Open enrollment is the perfect time to assess your benefits options for 2021.

The pandemic has certainly altered our routines, making this year anything but typical. Now's the time to select your employee benefits for the upcoming year, especially since the current situation may have shifted your priorities since your last enrollment. You might find yourself working from home or your children learning online, leading to different childcare needs than before. Career changes could also mean new job benefits, or perhaps you're among those who faced job loss. Additionally, your healthcare needs may have evolved, creating a greater urgency to safeguard your family against potential medical costs or loss of income.

Some regulations have shifted, expanding tax benefits for both healthcare and childcare expenses. Many employers are adjusting their health insurance offerings and other benefits to cater to families facing new challenges due to the pandemic. Familiarizing yourself with these changes can empower you to make informed decisions during open enrollment for 2021:

Understand Your Dependent-Care Flexible Spending Account

If you have children, they may be engaged in virtual learning, potentially leading to increased childcare expenses – or less, if remote work has allowed for more flexible schedules. If your employer provides a dependent-care flexible spending account, now is the ideal moment to reassess your contribution amount. You can set aside up to $5,000 pre-tax annually (per household) in a dependent-care FSA, using this fund tax-free for childcare costs for children under 13 while you and your spouse work or seek employment. This account reduces your taxable income, but remember that you typically need to use the funds by year-end or risk losing them. While predicting your childcare situation for 2021 may be tricky, keep in mind that you can utilize these funds for various expenses, including daycare, nannies, preschool, and summer camps.

Expanded Uses for Medical FSAs and HSAs, Particularly for Women

If your employer provides a healthcare flexible spending account or you have a high-deductible health plan qualifying you for a health savings account, know that you can set aside pre-tax funds for out-of-pocket medical expenses, including deductibles, co-payments, prescriptions, and other non-covered expenses. The CARES Act broadened the acceptable uses of FSA and HSA dollars: you can now use these funds tax-free for over-the-counter medications and menstrual products. Since you usually need to spend FSA money by year-end (or your employer might allow a grace period or partial rollover), being aware of these regular expenses can encourage you to contribute more without fear of excess funds left unspent.

Evaluate Your Health Insurance Choices

If you or your spouse experienced job loss in 2020, you might now have a new position with different benefits. Employers may have altered their health insurance offerings and costs due to financial strains from COVID-19. If both you and your spouse have employer-sponsored health coverage, it's wise to review both plans to determine the best coordination strategy. It could be advantageous for each of you to remain on your respective employer plans while ensuring your children are covered under one of them. However, one employer might provide superior dental or vision benefits, prompting you to enroll your entire family for those supplemental benefits, even if you maintain separate health insurance plans. When comparing options, scrutinize premiums, deductibles, co-payments, and whether your preferred healthcare providers and medications are included. Also, check if the plan qualifies for an HSA.

Consider Supplemental Insurance Options

The pandemic has highlighted the importance of protecting your family against unforeseen events. It's a good moment to review any disability or life insurance benefits that could assist your family in managing expenses if you become ill or injured and unable to work, or if you pass away unexpectedly. If you currently have disability coverage through your employer, check out the payout amount and consider whether additional coverage might be necessary, often available during open enrollment. This is also a great time to reassess your family's life insurance needs. Compare the costs between your employer's plan and obtaining coverage independently if you're in good health.

Maximize Your 401(k) Contributions

Some employers reduced their 401(k) match due to financial difficulties during the pandemic, but many are reinstating contributions as business conditions improve. Find out what your employer will match for your 401(k) contributions in 2021, and aim to contribute enough to secure the full match – that's free money that can significantly aid your future. Even modest contributions can accumulate substantially by the time you retire.