Fall is open enrollment season for the employees of many companies. This is generally the one chance during the year that employees are allowed to make changes to their benefits. As you are undoubtedly aware Obamacare comes online in 2014 with the health insurance exchanges in many states up and running on October 1 of this year. While this directly impacts those without health insurance through their employers, it is having a profound impact on the health insurance coverage offered by many employers to their workers as well.
Don't assume things are the same
Walgreens is establishing a private health insurance exchange for its workers to keep benefits costs in check. While your employer may not be doing something this drastic they are likely taking steps to keep costs down. What this means to you is that you can't assume that electing the same level of health insurance coverage as last year will yield the same costs and benefits. Read all of the fine print associated with your health insurance and all of your benefit options ensure that you are making the best choices in this brave new healthcare world.
Some things to consider for the coming year:
--Have the company's medical and dental care providers changed? If so how will this impact you in terms of the doctors, dentists or hospitals that you normally use?
--Has your personal situation changed such that your health insurance needs have changed? Perhaps you have chosen a lower-deductible health insurance plan in past years, but if the kids are grown you might look into a higher deductible option that carries a lower monthly premium. You will want to look at your spending in this area over the prior year and also try to determine what next year might look like for your family.
--You may have the option to fund a Flexible Spending Account or a Health Savings Account. Both allow for the payment of medical expenses with pre-tax dollars. The FSA is a "use it or lose it" proposition, the HSA is not. Take a look at your spending patterns for health care and also look at your out-of-pocket expenditures from past years. Both accounts have their pros and cons so read up, ask your benefits people and decide if either of these options (if offered) are right for your situation.
--You might have the option for life insurance via your company. Often, but not always, coverage can be competitive in terms of price and the death benefits offered. Also if you have a health condition that might preclude you from buying life insurance elsewhere this coverage can be crucial. Also, look outside the company for coverage so that you will have the coverage you need should you leave your current employer, regardless of any change in your future health status.
--Many companies also offer accidental death & dismemberment life insurance coverage. On the plus side the coverage is generally inexpensive; on the con side you must die from very specific circumstances for your beneficiaries to collect a death benefit.
--If you are offered disability coverage I generally suggest that you take advantage of it and buy any extra benefit that is available to you. Disability coverage is "lifestyle" insurance. There is generally a short-term component and a long-term component. The long-term portion generally covers 60 percent of your base salary, though coverage can vary. Also if you usually receive a substantial bonus or compensation of other sorts beyond your base salary you might want to consider looking into a supplemental disability policy from an outside insurance carrier.
While you can generally make changes to your investments and to the amount of salary that you defer during the year, many companies roll out changes to their 401(k) plans during this time period as well. This might include changes to the matching contribution and changes to the investments offered. While your benefits are top of mind, this can be a good time to review your situation to see if you can afford to increase your contributions for the upcoming year (unless you are already contributing the maximum).
Depending upon your organization, you might also have access to benefits for transportation, parking, child care, deferred compensation (if you are at a high enough level in the organization), and many others. These are all potentially valuable options depending upon your needs.
If you and your spouse both work look at both benefit packages and coordinate the best options between the two plans. Above all, don't just let your selections default to your existing choices.
Your benefits package can add up to a significant percentage of your overall compensation; often 30 percent or more of total cash compensation. Your employee benefits are quite valuable to you and your family. Manage them wisely to get the maximum benefit for you and your family.
Roger Wohlner, CFP®, is a fee-only financial adviser at Asset Strategy Consultants based in Arlington Heights, Ill., where he provides financial planning and investment advice to individual clients, 401(k) plan sponsors and participants, foundations, and endowments. Roger is active on both Twitter (@rwohlner) and LinkedIn. Check out Roger's popular blog The Chicago Financial Planner where he writes about issues concerning financial planning, investments, and retirement plans.
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