Open Enrollment 2027: 7 Benefits Choices I Review Every Year (HSA vs FSA, HDHP vs PPO)

Every October I block off one evening, pour a large coffee, and open my employer's benefits portal with the same mild dread most people feel at the dentist. For years I just clicked "keep my current elections" and moved on. Then I did the math one year and realized that lazy click had cost my family well over a thousand dollars in premiums and missed tax savings.

Open enrollment is the one window each year when most of us can change our health plan, our pre-tax accounts, and a handful of smaller benefits without a qualifying life event. Miss it, and you usually live with your choices for the next 12 months. So I treat it like a small annual audit.

Below are the seven decisions we review every single year, in the order we make them. I have included the 2027 numbers the IRS has already released, a few worked examples, and the data that convinced me each step matters.

Why This Year's Enrollment Deserves More Attention Than Usual

Health coverage keeps getting more expensive, and the trend is not slowing down. According to KFF's 2025 Employer Health Benefits Survey, the average annual premium for employer family coverage reached $26,993, and workers paid $6,850 of that directly out of their paychecks. Single coverage averaged $9,325.

Those numbers grew about 6% in a single year, well ahead of general inflation. KFF's president did not sugarcoat it. "There is a quiet alarm bell going off," Drew Altman said in a statement reported by SHRM, pointing to GLP-1 drugs, hospital prices and tariffs as reasons he expects sharper increases ahead.

Small businesses are feeling it too. KFF's review of preliminary 2027 rate filings found nearly 300 small-group insurers proposing a median premium increase of 14% for next year. If you work at a smaller company, expect your payroll deduction to change, and plan around it rather than discovering it on your first January paycheck.

The 2027 Numbers I Keep on a Sticky Note

Before I touch a single election, I write down the limits. The IRS released 2027 HSA and high deductible health plan figures back in May under Revenue Procedure 2026-24.

Source: Lockton's summary of the 2027 HSA and HDHP limits and Navia Benefits.

The 401(k) limit for 2027 has not been announced yet. The IRS usually publishes it in late October or early November once September inflation data is in, and Milliman's latest forecast puts it at either $25,000 or $25,500, according to 401(k) Specialist. I plan around the confirmed 2026 figure of $24,500 and adjust in January.

Now, the seven choices.

1. HDHP vs PPO: Which Health Plan Actually Costs Less for Us?

This is the big one, and it is where most of the money hides. A PPO (preferred provider organization) usually has higher premiums but lower deductibles and copays. A high deductible health plan (HDHP) flips that: lower premiums, a bigger deductible, and access to an HSA.

I never compare plans by premium alone. I compare total annual cost, which is:

Premiums + expected out-of-pocket costs - employer HSA contribution - tax savings

Here is a simplified example from our own spreadsheet, using round numbers for a family:

In a normal year, the HDHP wins easily. The real test is the bad year. So I also run the worst case: what happens if someone hits the out-of-pocket maximum? If the HDHP still comes out ahead or roughly even in that scenario, it is our pick. If a family member has a known surgery, a pregnancy, or expensive ongoing prescriptions, the PPO often wins, and that is fine.

Plenty of people are making the HDHP switch. KFF found that 29% of covered workers are now enrolled in HSA-qualified high deductible plans.

What I check: network (are our doctors in it?), the prescription formulary, the out-of-pocket max, and whether the employer seeds the HSA.

2. HSA vs FSA: Where Our Pre-Tax Healthcare Dollars Go

If we land on an HDHP, the next question is how to fund our healthcare spending with pre-tax money. The two tools are very different.

Health Savings Account (HSA)

• You own it. It follows you if you change jobs.
• Unused money rolls over forever.
• It has a famous triple tax advantage: pre-tax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
• You can invest the balance once it passes your provider's cash minimum.

Health Flexible Spending Account (FSA)

• Your employer owns the account.
• Mostly "use it or lose it," though plans may offer a small carryover or a grace period.
• The 2026 health FSA limit is $3,400, per IRS Publication 969 and the 2026 inflation adjustments.
• Usually you cannot contribute to a general-purpose FSA and an HSA in the same year. A "limited purpose" FSA for dental and vision is the exception.

In our house, the HSA is the clear winner whenever we qualify. We treat it like a stealth retirement account: we pay small medical bills out of pocket when we can, keep the receipts, and let the HSA stay invested. Years later, those saved receipts can be reimbursed tax-free.

There is also good news on eligibility. The One Big Beautiful Bill Act made direct primary care memberships compatible with HSAs, as long as fees stay within $150 per month for self-only and $300 for family coverage, and those caps stay unchanged for 2027. Benefits administrator Clarity called the package of changes the broadest expansion of HSA eligibility in recent memory.

3. How Much to Put in the HSA (and Whether to Max It)

Choosing an HSA is step one. Funding it properly is step two, and this is where I see people leave the most on the table.

Remember that employer contributions count toward the IRS limit. If your employer puts $1,000 into a family HSA in 2027, you can only add $8,000 yourself to hit the $9,000 cap.

