As the year comes to a close, we believe it’s crucial for employees to take advantage of open enrollment and contribution adjustments to seek to maximize their benefits. Beyond just selecting health insurance plans, this period offers an opportunity for individuals to make strategic financial and tax planning decisions. In this blog, we’ll explore how employees can potentially optimize their benefits by focusing on financial planning, tax planning strategies, and making informed choices during year-end open enrollment.
Choosing the Right Health Insurance Plan
During open enrollment, employees have the chance to review and make changes to their health insurance coverage. It’s important to consider not only the premiums and deductibles but also factors such as co-pays, prescription drug coverage, and out-of-pocket maximums. By selecting a plan that suits individual or family medical needs, employees can help to control medical expenses and seek to optimize their overall financial well-being.
Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs)
Contributing to an FSA or HSA can provide tax advantages and help employees cover qualified medical expenses. FSAs allow pre-tax contributions for healthcare costs such as co-pays, deductibles, and certain over-the-counter medications. HSAs, available to individuals with high-deductible health plans, offer similar tax benefits and often can be invested over time.
Retirement Contribution Adjustments
Year-end open enrollment often provides the opportunity to adjust retirement plan contributions. By increasing contributions to 401(k) or 403(b) accounts, employees can reduce taxable income, take advantage of employer-matching contributions, and boost long-term retirement savings. We believe it’s important to take advantage of employer match, as it can enhance saving towards retirement goals.
Dependent Care Assistance Programs
For employees with dependents, pre-tax contributions to dependent care assistance programs can help cover childcare costs. Taking advantage of these programs can result in tax savings and reduce the financial burden of childcare expenses.
Other Benefit Options
Open enrollment may also involve decisions related to life insurance, disability insurance, and other voluntary benefits. These insurance options can play a vital role in family financial planning and provide valuable protection against unforeseen circumstances.
Aligning Benefits with Financial and Tax Planning Goals
When making choices during open enrollment and contribution adjustments, employees should consider their broader financial and tax planning goals. By evaluating how benefit selections align with their financial objectives, individuals can make strategic decisions that create tangible savings toward long-term financial goals.
Open enrollment and contribution adjustments offer an annual opportunity for employees to adjust their benefits to suit their needs. By carefully considering health insurance options, making strategic contributions to accounts like FSAs and HSAs, adjusting retirement contributions, and aligning benefit selections with financial and tax planning goals, employees can seek to maximize the impact of their workplace benefits. Utilizing this period for informed decision-making can lead to tangible financial savings and a stronger foundation for the future.
For personalized advice and guidance on navigating year-end open enrollment and employee benefits, consult with our team at Keel Financial. Our advisors can help you make informed decisions that align with your financial planning and tax planning goals.
Disclosures
This material was prepared using Artificial Intelligence (AI).
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor.
