Introduction
October and November mark open enrollment season at most employers. For high-earning professionals—physicians, attorneys, tech leaders, business owners—this is one of the few times each year when you have real control over your benefits, coverage, and tax-advantaged accounts. It’s not just ticking boxes: done well, open enrollment can generate tax savings, better coverage, and less risk for your future.
In this post, we’ll walk you through how to approach open enrollment strategically (not just “since last year’s good enough”), how to spot hidden tax opportunities, and what tradeoffs to watch out for—so that you choose benefits aligned with your real health, family, and financial needs.
1. Start with Your Needs Inventory: What Changed (or Will) in 2026
Before diving into plan options, ask:
- Did your health or family situation change?
New baby? Chronic condition? A parent aged in? If your medical expenses are likely to spike, that changes your calculus.
- Do you expect major financial changes?
Perhaps your income will jump (e.g. bonus, equity liquidity event) or drop (starting a firm, sabbatical). That might affect how aggressive you want to be with pre-tax savings.
- Will your health usage patterns shift?
If you had a quiet medical year, you might lean into a higher-deductible plan. If you had surgeries or specialist spending, lean safer.
- Are you eligible for tax-advantaged accounts?
High-earning professionals should aim to use all benefits they qualify for: HSA, dependent care FSA, FSA etc.
This “needs inventory” grounds your decisions. Open enrollment isn’t about picking the cheapest premium—it’s about matching your benefits to your risk profile and avoiding the regrets (e.g. being underinsured mid-year).
2. Compare Plan Types: HDHP + HSA vs. Traditional PPO / EPO
For many high earners, the real choice is between:
- High-Deductible Health Plan (HDHP) + Health Savings Account (HSA) route
- More comprehensive plan (PPO, EPO, etc.) with lower deductibles but higher premiums
Here’s how to think about it:
| Feature |
HDHP + HSA |
Traditional Plan (PPO/EPO) |
| Premiums |
Lower |
Higher |
| Deductible / Out-of-pocket |
Higher |
Lower |
| Flexibility to see out-of-network specialists |
Often limited |
More generous |
| Tax advantage |
HSA contributions are tax-deductible / pre-tax; triple tax benefit |
Premiums may be pre-tax; limited ability to deduct medical expenses |
| Investment potential |
HSAs can be invested for long-term growth |
Typically no investing feature |
Why HDHP + HSA often wins for high earners:
- The pre-tax contribution to HSA
reduces your taxable income immediately.
- If you rarely need medical care, the lower premium + tax savings often outweighs the risk of hitting the deductible.
- Over time, if you let your HSA grow (invest the balances), it becomes a stealthy retirement health bucket.
- Many employers also contribute to your HSA, which is essentially free money.
But watch out:
- If you consistently have large medical bills, the higher deductible may cost more.
- If you’re managing a chronic condition or have dependents frequently needing care, a richer plan may make more sense.
- You need discipline: if you treat the HSA like another checking account and draw it down, you lose a lot of the benefit. The ideal way to use it is to fund it and let it grow.
Example for a tech founder:
Suppose Kira’s employer offers two plans:
- A PPO where she pays $1,000/month premium, $1,500 deductible, good coverage with low co-pays.
- An HDHP where she pays $400/month, deductible $4,000, but qualifies for HSA contributions up to $8,550 (family plan for 2025).
If Kira is healthy and estimates she’ll use <$2,000 in medical care, choosing the HDHP/HSA likely yields better net after-tax cost (premium + out-of-pocket) plus tax-advantaged growth. If 2026 looks like a high-use year (adds dependents, surgeries, etc.), she might lean PPO despite higher premiums.
3. Max Out (and Optimize) Your Pre-Tax Accounts
Once you pick the health plan, be sure to take full advantage of the tax-advantaged accounts that go along with it:
Health Savings Account (HSA)
If enrolling in an HDHP, prioritize maximizing your HSA contribution (for 2025: $4,300 individual / $8,550 family). If you're 55+, you get an extra “catch-up” allowance. Even if you pay some medical out-of-pocket, treat the HSA contributions as long-term savings unless needed. Let the invested balance grow for future medical or retirement expenses.
Flexible Spending Account (FSA) / Dependent Care FSA
If your employer offers health FSAs or dependent care FSAs, evaluate how much to contribute. These are “use-it-or-lose-it” (or small carryover) accounts, so you don’t want to overcommit. But under-contributing means leaving pre-tax dollars on the table. If you already know your medical or childcare needs for the upcoming year reasonably well, align your FSA election with that forecast. If you're a parent, you typically know what your childcare costs will be, so a Dependent Care FSA is a no-brainer. The FSA is more complicated, so be sure not to fund it beyond what you know you'll use - otherwise you'll be stuck buying nicknacks just to use up your own money.