Our rough priority list looks like this:

1. Contribute enough to the 401(k) to get the full employer match.
2. Max out the HSA.
3. Go back and add more to the 401(k) or an IRA.

Why is the HSA ahead of extra 401(k) money? Because 401(k) dollars get taxed on the way out in retirement, while HSA dollars spent on medical costs never get taxed at all. If you contribute through payroll, you usually skip FICA taxes too, which you cannot do with a direct deposit to an IRA.

If you are 55 or older, do not forget the extra $1,000 catch-up. Married couples who are both 55+ can each add $1,000, but each spouse needs their own HSA to do it.

4. Dependent Care FSA: Bigger Than It Used to Be

This one surprised a lot of parents this year. Starting in 2026, the annual limit on a dependent care FSA jumped from $5,000 to $7,500, the first real increase in decades.

If you pay for daycare, preschool, before and after school care, or summer day camp for a child under 13, this account lets you pay with pre-tax dollars. For a family in the 22% federal bracket, setting aside the full $7,500 can save roughly $1,650 in federal income tax, plus FICA savings, before state taxes are even counted.

A few cautions we learned the hard way:

• It is use it or lose it. Estimate conservatively.
• You need receipts and the provider's tax ID.
• Compare it with the Child and Dependent Care Tax Credit. Most middle and higher income families come out ahead with the FSA, but run your numbers.

5. The Retirement Election Hiding Inside Open Enrollment

Technically you can change your 401(k) contribution any time at most companies, but open enrollment is my annual reminder to look at it.

Here is what I review:

• Am I getting the full match? Missing an employer match is like declining part of your salary.
• Will I hit the 2026 limit of $24,500 by December? If not, can I bump the last few paychecks?
• Catch-up contributions. Workers 50 and older can add a catch-up, and those aged 60 to 63 get an enhanced "super catch-up" of $11,250 for 2026 under SECURE 2.0.
• Roth vs traditional. Starting in 2026, higher earners have to make catch-up contributions as Roth money. SuperMoney's summary of the 2027 projections flags this rule too, so check whether your plan has a Roth option set up.

Milliman's actuaries are telling employers to plan ahead as well. Nina Lantz suggested companies "begin evaluating the implications of these higher limits on their labor costs," according to 401(k) Specialist. For workers, that means your match budget may grow a little next year.

6. Life and Disability Insurance: The Boring Coverage That Protects Everything Else

I used to skip this section entirely. Then a friend went out on six months of medical leave and found out his company's short-term disability only replaced 50% of his pay, with no long-term coverage at all.

Here is how we approach it:

• Basic group life insurance is often free at one or two times salary. We take it, but we do not rely on it, because it usually disappears when you leave the job.
• Supplemental group life can be convenient, but healthy people under 45 often find cheaper term coverage on the open market. I compare quotes before electing more.
• Long-term disability is the coverage I consider most underrated. Your ability to earn an income is likely your largest financial asset. If your employer offers long-term disability, especially at group rates, it is usually worth it.
• Tax trick: if you pay long-term disability premiums with after-tax money, any benefits you collect are generally tax-free. If your employer pays, the benefits are typically taxable. Some plans let you choose.

7. The Small Benefits That Quietly Add Up

The last step takes 15 minutes and pays for my coffee habit several times over. I scan for:

• Commuter benefits for transit and parking with pre-tax dollars.
• Employee stock purchase plans (ESPPs). A 15% discount with a lookback provision is one of the best deals in corporate benefits, as long as you do not let company stock become too large a share of your net worth.
• Legal plans for simple wills and document review.
• Dental and vision. We do the math. If the vision premium is $150 a year and it covers one $120 eye exam plus a $100 frame allowance, fine. If not, we pay cash.
• Wellness incentives. Some employers drop $200 to $500 into an HSA just for completing a health screening.
• Pet insurance and identity theft protection. Convenient, rarely essential. We usually pass.

My Open Enrollment Checklist, Start to Finish

Here is the exact order we follow each fall:

1. Pull last year's medical claims and pharmacy receipts.
2. List expected changes (new baby, surgery, braces, new prescriptions).
3. Compare plans on total annual cost, including a worst-case year.
4. Confirm our doctors and medications are covered.
5. Choose HSA or FSA and set contribution amounts.
6. Set the dependent care FSA amount if childcare applies.
7. Review 401(k) percentage, match, and Roth settings.
8. Check life and disability coverage.
9. Scan the small perks.
10. Download the confirmation page and calendar a reminder for March to double-check paystubs.

The Bottom Line

Open enrollment rewards the people who spend one evening on it. With family premiums close to $27,000 a year and insurers signaling double-digit increases for some groups in 2027, the default choice is rarely the cheapest choice.

For us, the combination that works most years is an HDHP, a fully funded HSA invested for the long term, a carefully estimated dependent care FSA, and a 401(k) set high enough to capture every dollar of match. Your mix may look different, and that is the point. Run the numbers for your own family, write down the 2027 limits, and make the click on purpose this year.

This article is for educational purposes and is not individual tax, legal or insurance advice. Plan rules vary by employer, so check your plan documents or talk with a qualified professional before making changes.