Many employers offer open enrollment in the fall. This is when employees can sign up for various benefit options for the upcoming year. Generally, benefit changes can only be made during this time, unless you’ve experienced a “life change” such as a marriage, divorce, death, dependent job loss or other.
Health insurance is often the focus, but there are a host of other benefits you should consider. It's important to understand all the benefits offered by your company, as benefits are a significant component of overall compensation. Here are a few thoughts about choosing your benefits for the upcoming year.
Health insurance seems to get more expensive and confusing each year. It's important to carefully review all of the options offered as they may have changed since last year.
Review the options in light of your personal and family needs. Is your doctor or local hospital in the network? How do the prescription drug plans work for your situation? How much or how little do you spend on medical costs?
HSA versus FSA
Both types of medical savings accounts offer the chance to save for medical expenses that might occur during the year – using pre-tax dollars that can be withdrawn tax-free to cover eligible medical and dental costs.
With a flexible spending account (FSA), you must use the money during the same year, otherwise it will be lost.
A health savings account (HSA) must be accompanied by a high deductible health insurance plan. According to Healthcare.gov, a plan with a high deductible must be at least $1,300 for an individual plan and $2,600 for a family plan.
HSA contribution maximums are $3,450 for an individual and $6,900 for a family. In both cases, people 55 or over can add an additional $1,000.
You can withdraw HSA money to cover a range of medical costs just like the FSA. The difference is that money in an HSA can be carried over year-to-year if not used. In fact, many experts tout the HSA as another retirement savings vehicle to offset the increasingly high cost of medical care in retirement.
The strategy is to cover out-of-pocket medical costs with other funds to the extent possible while working, and use the HSA in retirement. Many HSAs offer investment options similar to an IRA account. A wide range of medical and related costs are eligible for coverage via HSA withdrawals including long-term care insurance and Medicare premiums – all subject to rules for HSA withdrawals.
Disability insurance is often called “lifestyle insurance.” If you are medically unable to work, disability insurance will cover a percentage of your salary. 60 percent is a common level. Employer plans may be more limited in the definition of disability than some private insurance plans, but the premiums are generally much more affordable.
Many financial experts cite the need for disability insurance in the context that a disability during your working years is much more likely than death. Additionally, qualifying for disability coverage under Social Security can also be difficult, as there are many hoops to jump through in the process.
Companies might offer both long-term and short-term policies. Check the premiums and the period before coverage begins for a disability. Be sure to understand the terms of the policies and what you need to qualify for coverage should it be needed.
Company life insurance
Employer-provided life insurance is all over the board in terms of quality and cost. Some policies can be continued if you leave the company, some can't. Some employers offer free coverage up to a certain level, and additional coverage can then be purchased.
If you have a medical condition that would preclude you from qualifying for a private policy, this insurance can be very beneficial.
Some employers offer dependent care assistance programs for employees who need daycare services for their children. The cost of daycare is high, so check with your employer to see if they offer any money-saving benefits for parents.
Though employees can make changes to their 401(k) throughout the year, many companies roll out changes to their plan during open enrollment. So be sure to watch for any announcements during that time.
Your employee benefits are a significant part of your compensation. The benefits discussed above, and a number of other options that may be offered by some employers, can save your family a lot of money and offer essential coverages. Take the open enrollment process seriously and manage your benefits to your best advantage.
*All content provided in this blog is supplied by Roger Wohlner and is for informational purposes only. Barclaycard makes no representations as to the accuracy or completeness of any information contained in the blog or found by following any link within this blog.
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