It’s open enrollment time again, and despite rising health insurance costs, my total monthly insurance and benefits cost remains about the same at $150 for an individual, with just a $5 increase from last year. This is a good time to reassess the value of your company benefits, which are a significant part of your total compensation. Make sure to maximize these benefits by the mid-December enrollment deadline. Otherwise, you might miss out and carry forward your current selections, except for flexible spending accounts which reset annually. You wouldn’t want to face high costs unnecessarily by overlooking important terms like “excess liability insurance.”
Insurance and Benefits Checklist
– Medical: Choose between a PPO, which offers greater flexibility and does not require a Primary Care Physician (PCP), and an HMO, which might cost less monthly but limits provider choices. Understand the difference between co-pay (a fixed amount per doctor visit) and co-insurance (a percentage of the medical costs), as these will affect your premiums and out-of-pocket costs. If you anticipate high medical costs, consider opting for a plan with higher premiums for better coverage.
– Health Care Flexible Spending Account (FSA): If you anticipate major medical expenses like surgery, you can set aside up to $2,500 pre-tax to cover these costs. However, manage this carefully as unused funds are forfeited at year’s end.
– Dental and Vision: These plans are straightforward. Dental plans often cover routine cleanings and a percentage of other dental work after a deductible. Vision plans offer significant savings on eye care and eyewear, even for those with perfect vision, considering the low cost of about $3-$5 per month.
– Basic and Supplemental Life Insurance: Basic life is often a free benefit provided by employers offering a modest coverage sum. Supplemental life insurance allows you to purchase additional coverage, typically up to 10 times your salary, at very low cost. Evaluate your needs based on your dependents’ financial needs and aim to cover at least five years of total expenses.
– Personal Accident and Excess Liability Insurance: These insurances provide coverage for accidents and protect your assets in case of legal actions against you. Ensure your excess liability coverage exceeds your net worth to safeguard your financial stability.
– Disability Insurance (Short and Long Term): These policies provide income replacement if you are unable to work due to injury or illness. Short-term disability typically covers a percentage of your salary for up to six months, while long-term picks up where short-term leaves off, potentially lasting until retirement age.
– Retirement Plans (IRA and 401k): Understand the contribution limits and employer match for your 401k, and aim to maximize these contributions. For IRAs, be aware of income limits and tax implications depending on whether you choose a traditional or a Roth IRA.
Reviewing and Choosing the Right Benefits
Completing your benefits enrollment is an opportunity to appreciate the value provided by your employer and the security of having comprehensive insurance coverage. Always take the time to understand and utilize your benefits fully.
Recommendations for Financial Management
– Managing Finances: Consider using platforms like Personal Capital to manage your finances in one place. This tool helps you track your accounts and expenses, analyze investment fees, and optimize your financial strategy.
– Finding Insurance: For life insurance, use services like PolicyGenius to compare and find the best rates tailored to your needs. For health insurance, explore options beyond traditional providers, such as Agile Health Insurance, which offers flexible and often more affordable plans.
Remember, the choices you make during open enrollment affect your financial security and peace of mind throughout the coming year. Take action, make informed decisions, and perhaps even find cost savings or better coverage than you currently have.
