When it comes to employer benefits, many people brush over their options each fall, trying to make the best guess possible. The same goes for those grappling with Medicare and private health insurance decisions in November and December.
Following are some commonly overlooked ways to benefit from your benefits:
Check for HSA-eligibility on your policy. If you are in a higher tax bracket, contributing to a family Health Savings Account (HSA) can save roughly $2000/year in taxes. Plus, if you are relatively healthy and do not use it, your earnings grow tax-free until retirement. Click here for why HSA’s beat IRA’s for retirement.
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. If you are over 50, consider shopping your group coverage against a private policy.
If you are a young professional, your potential earnings capacity over your lifetime is your biggest financial asset right now – likely in the millions. We are far more likely to be disabled than to die. Most employers provide short-term disability for 90 days. Long-term disability coverage, if offered, varies from 40% to 80% of compensation. Some employers provide supplemental; others don’t. Check whether you are covered for “own-occupation” or “any-occupation.” There’s a big difference.
Employer Stock Options/Restricted Stock Purchases
The most common error is concentration in employer stock, usually by having employer stock, options, more stock in a retirement plan, and having your primary income source from an employer. You may be highly satisfied with the company’s potential, but so were Enron employees. Stuff happens. If you have been with your employer a long time, chances are there are tens of thousands at stake. Also, there are major tax considerations with employer stock elections – consult a CPA or CFP before making any irrevocable decisions.
Sign up for Part B at the first opportunity, otherwise your premiums increase 8% – 10% per year. If you are over 65 and still employed, this doesn’t apply. However, if you are on COBRA, you don’t get an exemption. You still have to enroll and suspend Part B. A new service, i65, assists planners with the complexity of Medicare advice.
Medicare Premium Management
Additionally, your Medicare premiums will be based upon your income from 2 years’ prior. If you will have varying sources of income during retirement, such as pensions, rental property, and eventually required minimum IRA distributions, it’s a good idea to see how you can stay within the income limits to avoid high premium hikes. The difference could save you up to $3000/year.
Talking through your elections with your financial professional is a good idea at enrollment time. Make a special appointment to do so in advance of the 4th quarter crunch.
(Our complimentary consultation scheduler is located here.)