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 common considerations in benefit and insurance elections:
Health Insurance: 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.
Medicare: Sign up for Part B at the first opportunity, otherwise your premiums increase 8% – 10% per year. A new service, i65, assists planners with the complexity of Medicare advice.
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.
Long-Term Disability: 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. If you are a young professional, your potential earnings capacity over your lifetime is your biggest financial asset right now. Protect it with LTD coverage.
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. Also, there are major tax considerations with employer stock elections – consult a CPA or CFP before making any irrevocable decisions.
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.
(Holly’s complimentary consultation scheduler is located here.)
