Open Enrollment: The Decisions That Cost the Most

Open enrollment is a two-week window in which you make five or six decisions worth several thousand dollars each, using a benefits portal designed by someone who has never met you, and then live with the result for twelve months. The default option on every screen is "same as last year." Most people take it.

That's understandable and it's also where the money goes. Here is what actually matters, in rough order of how much it costs to get wrong.

The health plan comparison nobody runs

The mistake is comparing premiums. Premiums are the one number the portal shows you in big type, and they are only half the cost of a health plan. The real comparison is total annual cost: premiums you pay all year, plus what you pay when you use the plan, with the out-of-pocket maximum as the ceiling on the second part.

Run it at three usage levels. Here's a family with two plan choices — the numbers are illustrative, but the shape is typical:

• Plan A, a PPO: $210 per paycheck, 26 paychecks, so $5,460 a year in premiums. $1,000 deductible, 20% coinsurance after that, $4,000 out-of-pocket maximum.
• Plan B, a high-deductible plan paired with an HSA: $75 per paycheck, so $1,950 a year. $3,400 deductible, 20% coinsurance, $9,000 out-of-pocket maximum. The employer seeds the HSA with $1,200.

A quiet year with $800 of care. Plan A costs $5,460 + $800 = $6,260. Plan B costs $1,950 + $800 − $1,200 of employer money = $1,550.

A middling year with $6,000 of billed care. Under Plan A you pay the $1,000 deductible plus 20% of the remaining $5,000, so $2,000; total $7,460. Under Plan B you pay the $3,400 deductible plus 20% of the remaining $2,600, so $3,920; total $1,950 + $3,920 − $1,200 = $4,670.

The catastrophic year, where you blow through both caps. Plan A: $5,460 + $4,000 = $9,460. Plan B: $1,950 + $9,000 − $1,200 = $9,750.

So the low-premium plan wins by thousands in an ordinary year and loses by $290 in the worst year on record. That is the actual trade, and it is nothing like the one the premium column implies. The catch is that Plan B requires you to have $9,000 available if the bad year arrives — which is a cash-flow question, not a math question, and it is the reason the answer isn't automatic.

Two adjustments before you trust your own version of this table. Check whether your prescriptions are on the formulary in both plans and at what tier — a specialty drug can rearrange everything. And check whether your doctors are in network in both, because out-of-network care usually doesn't count toward the out-of-pocket maximum at all.

The 2026 numbers you're electing against

The IRS sets most of these each fall, and they change:

• HSA contributions for 2026: $4,400 for self-only coverage, $8,750 for family, plus $1,000 more if you're 55 or older by year end. Employer contributions count toward those caps.
• To be HSA-eligible in 2026, the plan must have a deductible of at least $1,700 self-only or $3,400 family, with out-of-pocket maximums no higher than $8,500 and $17,000.
• Health FSA salary reductions for plan years beginning in 2026: $3,400. If your plan allows carryover, the maximum carryover is $680.
• Dependent care assistance: up to $7,500 excluded from income in 2026 ($3,750 if married filing separately) — a substantial increase over the $5,000 that held for decades.
• Commuter benefits: $340 a month for transit passes and $340 a month for qualified parking.
• 401(k), 403(b) and governmental 457 elective deferrals: $24,500, with an $8,000 catch-up at 50 and over, and $11,250 instead for people who turn 60 through 63 during the year. IRAs are separate at $7,500 with a $1,100 catch-up.

The elections that aren't health insurance

Disability coverage is the one most people skip and the one that would matter most. Long-term disability replaces a portion of income if you can't work for months; the group rate through an employer is usually far cheaper than an individual policy. If you're offered the choice of paying the premium pre-tax or post-tax, paying post-tax means the benefit arrives tax-free if you ever collect it — a small cost now for a much larger difference later.

Employer-paid group term life is tax-free up to $50,000 of coverage. Above that, the IRS treats the value of the excess coverage as imputed income and it shows up in your taxable wages. That's not a reason to decline coverage; it's a reason not to be startled by the line on your pay stub.

Then there's the 401(k) contribution rate, which most people set once at hire and never revisit. If your employer matches, confirm you're contributing at least enough to capture all of it — our guide to employer matching walks through the formulas, including the ones that penalize front-loading.

What you can change mid-year, and what you can't

Once the window closes, your elections are locked unless you have a qualifying event. The governing rule is a Treasury regulation, 26 CFR 1.125-4, and it lists specific change-in-status categories: a change in legal marital status (marriage, divorce, legal separation, annulment, death of a spouse), a change in the number of dependents (birth, adoption, placement for adoption, death), a change in employment status for you or a family member (starting or ending a job, a strike or lockout, an unpaid leave, a change in worksite), a dependent losing or gaining eligibility (aging out, losing student status), and a change in residence.

Two things trip people up. First, the consistency rule: the change you make has to correspond to the event. A new baby lets you add the baby to your plan; it does not let you switch carriers because you've decided you prefer the other network. Second, the health FSA is treated differently from everything else — the regulation's provisions for significant cost and coverage changes explicitly do not apply to a health FSA, so a mid-year premium jump doesn't let you rewrite that election.

Most employers give you 30 days from the event to make the change, and they mean it. Put the deadline in your calendar the day the event happens, because "I didn't know" is not one of the categories in the regulation.

Four things not to do

• Don't reflexively pick the lowest deductible. You are paying a guaranteed premium every paycheck to avoid a cost you might not incur. Run the three-scenario table before you assume the rich plan is the safe one.
• Don't max a general-purpose health FSA in a year you might move to an HSA-eligible plan. Being covered by a general-purpose health FSA — including through a grace period with money left in it — blocks HSA eligibility. A limited-purpose FSA, restricted to dental and vision, exists precisely to solve this.
• Don't guess at the dependent care FSA. Unlike the health FSA, it has no carryover and no automatic grace period, so an over-election on childcare is money you simply do not get back if your arrangements change.
• Don't enroll in the same plan tier as your spouse without checking whether one employer's family coverage beats two individual plans. Run both combinations. One of them is usually meaningfully cheaper, and it isn't always the obvious one.

A ninety-minute checklist

1. Pull last year's explanation-of-benefits statements or the claims history in your insurer's portal and total what you actually spent. That's your realistic middle scenario.
2. Build the three-scenario table for every plan offered. A spreadsheet with four rows does it.
3. Check the formulary tier for every prescription in your household, in each plan.
4. Confirm every doctor you intend to keep is in network in the plan you're choosing — from the insurer's directory, not the employer's brochure.
5. Set the FSA or HSA election off your actual spending, not a round number.
6. Confirm the 401(k) rate captures the full match, and check whether your beneficiaries are still the people you'd choose.
7. Save the confirmation statement as a PDF. In January, compare it line by line against your first pay stub — deductions for plans you dropped have a way of continuing.

That last step takes four minutes and catches the errors nobody else is looking for.