Before You Hit Renew – Fall Enrollment Reminders

When it comes to employer, private health, and Medicare benefits, many people brush over their options each fall and simply renew last year’s choices. However, especially with the possibility of contracting Covid-19 looming, it can be worthwhile to take a closer look at all of your options, and how they might have changed, before doing so.

“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. Click here [https://www.hollydonaldsonfinancialplanner.com/hsas-over-iras/] for the reasons why HSA’s beat IRA’s for retirement.

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 2020 runs from October 15 – December 7.

If you are on prescriptions, the formulary – the list of drugs that 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.

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

We are far more likely to be disabled than to die. 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. 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; others don’t. Check whether you are covered for “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 though, consult a CPA or CFP – employer stock decisions can have major tax consequences.

Talking through your elections with your financial professional or accountant is a good idea at enrollment time. Make a special appointment to do so in advance of the holiday crunch. (Holly’s complimentary consultation scheduler is located here: https://go.oncehub.com/HollyPThomas

Holly Donaldson

Holly Donaldson, CFP® runs an hourly and fee-for-service financial planning practice virtually from her Tampa Bay, Florida office. She also works with clients throughout the U.S. (except Texas) interested in retirement and tax planning advice without product sales or investment management. Holly 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."

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