Open enrollment is the annual window during which you can make changes to your health, dental, vision, life, and disability insurance coverage. Outside of this window, you can only make changes if you experience a qualifying life event. The decisions you make during open enrollment govern your coverage and costs for the entire next plan year. Most employees spend an average of 18 minutes on open enrollment -- and carry suboptimal coverage as a result.
Step 1: Gather Last Year's Data Before You Start
Before evaluating any plan options, pull together your actual healthcare usage data from the prior year: total out-of-pocket spending, number of doctor and specialist visits, any hospitalizations or surgeries, current prescriptions and their costs, and your Explanation of Benefits (EOB) documents. This data is the foundation for your plan comparison. Without it, you are comparing plans on premium alone -- one of the most expensive enrollment mistakes.
Step 2: Calculate Total Cost of Care, Not Just Premium
The plan with the lowest premium is not necessarily the most cost-effective. The correct comparison is Total Cost of Care: your annual premium plus expected out-of-pocket spending based on your typical usage.
For each plan: note the annual premium (employee contribution only), estimate out-of-pocket costs by applying the plan's deductible and coinsurance to your typical usage, add them together, and note the out-of-pocket maximum as your worst-case annual cost. A plan with $600 more in annual premium but $1,200 less in expected out-of-pocket spending is $600 cheaper in total.
Step 3: Evaluate the HSA Option If You Are Generally Healthy
If your employer offers an HDHP with an employer HSA contribution, evaluate it carefully. Even if the HDHP has a higher deductible, the combination of lower premium and employer HSA contributions may make it financially superior. Example: premium savings of $1,500 per year plus a $750 employer HSA contribution means the HDHP is effectively $2,250 cheaper before considering any tax benefits on your own HSA contributions.
The HSA triple tax advantage is significant: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. Unused funds roll over indefinitely -- this is not a use-it-or-lose-it account.
Step 4: Check That Your Doctors Are In-Network
Before enrolling in any plan, verify that your primary care physician, any specialists you see regularly, and your preferred hospital are in-network. Network status changes every year. Use the insurer's current provider lookup tool -- do not rely on memory or last year's directory. This matters especially for HMOs and EPOs, where out-of-network care is not covered except in emergencies.
Step 5: Review Your Prescription Drug Coverage
Check whether your current medications are covered under the new plan year's formulary, and at what tier. Formularies change annually. A medication that was a $30 copay last year may move to a higher tier. For each prescription: look it up on each plan's formulary tool, note the tier and cost-sharing, and check whether a generic is available at a lower tier. For expensive specialty medications, the difference between plans' formulary structures can easily exceed the premium difference.
Step 6: Right-Size Your Life Insurance
If you have dependents and insufficient personal life insurance coverage, open enrollment is the time to add supplemental coverage. Group supplemental life insurance through an employer plan typically does not require medical underwriting up to a guaranteed issue limit, making it valuable for employees who have developed health conditions that would increase premiums or create barriers for individual policies.
Step 7: Elect an FSA If You Cannot Use an HSA
If you are not enrolled in an HSA-eligible HDHP, a Flexible Spending Account lets you contribute pre-tax dollars for qualified medical expenses. The 2026 contribution limit is $3,300. Unlike an HSA, FSA funds are subject to use-it-or-lose-it rules -- for the 2026 plan year most plans allow up to a $660 carryover. Estimate your expected out-of-pocket medical expenses for the year and contribute that amount.
Step 8: Evaluate Disability Coverage
If your employer offers long-term disability insurance, check whether the benefit would be taxable (it is, if your employer pays the premium). A 60% benefit that is taxed becomes approximately 45--48% after taxes -- potentially insufficient to cover your fixed obligations. If you have significant income from bonuses or commissions that group LTD does not cover, consider supplemental or individual coverage.
Use our Health Insurance Calculator to benchmark what your premium should look like, and our Disability Insurance Calculator to check whether your disability coverage is adequate for your income.
The Most Common Open Enrollment Mistakes to Avoid
Defaulting to your current plan without reviewing it is the most common and most costly open enrollment mistake. Plans change at each renewal -- premiums, deductibles, formularies, and network providers can all change. Your current plan may no longer include your preferred doctor, may have dropped a medication from the formulary, or may have been superseded by a better option from the same employer at a lower cost. Always actively compare rather than clicking through the auto-renewal.
Choosing based on premium alone is the second most common mistake. The plan with the lowest monthly premium is only the cheapest option if you use no medical care -- and almost nobody uses zero medical care in a full plan year. Always calculate total annual cost at your expected utilization level: premium plus estimated out-of-pocket spending. The plan with the lowest total cost at your utilization level is the financially optimal choice, which may or may not be the plan with the lowest premium.
Finally, not reviewing dependent coverage carefully is a common oversight. If a child has aged off your plan, moved to a state where your plan has no in-network providers, or gained their own employer coverage, your dependent coverage elections may need adjustment. Keeping dependents who no longer need coverage on your plan wastes premium; missing dependents who need to be added leaves them uninsured.
Health Savings Account Enrollment Decisions During Open Enrollment
Open enrollment is also the time to make your HSA and FSA contribution elections for the coming plan year. If you are enrolling in a High Deductible Health Plan (HDHP) that qualifies you for an HSA, the enrollment period is the right time to determine your annual contribution amount and set up the account if you have not already. HSA contributions can be made throughout the year and even up until the tax filing deadline for the prior year, so they are not strictly limited to open enrollment decisions -- but setting the contribution amount during open enrollment ensures that payroll deductions begin with the plan year rather than requiring a mid-year adjustment.
FSA contribution elections, by contrast, must be made during open enrollment and are locked in for the plan year (with limited exceptions for qualifying life events). Because FSAs are use-it-or-lose-it, the contribution decision requires careful thought about expected medical spending for the coming year. If your employer's FSA has a rollover provision (typically a fixed dollar amount set by the IRS), factor in any carryover from the prior year before deciding how much additional contribution to elect. Contributing more than you will spend -- and more than any rollover provision protects -- results in forfeited pre-tax dollars, which negates the tax benefit of the account.