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Tuesday, October 27

Open Enrollment 2027: The Benefits Employees Are Rethinking This Year

Young woman working on a laptop and writing notes at a kitchen table

Workers are shopping for benefits the way they shop for groceries: carefully. That extra attention pays off most here.

Photo: Shixart1985 / Wikimedia Commons, CC BY 2.0.

Open enrollment used to be the easiest chore of the year. You logged in, clicked “keep my current elections,” and got back to work. This fall, many employees are slowing down and reading the fine print.

A New York Life survey released October 8 found that 71% of workers with employer health coverage now closely evaluate whether their voluntary benefits are worth the money. That rises to 83% for Gen Z and falls to 61% for baby boomers. More than half (54%) said inflation and the cost of living shape how they think about benefits, and only 49% said they feel financially secure.

That’s a healthy instinct. Every benefit you pick comes out of your paycheck for a full year, so it should earn its spot.

Most people sign up, then never look again

The same survey found that nearly 90% of employees know how to enroll, but only 36% know all the details of their out-of-pocket medical costs. Half think about their benefits only during open enrollment. Only 15% think about them year-round, and 65% have never used or explored their voluntary benefits outside the enrollment window.

Orla Nixon, who leads claim and clinical operations for New York Life Group Benefit Solutions, wrote in Fortune on October 26 that her team calls this the “Benefits Activation Gap: the disconnect between enrolling in benefits and confidently accessing and using them when they’re needed.” She also noted that 49% of employees want supplemental health benefits, while only 15% know their employer offers supplemental voluntary benefits.

A benefit you forgot you had, or one that doesn’t pay when you expected, is just money out of every check.

Life insurance: check the number, then check the strings

Group life insurance is the benefit people most often assume is “enough.” LIMRA’s 2026 Insurance Barometer Study found that 47% of insured Americans have life insurance through work, and 27% have workplace coverage but no individual policy.

The National Association of Insurance Commissioners puts the catch plainly in its life insurance buyer’s guide: “While you may have free or low-cost life insurance through your employer, the death benefit usually is less than you need. And if you leave the employer, you may not be able to take this coverage with you.”

So during enrollment, look up exactly how much coverage you have. Compare it with what your family would really need: the mortgage, other debts, years of lost income, and the cost of raising the kids. Keep the group coverage as a bonus, but don’t build your family’s plan on something your employer controls. A term policy you own, bought while you’re healthy, stays with you when the job doesn’t.

One tax detail surprises people. Under IRS rules, the cost of employer-provided group term life coverage above $50,000 is added to your taxable wages, minus whatever you paid toward it. It shows up in box 12 of your W-2 with code C.

Disability coverage protects the paycheck itself

For most working families, the biggest financial asset isn’t the house or the 401(k). It’s the ability to earn a living for decades. Disability insurance replaces part of that income if illness or injury keeps you off the job.

Find out how much of your pay your plan replaces, how long you wait before benefits start, and how long they last. Then ask how the premium is paid, because that affects taxes. According to IRS Publication 525, if you pay the premiums on an accident or health policy yourself, the benefits aren’t taxable. If your employer pays, or you pay with pre-tax dollars through a cafeteria plan, the benefits are generally taxable income.

Supplemental health plans: read before you click

Accident, critical illness, and hospital indemnity plans generally pay a set cash amount when a specific event happens, such as a hospital stay or a covered diagnosis. For a family with a high deductible and thin savings, that cash can help. These plans can also overlap with coverage you already have or come with exclusions and waiting periods.

Before you enroll, ask what triggers a payment, what it pays versus its yearly cost, and whether an emergency fund that covers your deductible would do the same job.

Don’t leave tax savings on the table

If you choose a high-deductible health plan, take a close look at a health savings account. For 2027, the IRS lets you put in up to $4,500 with self-only coverage or $9,000 with family coverage, plus an extra $1,000 if you’re 55 or older. To qualify in 2027, the plan’s deductible must be at least $1,750 for self-only coverage or $3,500 for family coverage.

Health flexible spending accounts work differently. The 2026 limit is $3,400, and as of October 27, 2026, the IRS hasn’t announced the 2027 figure. FSA money is generally use-it-or-lose-it, though your employer may allow a small carryover or a grace period.

A 20-minute open enrollment checklist

  1. Pull up last year’s medical spending. It tells you which health plan fits.
  2. Find your life insurance number. Write down the group benefit and compare it with your family’s needs.
  3. Check your disability coverage. Know the percentage of pay, the waiting period, and how it’s taxed.
  4. Question every voluntary add-on. Keep the ones you understand and would actually use.
  5. Update beneficiaries. Marriages, divorces, and new kids change who should get what.

The Bottom Line

Employees are paying closer attention, and that’s good news. The next step is to keep paying attention after you click submit. Know what you signed up for, treat workplace life insurance as a bonus rather than your whole plan, protect your income, and use the tax breaks you qualify for.

Sources and Further Reading

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