Open enrollment has arrived, marking the period when employees select their benefits for the upcoming year. Making informed changes during this time can lead to substantial savings.

Life can get hectic, leaving little time to explore the best financial choices. However, open enrollment is the perfect opportunity to dive into your options. This year-end period allows you to enroll in new benefits or adjust your current selections.

For years, I encouraged a friend to investigate her company's dependent care flexible spending account (FSA) to save on taxes while paying for her toddler's daycare. I was aware that this benefit was available at her workplace.

Yet, juggling a toddler, a demanding career, and another baby on the way made it tough for her to prioritize looking into employee benefits. A few years later, when she finally had a chance to explore, she realized that participating in the dependent care FSA could save her a significant amount of money annually by allowing her to set aside pre-tax funds for childcare expenses.

Benefit programs frequently change, making it crucial to stay informed and ensure your selections still align with your needs. Attend open enrollment workshops at your workplace where HR representatives explain available programs alongside the written materials provided.

Here are some of the common benefits you can expect to find on your employer's offerings.

Health Insurance Comes First

When considering employer benefits, health, vision, and dental insurance usually top the list. This is understandable given their significance. Companies generally cover about 83% of the average $7,739 premium for individual coverage and nearly 73% of the $22,463 average for family coverage, according to the Kaiser Family Foundation.

Given the high costs associated with healthcare, it's vital to evaluate your choices during open enrollment to maximize your investment. Plans can shift from year to year. Your medications might fall out of coverage, or your doctors may no longer be in the network. Furthermore, your personal circumstances might have changed, making a different plan more suitable.

Employees at smaller companies might find themselves with limited plan selections, while larger firms typically offer various health insurance options, making comparison worthwhile. Most insurers provide online tools to help you assess how to best utilize your plan.

Tax Breaks for Major Expenses

Work-related benefits can be an effective way to save. One key option is a flexible spending account (FSA), which allows you to set aside funds tax-free for healthcare costs. Remember, FSAs operate on a use-it-or-lose-it basis, so it's important to estimate your annual healthcare spending realistically. In 2023, the maximum contribution for FSAs will increase to $3,050.

If your family often meets its deductible, contributing the maximum to the FSA might be beneficial. Conversely, if you generally avoid major medical expenses, consider a smaller contribution.

The upside? Any remaining funds in your FSA at year-end can be used for a wide range of health-related costs, including glasses, braces, crutches, and smoking cessation programs. A complete list of eligible expenses can be found here.

Additionally, a childcare FSA allows you to set aside up to $5,000 (for single filers or couples filing jointly) for childcare expenses for children under 13. This encompasses daycare, preschool, or summer camp costs. Keep in mind, this is a shared benefit, so if both you and your spouse have access to dependent care benefits, the total contribution remains capped at $5,000.

Importance of Financial Wellness Programs

After tackling the major expenses of health insurance and childcare, consider exploring less publicized benefits. Financial wellness programs are particularly valuable, as they provide guidance for managing financial goals and obstacles.

As a financial planner, I appreciate the significance of sound financial advice. However, not everyone can afford a financial advisor, making these wellness programs essential. Sadly, fewer than 25% of employees have access to such services, as per a recent study. Employees at larger organizations are more likely to have access to these programs than those at smaller businesses.

Benefits vary by employer and may include interactive budgeting tools or sessions with financial coaches.

Student Loan Repayment Options

In July, President Biden enacted an executive order to forgive $10,000 in student debt for borrowers, increasing to $20,000 for Pell Grant recipients. Currently, the debt forgiveness program faces legal challenges. While $10,000 can offer significant relief, it may not fully address the needs of many borrowers. Explore any assistance your employer may provide.

At present, only 17% of employers feature a student loan repayment benefit, but an additional 31% plan to implement such programs, according to a survey by the Employee Benefit Research Institute.

Evaluate Life Insurance Options

Your employer may offer a basic life insurance policy, usually covering one to two times your salary at no cost. This is an easy choice to make during open enrollment. However, don't neglect the option to purchase additional insurance on your own for a higher death benefit that remains active if you change jobs.

Additional insurance options through your employer may not be worthwhile. For example, accidental death and dismemberment insurance provides benefits for injuries or fatalities resulting from accidents, rather than natural causes. My recommendation is to obtain as much traditional life insurance as necessary and feasible to provide essential financial support for your loved ones, regardless of the circumstances of your passing.

However, consider supplemental life or disability insurance through your employer if you have a pre-existing condition that could disqualify you from obtaining coverage independently or make it exceptionally expensive.

Every Benefit Counts

Your benefits may not lead to massive yearly savings like they did for my friend when she enrolled in the dependent care FSA. However, over time, the support from your employer can significantly ease your financial burden. Remember, company benefits can also assist with challenging life situations, like elder care. Life can be overwhelming, so take full advantage of the assistance available during open enrollment.