Why open enrollment turns into a guess every year

The election form itself doesn't ask what you spent last year, what prescriptions you're on, or what appointments you already know are coming -- it just asks for a number, due by a deadline that arrives once a year whether you're ready or not. Without a deliberate process, most people fall back on whatever feels roughly right in the moment, which tends to be either too conservative (leaving real, predictable spending uncovered) or too aggressive (risking money that doesn't carry over, depending on the plan).

Start from your own last 12 months, not a guess

Before picking a number, pull together what you actually spent on eligible expenses over the past year: prescriptions, copays, contacts or glasses, dental and vision costs, and anything else that qualified. Insurance statements (often called an EOB, or explanation of benefits) and pharmacy receipts are the most reliable source, far more reliable than trying to recall the year from memory. This same-year-history approach is the same discipline a sinking fund uses for any predictable recurring cost -- look at what actually happened, not what feels like it should have happened.

Two accounts, two different rules worth understanding before you pick a number

HSAs and FSAs both let you set aside money for eligible health expenses, but the practical rules around what happens to unused money differ by account type and by your specific employer's plan design -- worth confirming directly in your plan documents rather than assumed from a general description:

  • HSAs — typically paired with a high-deductible health plan, and generally structured so unused funds carry forward rather than disappearing at year-end. Because the money isn't at risk of being forfeited, HSAs generally tolerate a more conservative, "estimate low if unsure" election without much downside.
  • FSAs — typically tied to a specific employer and plan year, and commonly structured with some form of "use it or lose it" rule, sometimes softened by a limited carryover or grace period depending on the plan. Because unused money can be at risk, FSAs generally reward a more careful, evidence-based estimate rather than rounding up "just in case."

A useful test

For each expense from last year's history, ask: "Is this a cost I can reasonably expect again this year?" A maintenance prescription or a standing annual exam -- yes, budget for it directly. A one-time procedure or an unusual year -- treat it as an outlier, not the new baseline, unless you have a specific reason to expect it again.

A worked example: turning last year's receipts into this year's election

Suppose a household gathers last year's EOBs and pharmacy receipts ahead of open enrollment. They separate the recurring items -- a maintenance prescription, routine dental cleanings, contacts -- from a one-time expense that isn't likely to repeat, like an unusual dental procedure that happened once. The recurring items become the core of this year's estimate. Because their plan is an FSA with a "use it or lose it" structure, they deliberately estimate toward the more conservative end of their own recurring-expense range rather than rounding up, since unclaimed money in that account doesn't carry forward the way it would in an HSA. The one-time procedure from last year doesn't get assumed into this year's number at all, since there's no specific reason to expect it again.

What to double-check before you submit the election

A few things are worth confirming directly with HR or the plan documents before finalizing a number: the actual submission deadline, the current contribution limit for the account type, the specific carryover or grace-period rule for that employer's plan (these vary plan to plan even within the same account type), and whether any life event coming up in the next plan year (a procedure already scheduled, a new dependent) should be factored in now rather than adjusted for later.

Revisiting the choice next open enrollment

The easiest time to note how this year's election actually played out is right when next year's enrollment period opens, while the real spending pattern is still fresh -- not by trying to reconstruct a full year of receipts from memory later. A short running note of what got used, what went unclaimed, and what changed turns next year's decision into an update instead of another guess from scratch.