Employer Open Enrollment: Make Benefit Choices That Work for You

According to the Kaiser Family Foundation, the average cost of health coverage for a family of four was $25,572 in 2024. While employers contributed the lion’s share, $6,296 of that amount was paid by employees. Employees have largely been spared from painful premium hikes over the last few years, but 2026 is likely to be a different story.1

In one recent survey, employers projected a 10% spike in health care expenses, largely due to soaring prices for specialty prescription drugs.2 As an employee, you may want to brace yourself for higher monthly premiums or out-of-pocket costs, and possibly even significant changes to your health coverage.

Open enrollment is the window of time, typically in the fall, when employers introduce changes to their benefit offerings for the upcoming year. Absent a qualifying life event, this may be your only chance to make important decisions that will affect your health care choices and your finances.

Even if you are satisfied with your current health plan, it may no longer be the most cost-effective option. Before you make any benefit elections, take plenty of time to review the information provided by your employer. You should also consider how your life has changed since last year, and any plans or potential developments for 2026.

Here’s a short guide designed to help you make the most of your workplace benefits.

Assess your health plan options

Details matter when it comes to selecting a suitable health plan. One options could even lower your overall health-care costs — However, you need to look beyond monthly premiums to make a smart choice.

Plans with lower monthly premiums often come with more restrictions or higher out-of-pocket costs, such as copays, coinsurance, and deductibles. When you need medical care, these costs can add up quickly.

To help you weigh these tradeoffs, the following comparison explains the five main types of health plans. It also clarifies commonly used health-insurance terms and acronyms.

Types of Health Insurance Plans

1. Health maintenance organization (HMO)

Coverage is limited to care from physicians, other medical providers, and facilities within the HMO network (except in an emergency). You choose a primary-care physician (PCP) who will decide whether to approve or deny any request for a referral to a specialist.

2. Point of service (POS) plan

Out-of-network care is available, but you will pay more than you would for in-network services. As with an HMO, you must have a referral from a PCP to see a specialist. POS premiums tend to be a little bit higher than HMO premiums.

3.Exclusive provider organization (EPO)

Services are covered only if you use medical providers and facilities in the plan’s network, but you do not need a referral to see a specialist. Premiums are typically higher than an HMO, but lower than a PPO.

4. Preferred provider organization (PPO)

You have the freedom to see any health providers you choose without a referral, but there are financial incentives to seek care from PPO physicians and hospitals (a larger percentage of the cost will be covered by the plan). A PPO usually has a higher premium than an HMO, EPO, or POS plan and often has a deductible.

Understanding Deductibles and Preventive Care

A deductible is the amount you must pay before insurance payments kick in. Preventative care (such as annual check-ups and recommended screenings) is often covered free of charge, regardless of whether the deductible has been met.

High-deductible health plan (HDHP). In return for significantly lower premiums, you’ll pay more out-of-pocket for medical services until you reach the annual deductible. HDHP deductibles start at $1,700 for an individual and $3,400 for family coverage in 2026, and can be much higher. Like PPOs, HDHPs often cover certain preventative care without a deductible. Care will be less expensive if you use providers in the plan’s network, and your upfront cost could be reduced through the insurer’s negotiated rate.

High-Deductible Health Plans (HDHPs)

You must be enrolled in an HDHP in order to establish and contribute to a health savings account (HSA), to which your employer may contribute funds towards the deductible. You can elect to contribute to your HSA through pre-tax payroll deductions, or make tax-deductible contributions directly to the HSA provider, up to the annual limit ($4,400 for an individual or $8,750 for family coverage in 2026).

Health Savings Accounts (HSAs)

HSA funds, including any earnings if the account has an investment option, can be withdrawn free of federal income tax and penalties if the money is spent on qualified health-care expenses. (Some states do not follow federal tax rules on HSAs.) Unspent balances can be retained in the account indefinitely and used to pay future medical expenses, whether you are enrolled in an HDHP or not. If you change employers or retire, the funds can be rolled over to a new HSA.

Three Steps to Making a Sound Decision

1. Estimate Your Total Costs

Add up premiums, copays, coinsurance, and deductibles for each plan based on last year’s medical usage. Many employers offer online calculators that consider chronic conditions and regular prescriptions. Also review each plan’s maximum out-of-pocket limit.

2. Coordinate Family Coverage

Married employees often need to compare two workplace plans. Some employers charge a surcharge if a spouse has access to other coverage. Compare costs carefully if you cover children under one or both plans.

3. Check Provider Networks

Before enrolling, confirm that your preferred doctors, specialists, and hospitals participate in the plan’s network.

Tame Taxes with a Flexible Spending Account (FSA)

Employer-sponsored health and dependent-care FSAs allow you to contribute pre-tax dollars through payroll deductions. These contributions avoid federal income and Social Security taxes and often state taxes as well.

In 2025, the federal contribution limit for health FSAs was $3,300, and the IRS may slightly increase it for 2026. You can use FSA funds for qualified medical, dental, and vision expenses. However, you cannot contribute to both an FSA and an HSA in the same year.

Dependent-Care FSA Benefits

Starting in tax year 2026, recent legislation allows households to contribute up to $7,500 annually to dependent-care FSAs—50% more than the long-standing $5,000 limit. These funds help cover child-care expenses for qualifying children aged 12 or younger, as long as the care allows you or your spouse to work.

Use-It-or-Lose-It Rules

Most FSAs require you to spend the full balance by year-end or forfeit unused funds. Some employers permit limited carryovers (up to $660 in 2025) or offer a grace period of up to 2½ months. Estimating expenses carefully helps you avoid losing money.

Take Advantage of Valuable Workplace Perks

In 2024, 9% of employers offered student loan repayment assistance, up from 7% in 2022. These benefits may include direct payments, matching contributions, or financial counseling.

Permanent tax rules now allow employers to provide up to $5,250 annually in tax-free student loan assistance, adjusted for inflation. Even modest monthly contributions can significantly reduce interest costs and shorten repayment timelines.

Many employers also offer voluntary benefits such as dental, vision, disability, life, long-term care, and pet insurance. Additional perks may include wellness incentives, gym discounts, and health-related rewards.

1) Kaiser Family Foundation Employer Health Benefits Survey, 2024
2, 4) Society of Human Resource Managers, 2025
3)The National Law Review,2025

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