Each Fall, you receive an email reminder, log into your benefits portal, and start clicking through your open enrollment options between meetings or after dinner. It’s a routine (if not inconvenient) process, making it extra tempting to click last year’s selections and move on.
But those few minutes of decision-making carry quite a bit of weight, considering they’ll shape your health coverage for the year ahead. In fact, the choices you make now have the power to influence your taxes, retirement savings strategy, out-of-pocket costs, and more.
This year, we encourage you to take a little extra time to review your options carefully first.
As a Reminder, Here’s How Open Enrollment Works
Open enrollment is the annual period during which employees can make changes to their employer-sponsored benefits. Employees will have the opportunity to change health insurance plans, add or remove dependents, adjust their Health Savings Account (HSA) contributions, and elect other voluntary benefits (such as life or disability insurance).
The timing of open enrollment varies by employer. However, it typically occurs across the last few months of the year. If you’re an employee of the University of Maine System, Northern Light Health, or another major organization, confirm the enrollment window with your human resources department. Decisions and elections made during the open enrollment period go into effect on January 1 of the following year.
Once elections are made, they’ll typically remain in place for the entire plan year. Outside of the annual open enrollment period, changes are only permitted if you experience a qualifying life event such as marriage, divorce, the birth of a child, or the loss of other health coverage.
Selecting Your Health Plan
If your employer offers plan options, you’ll need to decide whether it’s best to stick with your current coverage or make a change.
Reviewing your out-of-pocket costs is a good place to start. Aside from the monthly premiums, consider also your:
- Annual deductible: How much you’ll pay out of pocket before insurance kicks in
- Out-of-pocket maximum: The most you’ll pay out of pocket during the year
- Co-pays: Fixed out-of-pocket costs for things like doctor’s appointments, ER visits, and prescriptions
Generally, plans with higher monthly premiums tend to have lower deductibles, while lower-premium plans require you to pay more out of pocket before coverage begins.
If you’re offered a plan for $500/month with a $3,000 deductible or one for $300/month with a $5,000 deductible…How do you decide what’s best for you?
Someone managing chronic medical conditions or anticipating significant healthcare needs may find greater value in paying a higher premium for more comprehensive coverage. Meanwhile, someone in good health who primarily wants protection against emergency care might be comfortable with a lower premium and higher deductible.
Before making any changes in coverage, verify that your current physicians and specialists will remain in-network, and review each plan’s prescription drug formulary to ensure your medications stay covered.
You might find it helpful to review last year’s healthcare claims. See how often you visited the doctor, filled prescriptions, or underwent procedures. This information may provide a more accurate picture of which plan best fits your needs for the year ahead.
High-Deductible Health Plans (HDHP), HSAs, and FSAs
Each year, the IRS defines what qualifies as an HDHP. For 2026, a qualifying plan must have a deductible of at least $1,700 for individual coverage or $3,400 for family coverage, while limiting annual out-of-pocket expenses to no more than $8,500 for individuals or $17,000 for families.1
If you enroll in an HDHP, you may qualify for a health savings account (HSA).
As one of the most tax-efficient vehicles available today, HSAs offer what is often referred to as a “triple tax advantage.” Contributions are tax-deductible, investments grow tax-free, and qualified withdrawals for healthcare expenses remain tax-free.
Unused HSA funds roll over from year to year, allowing balances to accumulate over time. Many individuals choose to invest their HSA funds and use them as an additional retirement healthcare savings account. After age 65, withdrawals used for non-medical expenses are permitted without penalty, although ordinary income taxes still apply.
Flexible Spending Accounts (FSAs) also help reduce healthcare costs by allowing employees to contribute pre-tax dollars toward eligible medical expenses. Unlike HSAs, however, FSAs are subject to “use it or lose it” rules, meaning unused balances are forfeited if not spent by the applicable deadline (often the end of the year). FSAs also remain tied to your employer and cannot be taken with you if you leave your job.
Life Insurance and Disability Coverage
Open enrollment is a good opportunity to review employer-sponsored life or disability insurance benefits.
Many employers offer group life insurance coverage at little or no cost, with the option to purchase additional coverage. While this can be valuable during your working years, employer-provided life insurance is typically not portable. If you retire or leave your employer, the coverage ends.
As retirement draws nearer, consider whether additional personal life insurance is worth obtaining outside of your employer plan.
Similarly, long-term disability insurance provides valuable income protection during your working years, but its relevance naturally declines as retirement approaches. Someone planning to work another five to ten years may still benefit significantly from this type of protection, while someone retiring in the near future may have different priorities and a large enough nest egg to support a sudden job loss.
Regardless of whether you make changes in coverage this year, take a few minutes to review your existing policy’s beneficiary designations. Life events, including marriage, divorce, births, or deaths, can impact beneficiary elections.
Should Retirement Plan Contributions Increase?
Open enrollment is a good time to revisit your retirement savings strategy.
If you’ve received a pay raise this year or recently paid off debt, increasing your 403(b) contribution rate may allow you to make meaningful progress toward your retirement goals without dramatically affecting your monthly budget.
In 2026, employees under age 50 can contribute up to $24,500 pre-tax to their 403(b). Employees ages 50 to 59, as well as those 64 and older, can make an additional $8,000 in catch-up contributions, for a total of $32,500. Those between the ages of 60 and 63 qualify for an enhanced catch-up contribution, allowing total annual contributions of up to $35,750.2
Employees with at least 15 years of service with certain eligible 403(b) employers may qualify for up to $3,000 in additional contributions, depending on their individual circumstances and prior contribution history.2
Even a modest increase in your contribution percentage today can benefit from the power of compounding between now and retirement.
Special Considerations for Pre-Retirees
For employees planning to retire within the next two or three years, open enrollment decisions should be made with that timeline in mind.
Consider, for example, how long your employer-sponsored health coverage will continue into retirement. Will you need COBRA to bridge the gap until Medicare begins? If so, what will those premiums cost?
Your healthcare decisions become increasingly important as retirement approaches, and coordinating them with your retirement income strategy can help avoid unexpected costs or coverage gaps.
Ready for Open Enrollment?
If retirement is on the horizon, open enrollment is an excellent time to schedule a retirement readiness meeting and ensure your benefits elections support your transition.
It’s one of the few times each year when you have the opportunity to intentionally review the benefits that support your financial life. Rather than simply renewing last year’s elections, take a few moments to evaluate whether your healthcare coverage, retirement contributions, insurance elections, and tax-advantaged savings accounts still align with your goals.
If you’d like a second opinion before open enrollment closes, we’d be happy to help. Schedule a benefits review consultation with our team, and let’s make sure your decisions support both the year ahead and your long-term financial plan.
Sources:
1https://www.irs.gov/pub/irs-drop/rp-25-19.pdf
2https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-403b-contribution-limitse-costs-in-retirementt