Open enrollment season is approaching. It’s the time of year when many companies ask their employees to enroll in employer-provided benefits for the coming year. Here are some key areas to consider this enrollment season.
Review Your Benefits Booklet!
First and foremost, review your benefits booklet! While it may be easier to simply continue with your benefits elections from last year, you may be missing out on great benefits offered by your employer. You may also find that the details of insurance coverage have changed. Or, you may realize that the coverages you chose in the past haven’t kept up with your changing life and employment situation.
For instance, some coverages, like life insurance, may be dependent on your salary. Often, it will be a multiple (1x – 3x) of your salary. However, many of these offerings also include a cap on the amount of coverage. So, if your salary has increased since you initially chose this benefit, it may mean you don’t have the coverage amount you expected.
Coordinate with Your Partner
Coordinate your choice of benefits with those of your spouse or partner if applicable. This may be difficult if you don’t have enrollment periods around the same time. However, when possible, it can be helpful to evaluate which coverages should be elected by which partner. In some cases, specifically for health insurance, it may make sense for one spouse or partner to elect coverage for themselves and the dependents while the other spouse or partner elects only coverage for themselves.
Check Your Network
If you are changing your health coverage, be sure to check if your care providers are in-network on the new plan. An out-of-network provider isn’t a deal-breaker, but it does mean that you should use the appropriate amounts when calculating expected costs for the year (including co-pays, out-of-pocket medical expenses, and premiums). Along with determining whether your care providers are in-network, you should also determine if any necessary prescriptions are covered by the plans you are considering.
Understand the Differences
Understanding the differences between a Health Savings Account (HSA) and a Flexible Spending Account (FSA) is crucial to making the right choice for you and your financial goals. An HSA is only available in conjunction with a High Deductible Health Plan, while an FSA may be an option with other types of health plans. Also, you cannot have a medical FSA account and contribute to an HSA account at the same time. And while funds in an FSA are use-it-or-lose-it and must be used by the end of the year*, funds in an HSA can remain beyond the calendar year and may even be able to be invested and potentially grown and used in retirement. Learn more about using your Health Savings Account (HSA) as a Tool in your Retirement Portfolio.
Don’t forget that vision and dental insurance are usually separate from health insurance.
Take Advantage of “Free” Coverage
When it comes to life insurance, you should, at a minimum, take any free life insurance offered by your employer. However, if you have anyone dependent upon you for income, the employer-paid life insurance is likely insufficient to cover your entire life insurance need. If you are healthy, you can likely get an individual term life insurance policy for a smaller premium than additional group coverage would cost through your employer. You can often get quotes for term life insurance relatively quickly, so you can have numbers to compare before your open enrollment period ends.
Protect Your Greatest Asset
Remember that your ability to earn an income is possibly your greatest asset. Long-Term Disability insurance protects your ability to generate income. Be sure to understand the terms of any long-term disability insurance offered and select the appropriate amount of coverage. Many group long-term disability policies only pay out if illness or injury prevents the covered individual from working in any occupation for which they are trained, educated, or suited – not just the specific role being performed at the time of disability. Therefore, you may still need to consider seeking an individual long-term disability policy that provides own occupation coverage.
Evaluate All the Options
During open enrollment, be sure to evaluate other benefits offered by your employer. You may have the option to purchase additional vacation days. You may also have the option of electing dependent care benefits, critical illness coverage, and legal assistance plans. Some employers offer pet insurance, financial planning assistance, and wellness programs like reimbursements for gym memberships or activity rewards and incentives.
It’s important to review the benefits brochure that your employer provides each year. Your employer dedicates time and resources to offering benefits that they believe will improve the lives of their employees. Besides the benefits that you’ll be electing during the open enrollment, you may also find offerings that are new or that didn’t apply to your life situation when you last reviewed your options. For instance, tuition reimbursement (for the employee), home office equipment reimbursement, ID theft protection, and discounts on auto and home insurance are benefits that have become popular recently. In addition, some companies are offering more flexible matching programs for their employer-sponsored retirement plans, including matching student loan payments rather than matching retirement plan contributions.
Your benefits are part of your overall compensation package. This is your opportunity to tailor your package to your own needs.
*Sometimes, there is a grace period for spending and/or submitting qualified expenses.