ANNUAL ENROLLMENT GUIDEBOOK How to make the most of your annual

ANNUAL ENROLLMENT GUIDEBOOK How to make the most of your annual benefits enrollment

Our Annual Enrollment Guidebook can help you make more confident decisions about your benefit choices so you can make the most of your options in the year ahead. Even if you already have benefits, it’s good to revisit your selections each year to make sure that they’re still the best choice for you. 2

Key aspects of annual enrollment HEALTH INSURANCE PLAN HEALTH BENEFIT ACCOUNTS DISABILITY INSURANCE 3 DENTAL AND VISION SUPPLEMENTAL BENEFITS

Health insurance plan

Before annual enrollment begins, take the time to prepare for it Nearly half of Americans cannot correctly identify terms like deductible and copay. 5 Forbes, "Americans Confused By Basic Health Insurance Terms But Happy With Their Plans," December 8, 2022, https://www.forbes.com/advisor/health-insurance/confused-by-healthinsurance-terms/.

Decision support can help you save on the cost of benefits DID YOU KNOW? Our research has found that, when guided by a decision support tool at annual enrollment, 59% of new enrollees selected the likely overall lowest-cost plan for them. 6 Based on Fidelity recordkept data through December 31, 2021, for those eligible to use the Fidelity proprietary decision support tool. Percentage based on number of eligible employees who selected the medical plan recommended.

Make sure you understand what’s covered by your plan so you can take advantage of your benefits DID YOU KNOW? Some care that employees skip because of cost—such as preventive screenings, annual visits, and immunizations—is, in fact, covered at no cost under their plans. 7 Fidelity Investments, “Paying for Health Care: How Employers Can Better Support Their Employees’ Health Care Spending,” April 29, 2022.

Questions to consider as you assess your upcoming needs Do you anticipate that you’ll have a scheduled surgery this year (such as a hip or knee replacement)? If your or your family’s mental health needs have changed, have you checked the list of providers included in-network? Often, fewer providers are available for mental health than for other care, according to a Kaiser Family Foundation survey.* Will your number of covered dependents change? If you take any regular medications, have you reviewed the plan’s medication list to determine if a brand or generic will be covered? 8 Do you anticipate any changes in your prescription drug utilization? Did you have any unexpected health events last year? Has your employer expanded coverage for preventive services and chronic disease management (such as maintenance drugs)? If you had to pay the full deductible all at once—for example, if you had an unexpected, expensive health event—could you afford it? *Kaiser Family Foundation, 2022 Employer Health Benefits Survey, Figure 13.13, October 2022, https://www.kff.org/report-section/ehbs-2022-section-13employer-practices-telehealth-provider-networks-and-coverage-for-mental-health-services/attachment/figure-13-13-3/.

Determine which basic elements of a health plan are important to you so that you can compare your plan options BASIC ELEMENTS OF A HEALTH PLAN EXAMPLE PLAN 1 9 EXAMPLE PLAN 2 Hospitals in the plan’s network 2 out of 5 hospitals in my area included 1 out of 5 hospitals in my area included Doctors in the plan network 90% of doctors in my community included 70% of doctors in my community included Distance of doctors/ hospitals/clinics in network 25-50 miles Less than 1 mile Specialty care access No referral required Referral required Prescription drug coverage Includes most prescription drugs on the market Includes a limited number of prescription drugs on the market Cost of monthly premium Individual: 400 Family: 1,050 Individual: 100 Family: 450 Annual limit on out-ofpocket costs Individual: 3,500 Family: 7,000 Individual: 5,000 Family: 10,000

Remember, support is available to you A variety of free decision support tools are available, including this one from Fidelity. If you’d like to compare the costs you might end up paying, select the “comparison calculator.” 10

Health benefit accounts

Health care can be expensive HEALTH CARE EXPENSES LEAD TO ALMOST 1 in 3 hardship withdrawals from retirement savings 12 Fidelity Investments recordkept data as of December 31, 2019; eCertified participant web entries.

What health benefit accounts may be available to me to help pay for health care or health-related expenses? Health Savings Account (HSA) Savings Spending Reimbursement 13 Health care flexible spending account (FSA) - Limitedpurpose FSA Health reimburseme nt arrangement (HRA) Transportation, lifestyle spending accounts - - - - -

Although HSAs and health care FSAs can both help you save on taxes, they have some key differences. What might they mean to you? 14

