It’s the time of year again when companies big and small offer millions of U.S. workers a month-long window — typically in November — to enroll in and change the benefits they receive as part of their employment benefits package.
We know it’s easy to ignore the emails from Human Resources and the posters plastered in the breakroom, if you happen to be back in the office. But this is no time to go on auto-pilot and let your choices from last year (or quite possibly from many moons ago) determine the benefits you will be able to take advantage of in 2022. And if you miss the open enrollment period, many workers can’t sign up for or update their benefits unless they have a qualifying life change such as a marriage or the birth or adoption of a child.
If you received a raise this year, welcomed a new child, got married or experienced any number of other events, you should absolutely set aside time this month to review all of your employee benefits and make updates where appropriate.
Take advantage of 401(k) plans & other retirement accounts
In 2020, there were about 600,000 401(k) plans, with some 60 million active participants including millions of former employees and retirees, according to the Investment Company Institute. That means millions more workers weren’t taking advantage of these retirement accounts. There are important reasons to invest in these accounts: Making regular contributions lowers your tax burden, because you take home less pay when some of your money is being invested in a retirement account.
You also never want to leave money on the table. When your employer offers a 401(k) match and you don’t contribute enough of your salary (usually just 4 or 6%) to earn the match, you are giving up free money. If you don’t already take part in a 401(k) or other employee retirement account, you owe it to yourself to check with your HR department to sign up before the end of the month. Even small amounts add up over time.
Were you lucky enough to receive a raise or bonus? If you are enrolled in a retirement account, consider placing all or a portion of the salary bump into your account. You may not even miss it.
Employee sponsored health insurance
Research shows that many people stay in certain jobs for employer-funded health insurance coverage. Some companies now offer their workers a choice of several health insurance plans to choose from with lower-cost options typically providing more narrow choices when it comes to healthcare networks and higher co-pays for office visits and other out-of-pocket expenses. Just like in the open-market it’s wise to review the details of all of your health insurance options to make sure you find the one that’s best for you and your family. Members of your HR department should be able to let you know of any major changes in coverage from year-to-year, if you ask.
No matter what stage of life you are in, making sure you have the right amount of coverage will help your family cover the cost of your funeral, a mortgage and maybe even college expenses depending on the type of policy you choose. A good rule of thumb is if someone depends on your income, you need life insurance. While many employers don’t offer as much coverage as you may need, it’s smart to take advantage of what is offered for you and your dependents. Getting coverage through your employer is often the most cost effective way to get what you need.
Long-term and short-term disability coverage
Make sure this box is checked if your company offers these benefits and requires you to sign up for them, even if you are required to pay a portion of the premiums. Financial planners say disability coverage is worth every penny because the loss of your future earnings can negatively disrupt your life for years to come. Here’s a pro-tip: If possible, make sure your disability policy is paid for with after tax dollars so you won’t be forced to pay taxes on the money when you can least afford it.
With reporting by Casandra Andrews