Before You Click Renew – Fall Enrollment Choices

Before you click Renew for employer or Medicare benefits, pause for a moment and review your options. It can be worthwhile to take a closer look at how they might have changed.

“Research shows employees only spend 17 minutes electing their benefits, while Netflix users spend an average of 18 minutes deciding what to watch,” according to Kiplinger’s in this recent article on employer benefits: http://bit.ly/Kiplingers-Benefits

Following are a few benefit election reminders:

Health Insurance

Check for HSA-eligibility on your policy. If you are in a higher tax bracket, contributing to a family HSA (Health Savings Account) can save roughly $2000/year in taxes (depending on your bracket). Plus, if you are relatively healthy and do not use it, your earnings grow tax-free until retirement. Tax-wise, an HSA beats even an IRA. Click here: [https://www.hollydonaldsonfinancialplanner.com/hsas-over-iras/] for the reasons why.

HSA eligibility, unlike IRA eligibility, is not dependent upon having earned income. The last year you can contribute to an HSA is the year before you turn 65.  

Medicare

Your first opportunity to enroll begins 3 months before you turn 65 and continues until 3 months after, unless you are still employed. Sign up for Part B at the first opportunity (after leaving your employer), otherwise your premiums increase 8% – 10% per year.

Enrollment for existing Medicare beneficiaries for 2021 runs from October 15 – December 7.

If you have been notified that you will be paying an IRMAA surcharge based on 2019 income (over $87K/$174K for single/married filing jointly) your notification letter includes instructions on how to appeal. For example, if you retired or saw reduced income due to a disaster since that time, then there will be a box to check on the letter. Return the letter as instructed and, if your situation fits, it’s likely the surcharge will be waived.

Prescriptions

If you are on prescriptions, the formulary – the list of drugs that private insurance and Medicare Part D covers – might have changed. Make sure your prescriptions will still be covered. Stories abound of huge jumps in co-pays after January 1. At www.medicare.gov, you can input your prescriptions and the site will advise you which Part D plan covers those.

Remember to compare your prescription coverage – not the premiums – so that you are clear on your total out-of-pocket expenses. You can also call 1-800-Medicare. They are open 24/7 and if “you sit down with a glass of water, a cup of tea and your list of medications” they will help you pick the best plan, per Dr. Katy Votava of Goodcare.com, author of Making the Most of Medicare.

For folks under 65, healthcare.gov is the resource she recommends.

Check your private insurance site or healthcare. gov for a similar program if you are under 65 or still working and not yet on Medicare.

Long-Term Care Insurance

Group long-term care offerings through employers are quickly becoming a benefit of the past. Private policies can be bought with better coverage, but premiums are increasing. If you are at least 40 and have access to a group policy, strongly consider enrollment. Most group policies are portable if you leave the employer. If you are over 50, consider shopping your group coverage against a private policy.

Long-Term Disability (LTD)

We are far more likely to be disabled than to die during our working years. There have been reports, but no studies yet, that Covid can present long-term organ, neurological, and tissue damage, even in those with initially mild symptoms (although not as common in those who have been vaccinated). Most employers provide short-term disability for 90 days. Long-term disability coverage, if offered, varies from 40% to 80% of compensation until age 65. Some employers provide supplemental income policies; others don’t.

Check whether your disability coverage includes “own-occupation” or “any-occupation.” If you are a young person, your potential earnings capacity over your lifetime, known as your “human capital,” is your biggest financial asset right now. Protect it with LTD coverage.

Group Life Insurance

Many employers provide one year’s salary as a default for group life insurance, with the option to purchase more for the employee or the employee’s spouse or domestic partner. It’s usually a good deal. If you didn’t sign up at your initial enrollment, you may need to submit to a paramedic exam if you request more coverage.

Employer Stock Options/Restricted Stock Purchases

The most common error among holders of options and restricted stock is concentration of investments, and future earnings, in that employer. This is usually because those employees own employer stock outright, plus options, plus more stock in a retirement plan through a company match. That’s a lot of eggs in one basket. You may be highly satisfied with the company’s potential. So were Enron employees. Stuff happens. Before making major moves, consult a CPA or CFP. Employer stock moves can have major tax consequences.

Enrollment Time Meetings

Talking through your elections with your financial professional or accountant is a good idea at enrollment time anyway. Make a special appointment to do so in advance of the holiday year-end crunch.

(Holly’s complimentary 30-minute consultation scheduler is located here: https: go.oncehub.com/HollyPThomas.)

Holly Donaldson

Holly P. Donaldson, CFP® writes and consults on the psychology of money. Her fee-only, product-free financial planning practice focuses on increasing financial self-efficacy for those seeking a financial navigator to help them make good decisions. She is the author of The Mindful Money Mentality: How to Find Balance in Your Financial Future (Porchview Publishing, 2013) and publisher of the award-winning monthly e-letter, "The View From the Porch." With a fully virtual practice in Seminole, Florida, she primarily serves clients located in the Tampa, St. Petersburg, and Clearwater areas. Holly will also work with clients who are a good fit located elsewhere in the United States.

Leave a Reply