How do I know if I’m eligible? HSA You can establish and contribute to an HSA if you meet the eligibility requirements. Must be enrolled in an HSA-eligible health plan on the first day of the month Must not be covered by any other health plan unless that plan is also an HSA-eligible health plan Must not be enrolled in Medicare Cannot be claimed as a dependent on someone else’s tax return 15 HEALTH CARE FSA If you meet the plan eligibility requirements you can enroll in a health care FSA with your employer. If you’re self-employed, you aren’t eligible. .“Revenue Procedure 2021-25,” Internal Revenue Service, Code of Federal Regulations, 2021, https://www.irs.gov/pub/irs-drop/rp-21-25.pdf.“ Health Savings Accounts (HSA) FAQs,” Fidelity.com, accessed January 31, 2022, https://www.fidelity.com/go/hsa/faqs? imm pid 700000002058991&immid 100853&imm eid ep53520211790&gclid CIDFr-mp3PUCFcOIgQodYL0DOw&gclsrc ds

What happens if I have money left over at the end of the year? HEALTH CARE HSA The balance carries over from year to year until you need it. 16 FSA You will generally forfeit any money left in a health care FSA at the end of the year, unless your employer offers a grace period or allows you to carry some of it over for next year.

What if I change jobs, lose my job, or retire? HSA Your HSA can move with you. If you lose your job, you can use the money to pay for COBRA premiums (which temporarily extend your employersponsored health care coverage). And in retirement, you also can use your HSA for general (non-health care) expenses starting at age 65—you just have to pay normal income taxes on the money you withdraw. 17 HEALTH CARE FSA The account remains with your former employer when you leave, but you may be able to elect to continue to be enrolled in a health care FSA under COBRA.

Can I invest my HSA funds? HSA Contributions generally go into an interest-earning account, but you may be able to invest all or part of your balance to save for the future. 18 Investing involves risk, including the risk of loss. HEALTH CARE FSA You can’t.

If available and you are eligible, consider if a health benefit account is right for you to help cover health expenses 72 % of consumers with an HSA or FSA said they felt prepared to cover unexpected health expenses, compared with 48% of those without either one. 19 Fidelity Health Solutions Thought Leadership Consumer/Employee Survey, January–February 2022

HSA contributions, investment gains, and withdrawals for qualified medical expenses all are tax-free.* 2024 HSA contribution limits Individual 4,150 Family 8,300 55 catch-up (in addition to above contribution limits) 1,000 20 *With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation.

Did you know? Health care costs in retirement are estimated to total 157,500 for a 65-year-old retiring this year. An HSA can help you save for health care costs in the future. 21 Estimate based on a single person retiring in 2022, 65-years-old, with life expectancies that align with Society of Actuaries' RP-2014 Healthy Annuitant rates projected with Mortality Improvements Scale MP-2020 as of 2022. Actual assets needed may be more or less depending on actual health status, area of residence, and longevity. Estimate is net of taxes. The Fidelity Retiree Health Care Cost Estimate assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program, original Medicare. The calculation takes into account Medicare Part B base premiums and cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by original Medicare. The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care.

Dental and vision

Adding dental and vision coverage may decrease your out-ofpocket spending for these services Even if your health plan covers emergency dental work or annual vision exams, your employer may offer and subsidize additional coverage that can help you manage expenses. These plans may include: Dental cleanings Routine dental exams Routine eye examinations Basic eyeglasses or contacts 23

Disability insurance

If you get sick or hurt and can’t work, one of the two types of disability insurance may help supplement your lost income SHORT-TERM Replaces 40% to 80% of your salary for brief periods of illness or injury during which you are unable to work. 25 LONG-TERM Replaces 50% to 80% of your salary in the event you are no longer able to work because of illness or injury after an initial period, typically 90 days (although some policies cap the monthly payment).

Supplemental benefits 26

With so many benefits available to you, it can be unclear how they all work together so you can get the best care at the lowest cost ONLY ONE-THIRD of consumers said they understand how their health benefits work together 27 Fidelity Health Solutions Thought Leadership Consumer/Employee Survey, January–February 2022.

Make sure you’re aware of your benefit options so that you can stay on top of your health and well-being Examples of supplemental benefits that your employer may offer HEALTH-RELATED Condition-specific solutions Family-building benefits “Health at home” Mental health solutions OTHER Life insurance Auto and home insurance Lifestyle spending accounts Dependent care flexible spending account (DCFSA) Identity theft insurance Legal services 28 Pet insurance

The first year in an HSA 29

After weighing their options during annual enrollment, some people decide to switch from a traditional health plan to an HSAeligible health plan. Here’s why. They have minimal health care needs in a normal year, and their doctors are still in-network. The premiums are considerably lower than in a traditional health plan, even though the deductible is higher. Many employers make a lump-sum contribution to the HSA at the start of the year. The HSA has tax advantages: The money you contribute is tax-free, it can grow tax-free, and withdrawals for qualified medical expenses also are tax-free. 30 Contributions, earnings, and distributions are tax-free for federal tax purposes when used to pay for qualified medical expenses. Each state may decide to follow the federal tax guidelines for HSAs or establish its own. As of the publication date (07/25/2023), only California and New Jersey tax eligible contributions to HSAs. These states regard HSAs as regular taxable brokerage accounts, so residents have to declare any capital gains, interest, and dividends they receive to the state. New Hampshire and Tennessee tax earnings but not contributions.

For example, let’s follow Susan’s first year in an HSA [ January-March April-June Starting HSA balance 1,000 1,620 270 1,270 Susan’s HSA contributions 750 750 1,050 1,050 1,750 2,370 1,320 2,320 HSA money available to spend Health care and/or prescriptions purchased Prescription for asthma inhaler 130 Urgent care visit, X-rays, and cast for broken arm 2,100 Costs paid using HSA ( 130) Ending HSA Employer makes lump-sum balance contribution. 1,620 Susan makes monthly 270 ( 2,100) contributions of 250. Over-the-counter medications are considered qualified medical expenses. 31 OctoberDecember July-September Telehealth visit for sinus infection 50 Over-the-counter motion sickness medication 20 ( 50) ( 20) After the 1,270 broken arm, Susan decides 2,300 to increase her monthly contributions to 350. Susan has 2,300 to carry over for next year.

Here are a few resolutions to help make your first year in an HSA-eligible health plan successful Open your HSA so you will be sure to get your employer contribution. Adjust the amount you contribute to your HSA anytime. Know what services are available to you to help manage your costs. If you’re not able to contribute to your HSA regularly, you can still add money to pay for specific health bills and get the tax advantage. Save the money in your HSA until you really need it—including all the way into retirement. 32

Additional resources

Annual Enrollment Checklist Make sure your beneficiaries are accurate and up to date for your retirement savings plan, HSA, and life insurance. See if your employer offers a decision support tool to guide you through annual enrollment. Understand how your plan options may have changed since last year, including new condition-specific offerings like mental health care. Compare your out-of-pocket costs in plan options to make sure the plan you choose matches your budget. Determine whether your providers are in-network by using a provider search tool for the plan. Consider whether an HSA or FSA is right for you. If your employer offers a contribution match, factor that into your savings strategy. Find out if your employer offers an app to manage all your health-related benefits throughout the year. 34

Health Care Glossary Coinsurance: The percentage of costs of a covered health care service you pay (20%, for example) after you’ve paid your deductible. Copayment (or copay): A fixed amount ( 20, for example) you pay for a covered health care service after you’ve paid your deductible. Deductible: The amount you pay for covered health care services before your insurance plan starts to pay. With a 2,000 deductible, for example, you pay the first 2,000 of covered services yourself. Flexible spending account (FSA): An arrangement through your employer that lets you pay for many out-of-pocket medical expenses with tax-free dollars. Allowed expenses include insurance copayments and deductibles, qualified prescription drugs, insulin, and medical devices. Formulary: A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. Also called a drug list. Health savings account (HSA): A type of savings account that lets you set aside money on a pretax basis to pay for qualified medical expenses. By using untaxed dollars in an HSA to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs. HSA funds generally may not be used to pay premiums. In-network coinsurance: The percent (for example, 20%) you pay of the allowed amount for covered health care services to providers who contract with your health insurance or plan. In-network coinsurance usually costs you less than out-of-network coinsurance. 35 Network: The facilities, providers, and suppliers your health insurer or plan has contracted with to provide health care services.

Health Care Glossary, continued Out-of-network coinsurance: The percentage (for example, 40%) you pay of the allowed amount for covered health care services to providers who don’t contract with your health insurance or plan. Out-ofnetwork coinsurance usually costs you more than in-network coinsurance. Out-of-pocket costs: Your expenses for medical care that aren’t reimbursed by insurance. Out-of-pocket costs include deductibles, coinsurance, and copayments for covered services plus all costs for services that aren’t covered. Out-of-pocket maximum: The most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance for in-network care and services, your health plan pays 100% of the costs of covered benefits. Premium: The amount you pay for your health insurance every month. In addition to your premium, you usually have to pay other costs for your health care, including a deductible, copayments, and coinsurance. Preventive services: Routine health care that includes screenings, checkups, and patient counseling to prevent illnesses, disease, or other health problems. Provider: A physician (M.D. [medical doctor] or D.O. [doctor of osteopathic medicine]), nurse practitioner, clinical nurse specialist, or physician assistant, as allowed under state law, who provides a range of health care services. 36 Source: “Glossary,” Healthcare.gov, https://www.healthcare.gov/glossary/.

Important Information Investing involves risk, including risk of loss. The information provided herein is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, you are strongly encouraged to consult your tax advisor before opening an HSA. You are also encouraged to review information available from the Internal Revenue Service (IRS) for taxpayers, which can be found on the IRS website at IRS.gov. You can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses, online, or you can call the IRS to request a copy of each at 800-829-3676. Consult an attorney or tax professional regarding your specific situation. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917 2023 FMR LLC. All rights reserved. 1036571.3.0 37