Many individuals aren’t taking the time to understand the benefits their employers offer and consider how each plan may help them. In fact, studies show that about 8 in 10 employees are confused about their benefits and coverage options offered to them.
Whether your open enrollment is around the corner or months away, it’s worth taking some time to explore your employee benefits options. Rachel Leader, Employee Benefits Consultant, and Melissa Olson, Wealth RPS Participation Education Specialist, share benefits you don’t want to miss, along with key considerations when evaluating your options.
Each year, it’s important for you and your family to figure out what your insurance needs truly are – do you have any planned surgeries or known medical issues? What does coverage look like for an unexpected medical need? Everyone has a different financial situation and the worst time to figure out how your benefits work is when you or a loved one are facing an emergency or life-altering diagnosis.
RACHEL LEADER, Employee Benefits Consultant
Maximize Your Benefits Choices
Amid economic uncertainty and volatility, it may be tempting to forgo certain benefits. But if you aren’t taking full advantage of your employer-sponsored benefits, you may be leaving money on the table.
One of the biggest mistakes we see individuals make is delaying the opportunity to enroll in benefits or selecting inappropriate coverage – putting their financial futures at risk. A few minutes now can help you be prepared to maximize your benefits and possibly save thousands of dollars instead of rushing through a decision or just doing what you did last year.
Choosing the Right Health Insurance
Several factors go into choosing the right health insurance plan for you and your family:
- Start with an honest assessment. How do you currently use the healthcare system? Review the medical care you received over the past year and consider if you are in the right plan.
- Review offerings from a holistic perspective. Look at more than just premium costs. To weigh the cost and benefit of each plan, you’ll also need to also understand the deductible, coinsurance and out of pocket maximum. How does each one impact the long-term perspective?
- Understand the relationship between premiums and deductibles. There is an inverse relationship between premium and deductible; the higher the premium, the lower the deductible and vice versa. This makes it important to not only consider the per paycheck cost of the plan itself but also the cost at time of care.
- What type of lifestyle do you lead? Do you have any chronic conditions that will require more medical attention moving forward? Or, are you an overall healthy individual who doesn’t utilize frequent medical visits or prescription drugs?
- Anticipate upcoming life events, including worst-case scenarios. There are two main types of life events – planned and unexpected. Think about worst case scenarios when comparing plans – if you break your arm unexpectedly and have $10,000 of claims, how much would you owe in each plan? Compare that to your expected daily expenses along with the cost per paycheck (don’t forget any offset of employer contribution to a Flexible Spending Account or Health Savings Account).
Click here to learn more about common mistakes to avoid when choosing your health plan.
Evaluating FSAs vs. HSAs
Both FSAs and HSAs use pre-tax money to pay for the cost of medical, dental, and vision expenses for you and your tax dependents.
- Flexible Spending Accounts (FSAs) For dependent care and out-of-pocket healthcare expenses, flexible spending accounts can be a great way to pay for some of life’s necessities with tax-free money. Depending on your plan, unused funds may be forfeited at the end of the year, although some plans allow participants to roll over up to $550 into the next plan year.
- Health Savings Accounts (HSAs) A health savings account allows you to put money aside tax-free for medical costs, and unlike most flexible spending accounts, HSAs are not subject to “use it or lose it” rules. You can even use them to fund your retirement.
Prepare for Unforeseen Circumstances with Disability Insurance
Are you prepared if you lose your ability to earn income? We often talk about the “big three’s” of tragedy – death, divorce, disability. In other words – anything that could derail your ability to earn income.
On average, people have a 25% chance of becoming disabled before they retire, yet less than a third of private-sector workers have disability insurance. Signing up for group disability coverage through work is a cost-effective way to protect against a loss of income due to illness or injury. Use our disability insurance calculator to estimate the amount of coverage you may need and compare that to the level of benefits offered by your group plan. If the group benefits are not enough, consider purchasing additional coverage.
Supplemental Life Insurance
Your employer may already provide company-paid life insurance, but the benefit may not be enough. If your employer offers supplemental life insurance, it can be an inexpensive way to provide additional coverage. Group policies may also offer the advantage of guaranteed issue, which is essential for employees who may have problems with insurability.
Prepare for Retirement
There is no time like the present to start saving for retirement. However, setting up a savings strategy that is affordable and sustainable takes conscious effort. Your lifestyle will adapt to the income that you bring home. Set aside some time to build your strategy into your spending plan. Time is the one commodity we never get back, so make sure your dollars and investable assets are working hard for you. If your employer offers a retirement savings plan, here are a few important steps:
- Enroll as soon as you are eligible to participate.
- If your employer offers a match, make sure to hit the minimum required contribution amount to receive the match. Regardless of the amount, an employer match is “free money” that you don’t want to leave untapped.
- Contribute as much as you can afford, and continue to evaluate whether you can increase contributions, especially if you may receive an increase in hourly pay or salary in the coming months.
There’s no time like the present to set yourself up for a life of choice in retirement. Maximize the benefits offered, be realistic on your coverage needs, and educate yourself to better understand how to capitalize your current income working harder for you in the long run.
MELISSA OLSON, Wealth RPS Participant Education Specialist
Get Started
Ultimately, there is no one-size-fits-all approach to choosing benefits. If you have questions about how your benefits fit into your unique lifestyle and needs, reach out to an advisor today.
Legal Disclaimer: Insurance products and services offered by Johnson Insurance Services, LLC, a Johnson Financial Group Company. Not FDIC insured, not a deposit, not insured by any federal government agency, not bank guaranteed, may lose value. For your protection, coverage cannot be bound or changed via voicemail and is not effective until confirmed directly with a licensed agent.
