An Open Mind Towards Open Enrollment: How to Maximize Your Employer’s Benefit Package

Football, back to school, and…health insurance? Yes, it’s that time of year once again when millions of American workers get to make decisions about their employee benefits, usually health insurance, and sometimes life and disability insurance. Important decisions need to be made during this period regarding your 2023 benefits. While employers differ on when and what they offer employees, we think a little primer could be useful.

For something as important as health insurance, many people make decisions rather quickly. It sounds basic, but the most important thing is that you actually look at what’s being offered. For health insurance, workers may have options to choose from, including a high-deductible health plan, which in 2023 means one with a deductible of at least $1,500 for single coverage and $3,000 for a family plan. Because of the higher deductible — the amount you pay for covered medical costs before insurance kicks in — the monthly premiums may be lower than other coverage options.

High-deductible plans also might come with a health savings account, or HSA. This comes with a triple tax benefit: Contributions are made pretax, investment growth is untaxed, and withdrawals spent on qualified medical expenses are tax-free. For 2023, the annual cap on HSA contributions is $3,850 for self-only coverage and $7,750 for family coverage. You also can leave the money there from year to year.

There is yet another common employer benefit. If no HSA is offered, your company might offer a health flexible spending account or FSA. The money you contribute to FSAs is also made pretax and used to cover medical expenses. This year, 2022, the contribution limit is $2,850 per employee. (As an FYI, FSA caps for 2023 have not been announced yet.)

FSAs do have a major caveat, however. They usually come with a “use it or lose it” clause — meaning if you don’t spend the balance by the end of the year, you lose it unless your company is among those that give you a grace period or allow a certain amount to roll over to the next year.

When selecting your health insurance options, it all comes down to a cost-benefit analysis involving yourself and/or your immediate family members. Lower deductibles mean higher monthly premiums and vice versa. Medical emergencies can happen unexpectedly, but if you or your family have chronic health problems that will likely require care throughout 2023, the higher premiums might be worth it. If you usually visit the doctor once a year, higher premiums might not be worth it. Just for reference, the average American in 2022 paid $2,520 in the form of premiums.

Lastly, some additional, less common benefits might be offered through your employer: life insurance, disability insurance, tuition reimbursement, and childcare. When choosing among these, the same logic applies as health insurance: take full advantage if it makes sense within your personal financial situation, but don’t spend money on perks you’ll never use. It’s a new open-enrollment season, so let’s get started on a winning streak.

Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.

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