Open enrollment season is almost upon us! It is that exciting time of year when you devote three minutes to glancing at a benefits packet before deciding there is something more interesting you’d rather be doing. Even though our financial lives change all the time, updating our benefits at work is commonly missed. We are going to cover a quick list of benefit options we think you should review before you forget about it for another year.
- Health Insurance: Health insurance is one of the most crucial insurance benefits because of its overall cost, high frequency of use, and outsized role as protector of financial stability in American households. Make sure your plan covers providers or specialists you need to utilize. If you were prescribed any new medications, what drug tier do they fall in and how are they covered (this may require a call to the insurance company to figure out). If you rarely incur medical expenses, we feel considering a HDHP (High Deductible Health Plan) to lower your monthly out of pocket cost and take advantage of an HSA account can be a worthwhile option too.
- HSA Accounts: An HSA (Health Savings Account) is a tax-advantaged savings account used to pay out of pocket medical expenses (those not covered by insurance). If you are enrolled in a HDHP then you can contribute up to $3,600 for an individual or $7,200 for a family (2021 limits) into an HSA on a pre-tax basis. This helps reap a tax benefit for building up a medical emergency fund.
- FSA Accounts: An FSA is another savings option to cover future medical expenses. It has a lower contribution limit (projected to be $2,750 for 2021) and possible limits to what it can be used for, but FSAs doesn’t require a HDHP. One common form is a dependent care FSA. If you have children in daycare, summer day camp, or before and after school care programs this shouldn’t be missed. After all you are paying for these anyway, why not see if they qualify to be paid with pre-tax dollars instead. We promise it is easier than asking for a discount for those same services.
- Dental & Vision Insurance: Two things that never get better with age are our eyes and our teeth. This is often skipped by younger employees who don’t see the need, however an ounce of prevention is worth a pound of cure. Staying on top of these may seem trivial now but they will have a significant impact on your quality of life as you age.
- Disability Insurance: Disability Insurance pays you a portion of your income when you can’t work due to injury or illness. There are different types for the short term (from a few weeks to about 6 months) and the long term (several months up to and including a lifetime disability). Your employer may provide the most economical coverage with the easiest health qualifications to meet. According to a recent report from the Social Security Administration about one in four workers over the age of twenty will experience a disability prior to normal retirement age.
- Life Insurance: Life insurance gets more attention than other benefits due to the tragic circumstances where it comes into play for working age families. Despite that it is often seen as checking the box and moving on. Like disability insurance, obtaining it through your job may provide the most economical option with little or no heath screening required. Unlike disability insurance most employers don’t offer anywhere near enough life insurance for employees. This is especially true for married couples or parents who haven’t updated this since being single.
- Retirement Plans: No list of employer benefits would be complete without mentioning retirement plans. To be more specific ensure that you are at least contributing enough to maximize any company matching program, you have evaluated if a traditional or Roth retirement contribution is best for your situation, and you are steadily increasing contributions with pay raises until you hit your target goal. We tend to only care about the rate of return of our retirement account when these three changes matter at least as much.
- Mystery Benefit: This category is in reference to the benefits your work offers that you didn’t even know existed. Employee benefit plans evolve and change over time and if you aren’t checking them annually you could miss out on new options your company now provides. A few we have seen over the last few years include tuition reimbursement programs, student loan repayment programs, free legal consults, gym memberships, ID theft protection, and reduced cost or priority enrollment childcare (this can be huge for parents who find themselves heading back to an office with kids who aren’t back in school full-time).
We will leave you with two final tips that apply to most of this list. First, review your listed beneficiaries on any benefits that ask for one. Getting in the habit of doing this works as a failsafe if you forget to do it immediately after a major life event. Second, understand that most of the insurance benefits can’t go with you if you leave your job. There is a risk in losing all your coverage with a move so weight that versus getting independent coverage away from work. If you work in a field where you frequently change companies or are employed by smaller businesses, this will be a larger risk. Finally, this isn’t a list you can get through in ten minutes, but we promise it will be time well spent this open enrollment season.