A practical look at health insurance, HSAs and FSAs, life and disability insurance, retirement plans, and other employee benefits before Open Enrollment ends

By: Cole Hammack, Partner and CFP®

Cole Hammack, CFP® is a financial planner with John E. Sestina and Company, a Fee-Only Financial Planning firm in Columbus, Ohio. Cole works with individuals and families at all stages of life, providing comprehensive, ongoing advice on investments, taxes, insurance, retirement, estate planning, and the financial decisions that come up along the way. He especially enjoys building long-term relationships with his clients, getting to know their families, priorities, and goals, and being someone they can turn to whenever life brings a new financial question or decision.

 ‘Tis the season.

But hold on this isn’t about the holidays! This is Open Enrollment season, and there is a deadline to meet!

This is the time of year when benefit packets start showing up and employees have to decide what they want next year’s coverage to look like.

Open Enrollment is the annual window when employees can review and make changes to their workplace benefits, including health insurance, flexible spending accounts, life insurance, disability coverage, and retirement plan contributions. In many cases, it’s the only time during the year these changes can be made unless there is a qualifying life event, such as getting married, having a child, or changing jobs. For many people, the temptation is to choose the same benefits they had last year and call it good.

The thing is, a lot can change in a year. Benefits change. Costs change. And life changes too. Maybe someone started taking a new prescription, found a new doctor, welcomed a child, got married, or now has access to different coverage through a spouse’s employer. Any of those changes can affect which benefits make the most sense for the year ahead.

That’s why Open Enrollment is worth more than a quick click-through. Taking a few minutes to review the options now can help you make sure you’re selecting benefits that still fit your needs before clicking “Submit.”

Health Insurance: Don’t Just Pick Last Year’s Plan

 HMO, PPO, or HDHP?

 Most Open Enrollment packets start with health insurance and supplemental coverage, so that is where this conversation starts too.

You know your own health insurance needs better than anybody else, and the key is finding a plan and provider network that meet those needs, especially if you regularly sees specialists. It becomes even more important when a household is comparing plans available through more than one employer.

Generally speaking, employees may see three types of health insurance plans: a High Deductible Health Plan (HDHP); a Preferred Provider Organization (PPO); and a Health Maintenance Organization (HMO).

To explain in reverse order: HMO Plans are generally the most restrictive health insurance option available. Their premiums may be less expensive than the PPO, maybe comparable to an HDHP, but the tradeoff is your Primary Care Physician (PCP) acts as the gatekeeper for access to specialists. Additionally, HMOs generally do not extend coverage for out-of-network providers, which can be a huge surprise following an emergency. If provider flexibility or out-of-area access is particularly important to you, pay close attention to the HMO’s network restrictions before enrolling! PPOs are arguably the most popular health insurance plans that are available right now. Sure, they may cost more than the HMO to maintain, but it may be a small price to pay for many to have the flexibility that the PPO offers.

Additionally, PPOs do extend coverage to out-of-network providers, albeit using a separate deductible and out-of-pocket maximum from your in-network providers.

Lastly, you have the HDHP, which is essentially a different flavor of PPO Plan. What makes it distinct is it requires your maximum deductible to be over a set limit and your maximum out-of-pocket cost to be below a set limit, but ultimately gives you access to a Health Savings Account (HSA), which we’ll address below. Additionally, premiums for an HDHP are generally lower than what you’ll see for a traditional PPO Plan, but the tradeoff is found with the higher deductible which can result in a more expensive plan if you have surprise medical needs.

*** A Note for Married Households

When both spouses have access to employer coverage, Open Enrollment is not really an individual decision. It is a household decision.

You should be sure to compare premiums, deductibles, out-of-pocket maximums, employer HSA contributions, networks, prescription coverage, and dependent costs across both employers to ensure you’re receiving the best possible benefits for the household.

FSA vs. HSA (What’s the Difference?)

