Free lesson · Employee benefits
Choose your benefits on purpose.
Open enrollment is a short window to pick a health plan, set money aside for health costs and decide what goes into your retirement plan. Most of these choices hold for a year, so compare them by what they cost over the whole year, not by the number on the first screen.
By Ryan Loveless, MS FinancePublished October 2, 20267 min read
Know what you’re choosing.
- A health plan
- Four numbers describe most plans. The premium is what leaves your paycheck whether or not you see a doctor. The deductible is what you pay for care before the plan starts sharing costs. Coinsurance is your share after that. The out-of-pocket maximum caps what you pay for covered care in a year, not counting premiums.
- An account for health costs
- A health savings account (HSA) comes only with an HSA-eligible plan. The money is yours, it carries over from year to year, and it stays with you if you leave the job. A health flexible spending account (FSA) works with most plans, but money you haven’t used by the plan’s deadline is lost, unless your employer’s plan allows a carryover or a grace period.
- Your retirement contribution
- Many employers add money when you contribute to a 401(k) or 403(b). Find the formula: how much they add, how much you have to put in to receive all of it, and how long you have to stay before their money is yours (vesting).
- Everything else on the screen
- Dental, vision, disability and life coverage each have a price and a benefit. Read what each costs per paycheck and what it actually pays, and check whether a choice you skip now can be added later without a qualifying life event.
A fictional example
Which health plan costs less?
Plan A has a low deductible and a higher premium. Plan B is an HSA-eligible plan with a high deductible, a low premium and $750 a year from the employer into the HSA. The numbers are invented and kept simple: no copays, and every service in network.
| Plan details | Plan A | Plan B |
|---|---|---|
| Premium per month | $140 | $60 |
| Deductible | $1,000 | $3,000 |
| Your share after the deductible | 20% | 20% |
| Out-of-pocket maximum | $4,000 | $6,000 |
| Employer money into an HSA | $0 | $750 |
Now add it up for a whole year: twelve premiums, plus your share of the care you use, capped at the out-of-pocket maximum, minus any employer HSA money.
| The year you have | Plan A | Plan B |
|---|---|---|
| A light year ($300 of care) | $1,980 | $270 |
| A moderate year ($1,500 of care) | $2,780 | $1,470 |
| A heavy year ($10,000 of care) | $4,480 | $4,370 |
| The worst case: the whole out-of-pocket maximum | $5,680 | $5,970 |
With these assumptions, Plan B costs less in all three of these years ($1,310 less in the moderate one) and $290 more in the worst case. So the question isn’t only “which is cheaper?” It’s also “could I cover the worst case if it came?” That’s where an emergency fund, or money already in an HSA, comes in.
This isn’t a recommendation of either plan. Real plans add copays, prescription tiers, networks and family deductibles, and the care you’ll need is a guess. Take the real numbers from each plan’s Summary of Benefits and Coverage, and base the guess on the doctors and prescriptions you already use.
Where an HSA or FSA fits.
Both let you pay eligible health costs with money that isn’t taxed as income. The limits change every year, and at most employers the plan you choose now covers 2027, so here are this year’s figures and, where the IRS has published them, next year’s:
- HSA contribution limit, self-only coverage: $4,400 (tax year 2026); $4,500 (tax year 2027)
- HSA contribution limit, family coverage: $8,750 (tax year 2026); $9,000 (tax year 2027)
- Health FSA employee contribution limit: $3,400 (tax year 2026); next year’s isn’t published yet
To put money in an HSA, the plan itself has to qualify:
- Minimum deductible for an HSA-eligible plan: $1,700 self-only / $3,400 family (tax year 2026); $1,750 self-only / $3,500 family (tax year 2027)
- Maximum out-of-pocket for an HSA-eligible plan: $8,500 self-only / $17,000 family (tax year 2026); $8,700 self-only / $17,400 family (tax year 2027)
Employer money counts toward the HSA limit. The rules are in IRS Publication 969.
Before you submit, write down five answers.
- What would each plan cost me over a whole year, in a light year and in the worst case?
- Are the doctors, hospitals and prescriptions I already use in each plan’s network?
- If I chose an HSA-eligible plan, how much would go into the HSA, from me and from my employer?
- What do I have to contribute to receive my employer’s full retirement match, and when is it vested?
- Which choices can I change later in the year, and which wait for next open enrollment?
There’s no single right plan. The point is to know what each choice costs and covers before the window closes.
General financial education with a fictional example. This lesson does not assess your situation or provide individualized financial, investment, legal, tax or insurance advice.