Employer-Paid Benefits
Some employers subsidize HSA contributions, offer wellness stipends, or match contributions. Dive into your benefits packet: you might get “free money” you’re not using. Also check if your employer offers after-tax 401(k) contributions + in-plan Roth conversions (a “mega backdoor Roth”)—some high-earning professionals can use this as additional tax-advantaged savings beyond the usual 401(k) limits.
4. Understand the Tax & Cash-Flow Tradeoffs
Selecting benefits isn’t pure math—it’s balancing tax savings, cash flow, and coverage needs. Here are some tradeoff dynamics to watch:
More Pre-Tax = Less Take-Home Today
Every dollar you route to HSA, FSA, or increased pre-tax premiums reduces your taxable income—but also your take-home. If cash flow is tight or you want optional flexibility, don’t overcommit to pre-tax accounts such that you feel strapped mid-year.
Diminishing Marginal Utility of Insurance
If a lower-cost plan already covers most of your types of care, paying extra for incremental coverage (say, a lower co-pay or a richer network) might not give much benefit per dollar spent. Especially for unlikely large medical events, you may prefer to self-insure a little and invest the difference.
Tax Bracket Considerations
High earners often care deeply about marginal tax rates. Reducing your taxable income via HSA, FSA, or higher pre-tax deductions is more valuable when you're in the 35–37% bracket. That “tax shield” amplifies the value of benefits. In contrast, someone in a lower bracket would get less per dollar in tax savings.
State Tax and SALT Impact
If you live in a high-tax state (CA, NY, DC), your state deduction and SALT (state and local tax) limits can affect how much value you get from federal vs. state benefits. For example, your pre-tax contributions don’t reduce SALT, so that benefit is purely federal. If your state has favorable rules (e.g. certain medical deductions), compare net state + federal benefit.
Don’t Let “Free” Benefits Lull You
Just because enrollment is “free” doesn’t mean it’s optimal. Review each line item—what used to make sense might not after major life changes or compensation shifts. Don’t auto-renew last year’s picks without thought.
Timing Impacts Cost
If your payroll system splits your contributions evenly over the year, front-loading or back-loading decisions could shift your 2025 tax benefit slightly. Also, changes like switching from PPO to HDHP mid-year can create misalignment in benefit periods or require catch-up balancing—check your employer’s policy.
5. Use a Mini-Year-End Check & Buffer for Uncertainty
Because open enrollment decisions lock in premiums and contribution levels for an entire plan year, factor in uncertainty and “buffer room.” Here’s how to be prudent:
- Build in margin for surprise medical costs.
If possible, don’t stretch to the absolute minimum insurance you think you’ll need—leave some cushion.
- If expecting a big income change in 2026, simulate “stretch” scenarios.
What if your business sale or equity vesting pays a windfall? Could your chosen benefit elections remain efficient?
- Reserve liquidity.
Even with maximum deductions, ensure you hold enough cash or short-term assets for things like medical costs early in the coverage period, until your deductible is met.
- Review your coverage mid-year.
Some life events (marriage, birth, job change) allow benefit adjustments. Know your company’s window for mid-year amendments.
- Do a partial “rehearsal” or mock run of costs.
Estimate your 2026 expected medical use (dr visits, medications, labs) and simulate total costs under each plan: premium + expected out-of-pocket. That exercise often reveals surprises—especially for chronic care or specialty usage.
Practical Example (Physician + Tech Hybrid)
Meet Dr. Lee, a dermatologist in Chicago with a side tech startup. In 2025:
- Her employer offers a PPO (higher premium / richer benefits) and an HDHP + HSA option.
- She’s healthy and had only minimal annual medical use, but expects in 2026 she may have a child.
- Her 2025 income includes salary + bonus + modest startup equity gains.
Dr. Lee’s logic:
- Choose HDHP + HSA for 2025, because her usage is low and the tax savings + employer HSA match offset higher deductible risk.
- Max out HSA contributions
and allow it to invest and grow.
- Set modest FSA contributions
for anticipated routine care (vision, dental).
- Keep a “buffer fund”
(emergency cash) in case she needs medical care early in 2026 before she fully uses deductible coverage.
- Revisit coverage in 2026: if her prenatal or pediatric care anticipates high use, she might swing to PPO next open enrollment year.
- If her equity gains in 2026 push her into a higher tax bracket, the extra deductions she gained in 2025 compound in value.
This approach gives her tax savings now, protection for likely future needs, and flexibility to adapt.