Once you’ve selected your health insurance plan, you generally have an opportunity to supplement with a few other plans that may be worth considering.

The first option you’ll likely see is a Medical Flexible Spending Account (FSA), sometimes called a General Purpose FSA (GPFSA), which is a use-it-or-lose-it-style plan that allows for you to save for projected medical expenses on a pre-tax basis. Contributions are limited to $3,300/person/year (2026) and generally allow for minimal carryover into the following year if you’re unable to utilize the full account balance within the calendar year. However, our recommendation is to generally not fund this account for more than you would expect to use in the year to come. To reiterate, this type of plan can be used exclusively for Qualified Medical Expenses, which is a surprisingly broad definition, but still limited all the same.

You may also see a similar version of FSA, called a Limited Purpose Flexible Spending Account (LPFSA), which is a type of FSA that’s limited to being used for qualified Dental and Vision expenses. This type of plan can be used in tandem with a Medical FSA or the Health Savings Account if you anticipate needing additional funds to cover projected medical, dental, and vision expenses for the coming year; be sure you pick the correct plan because it’s easy to confuse the two if you’re going through your benefits quickly!

The last major supplement is the Health Savings Account (HSA) that I referenced earlier. As a reminder, the HSA requires you to be enrolled in an HDHP to be eligible for this type of account. What’s great about HSA Plans is they’re not use-it-or-lose-it in the same way an FSA is, meaning you can accumulate funds in this account to use for future medical expenses. Additionally, funds within an HSA can generally be invested to pick up additional long-term growth if you view this as a supplement to your retirement accounts since this money is yours and not tied to the employer in the same way the FSA is. I really can’t speak highly enough about this type of account for the right person!

To summarize:

• FSA: Great for medical expenses you reasonably expect to have next
• LPFSA: Primarily dental and vision expenses, and potentially useful alongside an HSA.
• HSA: Available with eligible HDHP coverage and, unlike an FSA, the money can remain yours from year to year.

Do I Need the Extra Insurance Options?

Once you’ve made it through the medical coverages, you’re finally onto Dental and Vision coverage. In many cases, these insurances may be limited to one or two coverages and you should pick the option(s) that’s most appropriate to meet your needs.

To close out this section, you may see a few newer coverages that have popped up in the last 5-10 years. The importance of these insurances is very much on a person-by-person basis, and you should review the details of each before making your elections.

The first option is Critical Illness Insurance, which pays out a lump-sum benefit for specific named major medical occurrences (think heart attack, cancer, stroke, etc.).

This is a broader version of Cancer Insurance, which pays out a benefit for cancer-related screenings and treatment. Generally, both policies can be a great option to consider if you have a family history of these types of medical events.

Additionally, you may see Accident Protection Insurance and Hospital Indemnity Insurance, in the event you need hospital-related care. These policies pay out a lump sum benefit to cover the costs related to your hospital stay, such as the deductible, pharmacy prescriptions, or the cost of an ambulance trip. Ultimately, you should choose the plan(s) that would be most appropriate to meet your family’s needs.

Income Replacement: Do I have enough?

Everyone’s least favorite consideration is “what’s going to happen to the family if something happens to me,” and that’s exactly where these benefits really kick in.

Life Insurance

Most employers are going to provide some sort of life insurance benefit to their employees, although these benefits are often limited to either a flat $50,000 or maybe a multiple of salary, normally 1–2x. Obviously, it’s often better to have something rather than nothing, but is it enough?

1. If you pass away, will your spouse have enough income to maintain their lifestyle?
2. Do you have kids that you need to feed or want to put through college?
3. Is your goal to pay off debt so those you leave behind have a little more room to breathe if you’re gone?
4. What would financially change for your family if your income disappeared tomorrow?

This is where life insurance comes in and where we find the base offerings are often limited in terms of reaching your goals. While there are rules of thumb to generalize your life insurance starting point, such as 10x your gross annual income, they’re no substitute for actually calculating your need based on more than a dozen moving pieces.

