than you need to. Missing open enrollment could mean exposing yourself to unnecessary risk or simply failing to capitalize on an offered benefit. Depending on the benefit this could equate to hundreds or thousands of dollars that you could miss out on.
What happens if I miss my open enrollment period?
If you miss your open enrollment you typically will have to wait until the next enrollment period (the next year). However, you may be eligible to change your benefits mid-year if you experience a Qualifying Life Event (QLE) that permits you to a Special Enrollment Period (SEP). Some examples of QLEs are:
- Death of a spouse or child
- Adoption or birth of a child
- and/or change in your work schedule that causes you to gain or lose coverage
If you find yourself in a Special Enrollment Period, you’ll likely want the assistance from a professional to adjust your benefits moving forward.
For example, if a family welcomes a child into the world it’s an excellent idea to reassess health and life insurance needs due to the family addition.
Is there anything else I need to do during open enrollment?
Open enrollment marks a great time to do a routine review of your benefit offering including what you’re already taking advantage of. I can’t tell you how many times I’ve unearthed a benefit that a client had no idea was offered to them so they consequently weren’t taking advantage of it.
You also need to realize that outside of your initial hiring period your employer typically won’t educate you on the benefits available to you. Know what’s available to you and proactively initiate the process to enroll in the appropriate benefits, no one else will do this for you.
It’s worth taking the time to review your employer’s benefit manual. The time spent reviewing this manual can easily pay itself off through capitalizing on a benefit. Through this manual you can educate yourself on the benefits offered to you while also learning their purpose and how they work.
That may sound extremely boring to you as you’d rather be doing other things with your time. I get it, it’s a valid point that I won’t argue. However, if you aren’t going to take the time to stay in the know you probably need to hire a financial planner to do it for you. A great financial planner will periodically review your benefit offering in order to properly coordinate your benefits with your financial plan.
Common benefits you should consider reviewing during open enrollment:
- Health Insurance plan
- If a High Deductible Health Plan (HDHP) then review your Health Savings Account, if you have one
- Vision and Dental Insurance
- Group Life Insurance and Accidental Death & Dismemberment Insurance
- Group Disability Insurance
- Flexible Spending Account
- Stock Purchase Plans
- 401(k) or other qualified plans
One reason to review your benefits periodically is to ensure you’re getting the full 401(k)/qualified plan match by your employer. I’ve seen individuals miss out on a full match because they were still contributing the “default” amount from their initial hiring period and were unaware of their employer’s matching contribution amount.
Open enrollment is a great time to change your current benefit elections or enroll in new benefits. Life is constantly changing so you should periodically review your benefits and open enrollment marks a great time to do just that. Put it on your calendar if you have to and spend a night in review. Remember it only comes once a year. You don’t want to squander the opportunities to fine tune your benefits in order to work in tandem with your financial plan!
Has missing your open enrollment period ever cost you? Do you plan to change anything this open enrollment? Have you learned anything new during open enrollment?