It’s “Open Enrollment” Season!

Along with the beautiful Indiana fall season, comes the time to sign-up and/or renew your employee benefits for the coming year. It can seem stressful! But this is the perfect opportunity to review your family needs and select the appropriate options.

Navigating Open Enrollment

It’s hard to believe, but 2026 is almost here. For many Americans, open enrollment provides a good opportunity to plan for next year. Unfortunately, some employees feel overwhelmed and confused by the benefits offered by their employer causing open enrollment to become a source of stress rather than opportunity. Below you will find some considerations when it comes to common benefits offered to employees.

Retirement Contributions

The topic that likely comes to mind for most workers when discussing benefits is saving for retirement. The most common employer sponsored retirement plans are 401(k)s and 403(b)s which allow for both the employee and employer to contribute to a tax advantaged account for the benefit of the employee. But how much should you contribute?

2026 contribution limits have not been released yet so we will consider 2025 limits. In 2025, the maximum salary deferral allowed by an employee is $23,500 (plus applicable catch-up contributions for those over 50) and the overall limit from all sources is $70,000. In addition to employee deferrals, employer matching contributions and profit-sharing contributions count toward the $70,000 limit.

In a perfect world, you would calculate how much needs to be deducted from your paycheck to hit the maximum. However, that isn’t an option for many employees. A good compromise is to consider how much needs to be contributed in order to maximize the matching contribution offered by your employer. For example, if the employer will match 100% of the first 6% of your salary, then contributing at least 6% is a good starting point. After all, the matching is free money! It’s advisable to continue to increase your savings beyond the matching amount as you can.

Life and Disability Insurance

While most individuals would likely say health insurance is the most important form of insurance offered through work, that doesn’t mean life and disability protection should be ignored. But what should you be considering when looking through the slew of options available?

Starting with life insurance, you need to consider your dependents that rely on you to provide for their current and future needs. Do your children plan to attend college? Can your spouse afford childcare if you were to pass away? Is there any debt, such as a mortgage, that you would like to pay off if something were to happen? If your spouse works, what would they be able to afford without your income?

These life circumstances should be considered when determining whether to buy additional coverage through work, in addition to what your employer may be providing for free. Of course, if the amounts offered to you through work are not adequate, you should consider acquiring personally owned coverage outside of work.

Disability insurance is an often-overlooked aspect of one’s financial security. Both short-term and long-term policies need to be considered as well as the income replacement level offered through the policies. A good rule of thumb is to aim to protect 60-70% of your monthly income through disability coverage.

If coverage offered through your employer is not adequate, consider purchasing your own policy. One difference between employer owned and personally owned coverage is the taxation of benefits. If you claim benefits through an employer sponsored plan, all benefits received are taxable. However, if you claim benefits on your own policy for which you were paying the premiums, benefits are tax free.

HSA vs. Health Care FSA

If you’ve ever felt embarrassed because you didn’t know the difference between an HSA and a Health Care FSA, you are not alone. A study conducted by Bend HSA in 2021 found that 65% of respondents thought that Flexible Spending Accounts and Health Savings Accounts were the same thing. While both of these options allow for tax-free withdrawals for qualified medical expenses, there are some key differences between the two:

Health Savings Accounts:

• Owned by the employee
• Unused funds are not forfeited at year end
• No vesting requirements
• Must be enrolled in a high-deductible healthcare plan

Health Care Flexible Spending Accounts:

• Owned by the employer
• Unused funds are forfeited at year end
• Generally, any unused funds are forfeited if the employee leaves the company
• No specific plan required

Summary

As you can see, each benefit offered to you comes with its own specific and unique considerations that need to be examined. While it is easy to feel overwhelmed, it is important to take the time to properly analyze each offering and plan for how they fit into your specific financial picture.

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