Once you’ve worked through your number, you may realize there are limitations at the employer level to cover this need. If you have access to supplemental insurance, oftentimes this is limited to 3–5x your salary and may not meet that total need. In that case, it’s a good time to consider a personal life insurance policy to bridge the gap.

The great thing about personal life insurance is it follows you wherever you go, meaning you’re not bound to the employer to maintain your life insurance coverage and, sometimes, the premiums may be even less expensive depending on age and health.

Disability Insurance

Now that you’ve worked through life insurance, it’s time for the most difficult insurance to conceptualize: disability insurance. Believe it or not, you’re 4-5 times more likely to become disabled during your working years than you are to die, and it’s not exclusively because of the catastrophic accident that everyone first thinks of; disabilities often result from less severe injuries, pregnancy, and illness, which are far more common but may be just as debilitating.

Now that that’s established, that’s exactly why you need income protection! Many employers will provide short-term disability and sometimes even long-term disability free of charge, which can be a great benefit toward covering this potential gap. Sometimes, there may even be an option to “buy up” additional disability insurance to increase your overall coverage. Additionally, there may be the option to pay for the premium yourself. ‘Now why would I do that?’ everyone collectively asks, and you would do this because this ensures any potential disability payout to you is tax-free! If the employer is paying for the benefit, any potential payout to you is taxable income, which is far less advantageous and, generally, the rate for employer coverage is reasonable enough to really consider this option if it’s available.

Financials: Is my Money in the Right Place?

Where most financial planners start is where we’re going to end- the 401(k) (403(b), 457, SIMPLE IRA, the list goes on)! It’s important to us that your family’s taken care of, which is why we lead with health and related benefits. Once all of that’s locked in, we need to be sure you’re taking advantage of the financial options that are available to you. In many cases, the employer is going to automatically enroll you into your workplace retirement plan, but we want to be sure we’re proactively reviewing, enrolling, and confirming we’re in the best possible space. To start, confirm whether your employer is offering a match on contributions you make.

The match can be structured in several different ways, whether flat or tiered, but you want to ensure you’re contributing at least the match. If the employer matches 100% up to 3% of contributions, consider contributing enough to capture that match if your finances allow. In a perfect world, it’s often best to position yourself to maximize your contributions, which varies widely based on the plan you have access to, but we understand that’s not always feasible and you should always try to do what you can. The more you can save while you’re young, the more flexibility you’re going to have when you’re old. It’s as simple as that!

Lastly, and we can’t stress this enough, make sure your account’s not sitting in cash.

You don’t necessarily have to go through and pick your own investment options, but you should at least look into appropriate Target Date funds which adjust their allocations automatically to become more conservative as you get closer to retirement, which can be a great solution if you want to set it and forget it.

What Else is Hiding in Your Benefits Package?

There may be other options popping up nowadays, whether that’s pet insurance, access to a stock purchase plan, or a relationship with an insurance company that can offer discounts on auto, homeowners, and umbrella coverages. We don’t have the space to get into every one of those today, but it’s worth reviewing the terms of each to see if they’re appropriate to meet your needs and goals.

Before You Click Submit

To close out, we put together a quick “Before You Click Submit” checklist to help make this your best Open Enrollment yet:

• Did I compare this year’s medical options instead of automatically choosing last year’s?
• Are my doctors and prescriptions covered?
• Does an HSA or FSA make sense this year?
• Is my life and disability coverage sufficient for my household?
• Am I getting my full employer retirement match?
• Is my retirement account actually invested?
• Did I review beneficiaries?
• Are there any new benefits I overlooked?

Open Enrollment doesn’t have to be complicated, but it deserves more attention that clicking through last year’s elections. A few extra minutes now can help make sure the benefits you’re paying for actually fit your life in the year ahead.

Thank you for reading!