Every fall, open enrollment shows up in your inbox as a list of deadlines and dropdown menus, and it’s easy to click through it the same way you did last year.
But for stock-eligible employees, the elections you make in the next few weeks touch nearly every part of your financial picture: your tax bill, your cash flow, your risk exposure, and how much you’re able to put away for the future.
Before you open a single form, it’s worth asking yourself whether anything about your income, your family, or your equity picture has actually changed since you made these same choices last year.
If the answer is yes, last year’s elections may not be the right ones anymore.
Start with the coverage decisions, because they set the tone for everything else. As you weigh a high-deductible health plan with an HSA against a traditional plan with an FSA, and take a hard look at your life and disability coverage, ask yourself:
How did my family actually use healthcare this past year, and am I in a position to let an HSA balance grow untouched rather than spend it down?
If I were out of work for six months, would my disability coverage replace enough of my real income, bonus and equity included, or just my base pay?
How an HSA Can Work as a Retirement Account
An HSA is the only account that gives you a deduction going in, tax-free growth, and tax-free withdrawals for qualified expenses. And unlike an FSA, the balance doesn’t disappear at year-end.
That last feature is worth sitting with, because most people use an HSA as a pass-through: money goes in, medical bills go out, and the balance never really grows. If your cash flow allows it, there’s a different way to use the account.
Fund it, invest it, and pay current medical expenses out of pocket instead of drawing from the HSA. Keep your receipts. There’s no deadline on reimbursing yourself, so those dollars can grow tax-free for years before you ever pull them back out.
Over time, that turns the HSA into a second retirement account aimed specifically at healthcare costs, which matters because Medicare doesn’t cover everything.
Dental, vision, hearing, and long-term care are common gaps, and an HSA balance built this way can absorb those costs without disturbing the rest of your retirement withdrawals.
It can also do something more immediate if you’re planning an early retirement: bridge the years between when you leave work and when you become Medicare-eligible at 65, a stretch where you’re often buying coverage on the exchange at a higher premium and a higher deductible than what you’re used to through an employer plan.
Ask yourself:
Am I able to cover this year’s medical expenses out of pocket and let my HSA balance grow instead?
If I’m planning to retire before 65, what will I actually pay for health coverage in the years before Medicare starts, and could a larger HSA balance close that gap?
Is my HSA invested for growth, or is it sitting in cash the way a checking account would?
Group Life and Supplemental Life Insurance: How Much Coverage, and at What Cost
Group life insurance is another one worth slowing down on, because the design of these plans makes it easy to under-think.
Most employers provide a base amount of coverage at no cost to you, then offer supplemental or “buy-up” coverage priced as a multiple of your base salary. The convenience of that structure can mask a few questions that actually matter.
How much coverage do you need, and does that number come from a real calculation (outstanding debt, years of income replacement, education costs for your kids) or is it just whatever multiple the plan happens to offer?
What is this coverage actually meant to do for your family, and does the purpose change depending on where you are in your career and how much of your net worth now sits in vested or unvested equity?
It’s also worth understanding how the pricing works over time.
Supplemental life rates inside most employer plans are structured in five-year age bands, often called quinquennial brackets, which means your premium jumps every time you cross into a new bracket rather than staying level.
That can make employer coverage look inexpensive at 35 and considerably less so at 50 or 55. Ask yourself:
How much coverage do I actually need, based on my debts, my family’s income needs, and my goals for them, rather than the multiple my employer offers?
What is this coverage for, and does that purpose still match how my compensation and net worth are structured today?
Am I factoring in that supplemental life premiums typically rise every five years as I move into a new age bracket, rather than staying flat?
Would it be more cost-effective, over the years I actually need this coverage, to hold it through my employer, or to lock in level term coverage outside the plan while rates and health are in my favor?
Long-Term Disability Coverage for Executives
Disability coverage deserves the same scrutiny, and for many executives, the shortfall there is even less visible.
Base employer disability coverage typically caps out well below what an executive-level income requires, which is exactly why the second question above is worth asking rather than assuming.
Many group long-term disability plans only replace 40% to 60% of base salary, and because premiums are often paid pre-tax, the benefit itself is taxable, meaning the check you’d actually receive is smaller than the percentage suggests once you account for the income tax owed on it.
The bigger gap, though, is what base salary leaves out entirely. If a meaningful share of your compensation comes from bonus or equity, that income typically isn’t factored into the disability benefit at all.
The plan is calculating your replacement income off a number that may only represent a fraction of what you actually earn.
For an executive whose bonus and vesting equity make up a significant piece of total pay, that gap between what the plan pays and what your household actually needs to maintain its lifestyle can be substantial, and it’s usually invisible until the moment you’d need the coverage most.
Deferred Compensation, 401(k), and Mega Backdoor Roth Elections
Then there’s the set of decisions that shape your tax picture for next year specifically. Deferred comp elections, if your plan offers them, lock in before January 1 and can’t be revisited once the window closes.
Your 401(k) deserves the same kind of direct questioning. Before you finalize either, ask yourself:
What do I expect my income and my tax bracket to look like next year, and am I comfortable giving up access to these dollars until the distribution date I choose?
Is my 401(k) contribution rate still right for where I am now?
Does Roth or Pre-Tax make more sense given where I expect my taxes to go, this year and in retirement?
If my plan allows after-tax contributions with in-plan conversion (often called mega backdoor Roth or spillover), do I have the cash flow to take advantage of it without straining the rest of my plan?
How the Elections Fit Together
None of these elections exist in isolation, which is exactly why we build cash flow models for clients this time of year rather than reviewing each choice on its own.
An HSA contribution, a deferred comp deferral, and a mega backdoor Roth contribution are all competing for the same dollars, and the right mix depends on your income this year, your vesting schedule, any planned exercises or sales, and what you’re already committed to elsewhere.
If you’re working through these questions and want to see how the answers actually play out against your full picture, let’s talk before your enrollment window closes. A short conversation now can save a year of living with the wrong elections.
Disclosures
Tempo Wealth, LLC ("Tempo") is a Registered Investment Advisor registered with the Securities and Exchange Commission (SEC). Registration as an investment adviser does not imply a certain level of skill or training, and the content of this communication has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. The information contained in this material is intended to provide general information about Tempo and its services. It is not intended to offer investment advice. Investment advice will only be given after a client engages our services by executing the appropriate investment services agreement. Information regarding investment products and services are provided solely to read about our investment philosophy and our strategies. You should not rely on any information provided on our web site in making investment decisions.
Market data, articles and other content in this material are based on generally available information and are believed to be reliable. Tempo does not guarantee the accuracy of the information contained in this material. Tempo will provide all prospective clients with a copy of our current Form ADV, Part 2A (Disclosure Brochure) prior to commencing an advisory relationship. However, at any time, you can view our current Form ADV, Part 2A at adviserinfo.sec.gov. In addition, you can contact us to request a hardcopy.
This article discusses general planning considerations and does not take into account any individual's specific financial situation. Strategies discussed may not be appropriate for all investors. Examples are provided solely to illustrate common planning considerations during an employer's open enrollment period.
