Open enrollment is here. The list of options gets longer every year, and so does the sales pitch. For high earners, a few of these decisions carry real financial weight. Most do not.
At Aptus, we see plenty of smart, busy professionals who either check the same boxes every year without a second thought or sign up for every add-on because it sounded responsible. You don’t need to agonize over every option. Just follow one simple principle: insurance should protect you from financial disaster, not everyday costs. Protect yourself from the events that could derail your finances, like a major illness, a long-term disability, or an early death. Open enrollment is also a good time to review the tax-saving options in your benefits.
Health Insurance
For most high earners, the financially optimal election is usually a high-deductible health plan (HDHP) paired with a Health Savings Account (HSA). The HSA is the only account with a triple tax benefit: contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. At higher incomes, the tax benefits of the HSA usually outweigh the increased out-of-pocket costs of the HDHP.
The trade-off is that in some years you may pay up to the plan’s full out-of-pocket maximum. That’s a risk you can self-insure: the worst case is capped, and thoughtful cash flow planning can reduce its impact, so a big year doesn’t catch you off guard. You don't want the prospect of out-of-pocket costs to discourage you from seeking care, and so it's important to set aside cash for health contingencies.
Max out your HSA and treat it as a long-term investment account rather than a spending account. Invest the balance, pay current medical bills out of pocket, and save your receipts. You can reimburse yourself tax-free years later. Think of it as a retirement account that happens to cover medical bills.
In dual-income households, it often makes sense for each spouse to enroll in their own employer’s plan rather than putting everyone on a family plan, especially when an employer adds a spousal surcharge. Then cover the kids on whichever plan offers the better combination of premiums, deductible, and network.
Dependent Care FSA
If you pay for childcare, elect the Dependent Care FSA. It’s one of the easiest tax breaks available. It lets you pay for daycare, preschool, before- and after-school care, and summer day camps for children under 13 with pre-tax dollars, so you skip both income and payroll taxes on that money. Because it has nothing to do with your health coverage, you can use it alongside an HSA.
The catch with any FSA is paperwork. You have to estimate your expenses up front to know how much to contribute, submit receipts to get reimbursed, and use the balance before the deadline. The account belongs to your employer’s plan and is meant for expenses within the year, not long-term saving, so unused funds are generally forfeited. For high earners, the tax savings can often justify the hassle.
Healthcare FSA
A healthcare FSA, like an HSA, is designed to help you pay for healthcare expenses for you and your dependents. It’s separate from an HSA, though, and works differently. Unlike an HSA, healthcare FSA funds are mostly use-it-or-lose it, so you should only contribute what you’re confident you’ll spend. Unused money is generally forfeited, though up to ~$700 of unspent funds can roll to the next year.
Typically, you would have access to an HSA or a healthcare FSA, but not both. If you have an HSA, though, your employer may also offer a limited-purpose FSA for dental and vision costs. Use it if you know you’ll have expenses in those categories, like braces or a planned procedure.
Disability Insurance
If there’s one part of open enrollment worth slowing down for, it’s disability insurance. Most employers offer group long-term disability coverage, and open enrollment is your chance to make sure you’re getting the most from it.
A group policy is rarely the answer on its own. Group plans typically replace about 60% of base salary up to a monthly cap and exclude bonuses and incentive pay, so high earners may see only 30% to 40% of their total income replaced. Many group disability plans do not offer true "own occupation" policies, which are important in high-paying occupations requiring specific physical abilities (e.g., surgeons), or the policies stop covering your own occupation after a period of time. Still, it’s typically worth participating in group disability coverage and a few open enrollment choices help you get the most from it:
- Enroll if coverage isn’t automatic. Group coverage is inexpensive and adds a layer of protection alongside an individual policy.
- Think about whether to pay premiums pre- or post-tax. If your plan gives you the option, you may want to pay the premium with after-tax dollars so your benefits would be tax-free. A taxable benefit worth 60% of your salary might leave you with 40% to 50% after taxes, while a tax-free benefit stays at 60%. Taxes are easier to pay while you’re healthy and working than after a disability. On the other hand, your tax bracket might be higher when you are healthy than it would be when claiming a disability. For a deeper look at the trade-offs, see CJ Rose’s article on pre-tax vs. after-tax disability premiums.
- Consider any buy-up option. Many employers let you raise the benefit percentage or monthly cap. It’s easiest when you’re first eligible; later, you may have to answer medical questions.
Open enrollment is a good time to review your individual disability coverage as well. Even an optimized group plan leaves gaps. Losing your ability to earn is exactly the kind of big risk worth insuring, and an individual own-occupation policy is the best way to do it.
Life Insurance
Most employers provide a modest amount of basic group life insurance at no cost, often a flat amount like $50,000 or one times salary up to a cap. During open enrollment, accept any employer-paid life insurance benefit. It’s free, and it adds a layer of protection.
You will likely want to decline supplemental life insurance through your employer. It’s convenient but has drawbacks. Group coverage usually ends when you leave the job, it’s subject to dollar caps that often fall short for high earners, and its cost often goes up as you get older. An individual level term life insurance policy is usually the better solution.
The exception is if you can’t qualify for individual coverage, or can only get it at high rates because of your health. Supplemental group life often offers some coverage with limited or no medical questions, especially when you’re first eligible, which can make it worth buying in that case.
The same applies to dependent life coverage on a spouse or children. Those amounts are usually small, and if a non-earning spouse would need to replace childcare and household support, an individual term policy is usually the better tool. Children typically don't need life insurance, since nobody is financially dependent on them.
Group Legal Plans
If you don’t have basic estate planning documents yet, a group legal plan is worth a look. For a modest payroll deduction, you get access to a network attorney who can prepare a will, health care directive, and durable power of attorney. Some plans also cover revocable trusts.
Use it strategically. Enroll for one year, get your documents done, and reassess at the next open enrollment. Before signing up, confirm which documents are included and that there are participating attorneys near you.
Just know its limits. Group legal plans are built for simple situations. If you own multiple properties or a business, have a blended family, or have a sizable estate, you’ll need to work directly with an estate attorney. For straightforward needs, though, the group plan is a great starting point.
Retirement Plans
Most high earners will want to "max out" their work retirement plans each year. The maximum contributions are adjusted for inflation each year, and there typically isn't a "max out" button on the retirement plan website, so you need to monitor and adjust. Also, ask your employer if there are any additional retirement plan options to which you are not yet contributing. One increasingly common option is the so-called mega backdoor Roth, which involves after-tax contributions and the conversion of those contributions into Roth accounts, either in-plan or by rolling the after-tax contributions to a Roth IRA.
Retirement contributions can usually be changed anytime, but open enrollment is a natural checkpoint, especially for the plan many high earners overlook: the 457(b). Many nonprofit and government employers, including hospital systems and universities, offer one alongside a 401(k) or 403(b). It has its own contribution limit, so you can contribute the full amount to each. You can usually change contributions during the year, but open enrollment is a good time to set them.
Not all 457(b) plans work the same way. Governmental plans function much like a 401(k). Non-governmental plans offered are considered "non-qualified" deferred compensation plans. In non-governmental plans, the money remains subject to your employer’s creditors, and distribution options can be limited.
Before electing to contribute to a non-qualified deferred compensation plan, review the plan details, including the investment options, fees, distribution schedule, and your employer’s financial strength.
Most importantly, contributions need to make sense within your financial plan and cash flow. Money in a non-qualified 457(b) is locked up until the distribution date, so only defer what you won’t need before then.
Hospital Indemnity, Critical Illness, and Accidental Death
Typically, you can decline these. Hospital indemnity, critical illness, and accidental death and dismemberment (AD&D) plans pay a lump sum if you’re hospitalized, diagnosed with a specific illness, or die or are injured in an accident. They’re marketed as extra protection, but for high earners they’re rarely worth the premium.
These are usually small risks you can self-insure. Hospital indemnity and critical illness payouts are typically too small to change a high earner’s financial outcome, and they cover the kind of costs a strong health plan and good cash flow planning already handle. AD&D rarely pays: it covers only death or injury from an accident, leaving out illness, which is the far more common risk.
Your health insurance, disability coverage, and life insurance already provide most of the protection these add-ons promise.
Identity Protection
Typically, you can decline it. Identity protection services monitor your credit and help if your information is stolen, but you can get most of that protection for free. Freeze your credit with the three major bureaus to block new accounts in your name, and request an IRS Identity Protection PIN, a free six-digit code that prevents anyone else from filing a tax return using your Social Security number.
The Bottom Line
The best way to optimize open enrollment is to follow one simple principle: insurance should protect you from financial disaster, not everyday costs. Protect yourself from the big risks, make the most of the tax-saving options available, and decline coverage you don’t need.
And if you’d like a second set of eyes on your elections, that’s exactly what we’re here for.