Fall benefits reminders before you click “renew.”
When it comes to employer, private health, and Medicare benefits, it’s easy to click “renew last year’s choices” and move on.
However, it can be worth the extra time to look closely at all options, and how they might have changed.
Consider this amusing statistic: “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: http://bit.ly/Kiplingers-Benefits.
What kind of areas produce tricky choices?
- Health Insurance – Under 65 and over 65
- Long term care insurance – if you can get it
- Long term disability insurance
- Life insurance
- Employer Stock Options and Restricted Stock
- Employer Retirement Plan Matching
- Employee Assistance Programs – (which sometimes cover financial planning fees :))
Under 65: Health Insurance
If you are under 65, check for HSA (Health Savings Account) eligibility on your policy. Contributing to a family HSA can save roughly $2000/year in taxes (depending on your marginal tax bracket). Plus, if you are relatively healthy and do not use the HSA, 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 as retirement accounts.
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.
65 or Over: Medicare
If you are 65 or over, 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 can increase 8% – 10% per year, permanently.
Enrollment for existing Medicare beneficiaries 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 the meds you need.
Long-Term Care Insurance
Group long-term care offerings through employers are 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, or if the employer stops offering it. Also consider shopping existing group coverage against a private policy.
Long-Term Disability
This tends to be the most overlooked benefit. We are all 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 until age 65. Some employers provide the opportunity to purchase supplemental coverage; others don’t. Most employees I speak with are either not sure whether they have enrolled in this coverage, or how much they have.
Additionally, check whether you are covered for “own-occupation” or “any-occupation.”
Think about it this way. What’s your biggest financial asset? The younger you are, and the more education you have, then the more likely that your potential earnings capacity over your lifetime, known as your “human capital,” is. 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 pretty 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 in 2001 and bank employees in 2008.) Stuff happens. Before making major moves, consult a CPA or CFP. Employer stock decisions can have major tax consequences.
Employer Retirement Plan Matching
Speaking of retirement plan matching, this is a basic one. Employer matching money is like an investment that provides a guaranteed 100% return. You put money in and it immediately doubles. Do whatever you can to take advantage of employer matches.
Employer Student Loan Repayments
The SECURE Act 2.0 enabled employers to assist with student loan repayments tax-free up to $5,250 per year. The program is being allowed to expire, however on December 31, 2025. While it might not make a huge dent in a six figure student loan, it’s still $5,250. If student loan debt is a concern for you and your employer does not offer it, write your Human Resources department or owner if it’s a small business and ask if they would consider adding it before year-end.
Employee Assistance Programs
These are well-known mostly for providing mental health counseling when an employee experiences a traumatic event. However, some EAPs also offer assistance with financial planning. If your employer’s EAP doesn’t currently offer it, ask about this, too.
In summary, hese are just a few of several benefits options commonly overlooked by employees. Walking through elections with a CERTIFIED FINANCIAL PLANNER™ is a good idea at enrollment time. Make a special appointment to do so in advance of the holiday crunch.
For questions about planning services, pick a time here to discuss more about options for you: https://go.oncehub.com/ScheduleWithHollyDonaldson?utm_medium=website&utm=hollydonaldsoncom.
