5 Ways to Make the Most of Open Enrollment

Most people will spend weeks planning a vacation or shopping for the perfect flat-screen TV. Yet they'll only devote a few minutes to signing up for their employer's benefits during open enrollment season.

Big mistake. Open enrollment, which typically occurs between October and early December, is a time when employees can review -- and possibly change -- their health insurance and retirement plans and find out about perks, such as transit subsidies and gym reimbursements. Making the right decisions during this time can save employees hundreds, or even thousands, of dollars.

Nevertheless, 64% of employees don't make an active decision about their benefits during open enrollment, according to benefits-consultant Hewitt Associates.

To help you avoid being part of that group, here are five ways to get the most out of your employer's benefits this year:

Assess Changes in Insurance
On average, employees are expected to spend $1,880 in out-of-pocket health-care expenses in 2009, according to Hewitt Associates. That's a sizable jump up from $1,707 this year. To make sure your current coverage is still the best option, look through your enrollment packet to find out if your insurer is making any substantial changes to coverage or raising deductibles or co-pays. Also, check to see if your doctor is still covered.

Consider Life-Changing Events
Getting married or having a child not only necessitates a major change in your lifestyle, but also your health-care coverage. After such events occur, most employees have 30 days to change their health coverage, says Matt Tassey, former chairman of the Life and Health Insurance Foundation for Education (LIFE). Otherwise, they'll have to wait for open enrollment.

After getting married, for example, assess whether it makes sense to join your spouse's plan as a dependent (or vice versa) or whether it's more cost-effective to hold separate plans. "Oftentimes, an employer pays a significant part of the premium for your medical insurance but they may not pay as much...[for] your dependent's portion," says Tassey.

Even the most comprehensive health-insurance plans don't cover 100% of all costs.

That's where a flexible spending account (FSA) comes in. This account allows employees to stash away pretax dollars for certain expenses that aren't covered by health insurance, such as co-pays, prescriptions or dental work. The drawback to FSAs, however, is that employees must use all of the money in their account by the end of the year (and file all of their expenses by the following March) or else they forfeit it.

Another thing to consider is a dependent care account, which lets you put up to $5,000 in pretax money toward a child's daycare or an elderly parent's care.

Employees can also offset costs associated with high-deductible insurance plans (at least $1,150 for individual and $2,300 for family coverage for 2009) by contributing pretax dollars into a health savings account (HSA). HSAs also help pay for other health-care expenses that aren't covered by insurance. Unlike FSAs, however, any money that's not spent by the end of the year gets rolled over to the next one. For 2009, the maximum HSA contribution is $3,000 for individual coverage and $5,950 for family coverage. Those who'll be 55 or older as of Dec. 31, 2009, can contribute an extra $1,000.

Ongoing stock market volatility has many investors fearful about their retirement savings, but panicking and paring your 401(k) contributions could have an even more devastating impact.

Even with regular triple-digit market swings, contributing enough of your salary to get the full company match "is a huge source of savings and will help you with future retirement goals," says Pamela Hess, director of retirement research at Hewitt Associates. "[It] makes a difference even if the markets are down."

By failing to do so -- Hewitt reports that nearly 30% of employees who have access to a 401(k) aren't investing in it and 22% aren't contributing enough to get the full match -- you're missing out on free cash.

While you can take advantage of most employer perks throughout the year, open enrollment is a good time to find out about new or existing deals on everything from commuting costs to theater tickets. Here are some to keep an eye out for: