BigLaw Open Enrollment: Making the Right Benefit Elections

2026 benefit limits at a glance

Decision 1: Health plan — HDHP + HSA vs. PPO

This is the highest-dollar benefit election for most attorneys. At a 37% federal bracket plus 8–13% state tax, the HSA's triple tax advantage — deductible contribution, tax-free growth, tax-free medical withdrawals — delivers more after-tax value per dollar contributed than almost any other savings vehicle in the tax code. Most healthy associates get the math wrong because they compare gross plan features without adjusting for the tax benefits.

The trade-off: HDHPs have no coverage until the deductible is met ($1,700 self-only in 2026). If you have a family with young children or a chronic condition requiring frequent care, the out-of-pocket exposure may outweigh the premium savings and HSA benefit. The calculator below runs your specific numbers.

HDHP vs. PPO break-even calculator

Enter your firm's employee premium shares (after employer contribution). For out-of-pocket modeling, this calculator assumes HDHP = 100% of costs to the deductible then 20% coinsurance; PPO = 20% blended rate (copays + coinsurance). Adjust to match your actual plan design.

What HDHP is right for

• Healthy associates with minimal healthcare use. If your annual spend is $500–$1,500 (a physical, a few copays, generic Rx), HDHP almost always wins by a wide margin at BigLaw income levels.
• Associates building an HSA as a retirement account. Pay medical expenses out-of-pocket now, let the HSA grow tax-free, and draw it down tax-free in retirement when healthcare costs are highest.
• Partners who want the §162(l) deduction optimization. Equity partners can deduct health insurance premiums from SE income. Pairing an HDHP with an HSA captures both the deduction and the triple-tax benefit.

When PPO may be better

• Family with young children or a member managing a chronic condition — frequent doctor visits add up before the deductible is met.
• Expecting a major medical event in the plan year (surgery, pregnancy, significant procedure).
• Firm's HDHP premium savings are minimal — some AmLaw firms price their plans nearly at par, which eliminates the HDHP financial advantage.
• Your spouse has an FSA through their employer (see below) — that blocks HSA eligibility entirely.

Decision 2: FSA vs. HSA — you cannot have both

This is the most commonly misunderstood open enrollment rule. If you enroll in an HDHP and want to contribute to an HSA, your household cannot have a general-purpose Health FSA — even if the FSA is through your spouse's employer plan.

Health FSA: when it makes sense

If you're on a PPO and HSA eligibility is off the table, the Health FSA contribution up to $3,400 (2026) still provides a pre-tax deduction. At 47% combined federal + NY state rate, $3,400 pre-tax saves $1,598 in taxes. The trade-off: FSA funds are use-it-or-lose-it beyond the $680 carryover. Only contribute what you'll spend.

Dependent Care FSA: a significant OBBBA increase

The One Big Beautiful Bill Act permanently increased the Dependent Care FSA limit to $7,500 per household for 2026, up from $5,000 — the first change in nearly 40 years. Married couples filing separately are capped at $3,750 each. Note that employers had to amend their plan documents to adopt the higher limit; confirm your firm has done so before enrolling at the new maximum.

If you have children under 13 or a dependent adult requiring paid care, the DC-FSA contribution reduces your taxable income dollar-for-dollar. At a 37% bracket, $7,500 pre-tax saves $2,775 in federal tax alone.

Decision 3: Disability insurance — check your coverage gap

Most BigLaw firms provide group long-term disability coverage equal to 60% of base salary, capped at $10,000–$20,000 per month. At a $350,000–$435,000 annual salary, that's a replacement-rate floor of roughly $17,500–$26,100 per month needed vs. $10,000–$20,000 provided. The gap is real.

Open enrollment is often the only time to purchase supplemental individual disability insurance through your employer at a group discount — without medical underwriting. For 7th–8th year associates approaching partnership, this window is particularly valuable: individual own-occupation IDI issued at your current income with a future-purchase option rider lets you increase coverage when your income rises as a partner.

Equity partners face an additional exposure: group LTD coverage typically ends when you convert to K-1 income, and SSDI is capped at $4,018 per month in 2026. An individual own-occupation disability policy is essentially required if you have significant firm capital and living expenses.

Decision 4: Supplemental life insurance

Group life insurance offered at open enrollment typically requires no medical underwriting for elections up to a "guaranteed issue" amount (often 3–5× salary). For associates with student loans or a mortgage, this is an inexpensive way to ensure coverage. The limitation: group coverage is not portable — it ends when you leave the firm. At a healthy age, individual term insurance is usually cheaper per dollar of coverage and travels with you.

Partners with large capital accounts have a specific need: if you die before the capital account is returned, your estate depends on the firm's buyout provisions. Review your partnership agreement's death-of-a-partner clause before relying on group coverage alone. For estate planning at the $15M OBBBA exemption level, an ILIT-held policy may be more appropriate than group supplemental.

Decision 5: Commuter benefits — $340/month tax-free

The IRS increased qualified transportation fringe benefits for 2026 to $340 per month for transit and $340 per month for qualified parking — each a separate limit, for a combined pre-tax potential of $680 per month ($8,160 per year).⁵ For a NYC attorney commuting from New Jersey or Westchester, maximizing both limits is straightforward and saves $3,800+ in taxes annually at combined federal/state rates.

Commuter benefits are fully separate from HSA and FSA eligibility — you can contribute to all three simultaneously. Unlike FSA funds, unused commuter benefit balances can often roll over month to month (plan-specific; confirm with your benefits administrator).

Adjacent deadline: the December 15 NQDC clock

Open enrollment closes in November. Six weeks later, a separate irrevocable deadline arrives: December 15 is the last day to submit your NQDC deferral election for compensation earned in the following year. These are two entirely separate processes, but they land in the same planning window — and the NQDC decision is often higher dollar value than any benefits election.

Under §409A, once the December 15 deadline passes, you cannot change your deferral election or distribution schedule until the following year's election window. The election must specify both the amount to defer and the distribution timing years in advance. Most attorneys set and forget this — which means they leave substantial tax deferral opportunities on the table.

Getting the full picture

Benefit elections exist inside a larger financial plan. The right health plan depends on your expected healthcare spend, tax rate, and HSA investment horizon. The right disability coverage depends on your capital account exposure and partnership timeline. Assembling these correctly — especially when the December NQDC election and 401(k) rate change land at the same time — is where a specialist financial advisor earns their fee in a single conversation.

Talk to an advisor before open enrollment closes

The benefit elections above, the NQDC deadline, and the 401(k) contribution rate for next year are all decided in the same 6-week window. A fee-only advisor who works with Big Law attorneys can walk through all of them in one session. No fees to get matched, no obligation to hire.

Fee-only · No commissions · Free match · No obligation

Sources

1. IRS Rev. Proc. 2025-19 — 2026 HSA contribution limits, HDHP minimum deductibles, and HDHP OOP maximums.
2. Mercer: 2026 Health FSA and fringe benefit limits — Health FSA $3,400 limit, $680 carryover per IRS Rev. Proc. 2025-40 (announced Oct. 9, 2025).
3. Mercer: OBBBA Dependent Care FSA increase — OBBBA § 112 permanently raised DC-FSA to $7,500; employers must amend plan documents.
4. HRP: IRS releases 2026 Health FSA limits — IRS announcement confirming $3,400 Health FSA and $680 carryover limits.
5. SHRM: IRS boosts 2026 commuter benefit limits — Transit and parking limits raised to $340/month each for 2026.

All limits verified against 2026 IRS guidance. The HDHP calculator uses simplified assumptions (HDHP: 100% OOP to deductible then 20% coinsurance; PPO: 20% blended effective cost rate). Actual plan designs vary. Values updated as of June 2026.

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