The end of the year is a time full of big financial decisions, including open enrollment for elected employee benefits options.
University of Minnesota Carlson School of Management Professor Andrew Whitman specializes in insurance and personal finance. He can speak to what people should consider this time of year to set themselves up for financial success.
Andrew Whitman, PhD
“The open enrollment period is a critical time for folks to reassess their benefits and personal finances. Taking the time to thoughtfully consider your options could lead to big savings. While every person’s financial situation differs, here are several items to consider this time of year:
- Make sure health providers are in your plan’s network when electing a new or the same health insurance plan. It’s tempting to elect a lower premium plan, but it’s likely to have a limited provider network. Out-of-network providers cost more.
- Register for a Flexible Spending Account (FSA). While some benefits roll over from year to year, you will need to re-enroll in an FSA. Contributions to an FSA are not taxed, which can add up to a 30 to 40 percent discount on services. Just remember, FSA funds are ‘use it or lose it.’ Make sure your contribution amount is one you will spend over the next year.
- Make the most of 401(k) match programs. Many employers will match contributions that the employee makes to a 401(k). That’s the equivalent of a 100 percent return on your contribution for that year.
- Keep track of your charitable contributions. The end of the year is a popular time for giving. If you’re making those contributions from an individual retirement account (IRA) be sure to communicate those plans with your tax preparer, otherwise, the distribution may become taxable.
“It’s important to make financial and insurance decisions that are the best fit for you and your family. Be sure to check in with an experienced advisor, seek out resources, or connect with tax preparation nonprofit organizations for personalized advice.”
Andrew Whitman is a professor of insurance in the Carlson School’s Finance department. His research interests include corporate risk management, insurance, personal finance, and employee benefits. He has served as the Deputy Commissioner and Acting Chief Counsel for the Pennsylvania Insurance Department and as an insurance consultant.
