It's time for benefits enrollment

It's decision time again for workers as many companies offer employees the annual opportunity to change insurance choices and make other benefit selections.

Open enrollment season can be stressful because it requires decisions to be made that can't be changed for another year unless you have a major life change such as marriage, divorce or childbirth.

For many, it's simply easier to leave things the way they are.

Benefits consultant Hewitt Associates says its research shows more than 60 percent of workers will simply default to the choice they made the previous year. That might be unwise. If you don't choose, your employer may do it for you in a way that saves it the most money but might not be best for you.

Many companies are beginning the practice of moving employees who don't make choices into default health care plans, which likely carry high deductibles, said Sara Taylor, head of open enrollment at Hewitt. In a few cases, companies have dropped coverage for workers who never look at their plan.

“The thinking is, this is an important and costly benefit and if you aren't going to pay attention to it and at least look at it, you obviously don't need it that much,” she said.

Workers should put as much thought into benefits choices as they would into buying a big-ticket item.

“They need to do their research, comparison shop and then select the options that will not only enable them to maximize their benefits dollars, but also best meet their needs and the needs of their families,” she said.

Hewitt says employees' total health care costs – including employee contribution and out-of-pocket costs – are projected to be $3,826 in 2009, up 8.9 percent from $3,513 in 2008. The increase is more than double the rate of inflation and expected salary increases, which average about 3.7 percent.

When you're starting to evaluate your coverage, you may want to look at your life insurance, whether to increase it and who you've listed as beneficiaries. Also look at dental, vision and disability insurance coverage.

If nothing else, you should at least look at your health care coverage and consider starting a health savings account or a flexible spending account. Such plans can save you money on your taxes and can help control rising health care costs, Taylor said.

The accounts are set up with money taken out of your pay before taxes, which means you'll face a lower tax bill. The money may be used for a range of health expenses such as outpatient consultations, diagnostic tests and co-payments. In some cases expenses not covered by the primary health care plan, may be paid for out of the accounts.

You should also start saving for retirement in a 401(k) account if you don't already, and assess your contribution level if you do.