The season is here when we are surrounded by festivals, pumpkins, leaves changing colors on the trees, and more candy than I wish to talk about. I usually don’t allow my kids to eat their candy that they collect, because I want to save the pieces I like for myself. Today, I will share some “financial” candy with you.
Fall is also the season for company open enrollment. Many families get a little anxious and overwhelmed when it comes to deciding which benefits to choose. Over the years, the analysis for me to help with choosing has become more involved and a little more detailed than I want to admit. Whether you have one option or multiples, avoid just ignoring this time and keeping your current elections without reviewing what you have or no longer have. The Balance gives a comprehensive list of typical employer benefit options that I will discuss further.
According to Yahoo finance, 2018 open enrollment period for the federal government’s health insurance exchange will run for six weeks from November 1, 2017 to December 15, 2017 this year versus through January 31, 2017 for this year’s enrollment period. The federal government operates the Health Insurance Marketplace for most states, however, some states operate their own exchanges. Texas and North Carolina use the federal option.
1. When comparing health insurance plans, look at the plan types, deductibles, premiums, and percentage of coverage you will receive.
2. Compare the different variables that will allow you and your family to have the most coverage AND that is the most affordable.
3. When choosing the plan with the most economical monthly premium, consider the risk of the unexpected, i.e. hospital stays and plan to save through a Health Savings Account. Some employers will make an initial contribution for you.
Nerdwallet gives a full step-by-step guide on choosing a health insurance plan and provides a chart that gives a quick view of each plan type.
Short-Term and Long-Term Disability Insurance
Based on Fidelity’s findings from The Life and Health Insurance Foundation for Education, one in three women will have a short-term disability occurrence at some point during their working lifetime. Short-term disability and long-term disability insurance are distinct and complimentary programs that cover different types of disability. Short-term disability is typically used to cover 80% or more of your salary and may have a waiting period associated with the plan before coverage can begin. After your short-term disability, has been used and your illness continues, at that point the long-term disability coverage would take effect. Long-term disability usually covers only about 60% of your salary and typically employers will give you an option to pay for more coverage out of pocket.
For example, a UNC health center nurse automatically receives a disability benefit through the Disability Income Plan of North Carolina:
1. A permanent employee who works 30 hours or more per week, contributes to the retirement system, and has 1 year of service
2. Short-term disability coverage applies if above criteria is met and after satisfying a 60-day waiting period. Pays 50% of the salary prior to the first day out of work up to 12 months.
3. Long-term disability coverage applies if above criteria met and have at least 5 years of service. Pays 65% of gross monthly salary up to $3900 per month.
4. Liberty Mutual Supplemental Long-Term Disability is supplemental coverage for TSERS participants only. Pays 66 2/3% of monthly salary while on short-term or long-term disability after 90-day waiting period. Fills in the gaps of the State’s plan for the first year of employment, during the short-term period before and after five years of service, and if salary exceeds maximum.
5. Standard Supplemental Long-Term Disability is supplemental coverage for ORP participants only. Pays 66 2/3% of monthly salary while on short-term or long-term disability after a 90-day waiting period. Continues retirement contributions to a TIAA account at the full contribution rate for the disability duration. Fills in the gaps of the State’s plan for the first year of employment, during the short-term period before and after five years of service, and if salary exceeds maximum while continuing retirement contributions.
When determining the appropriate level of disability coverage, pick a plan either through work or an insurance provider, that will cover your monthly expenses.
Dental and Vision Insurance
According to the American Dental Association, the typical cost of an individual dental insurance policy is around $350 a year. For a family, the cost is around $550, annually. If you pay out of pocket for two checkups and cleanings and a set of X-rays, your cost, on average, will be around $375-$400. Delta Dental’s White Paper, concerning choosing dental insurance, gives a breakdown of the typical dental needs of different age groups. After understanding your needs, you should consider the following points: network, cost management, service, enhanced benefits and dental expertise.
WebMD shares that when it comes to vision care coverage, the average cost of frames and lenses alone is over $250, however, vision care coverage can make eye care more affordable. The Affordable Care Act considers vision care for children an essential benefit. The first step in determining which vision plan is right for you is to determine the type of vision plan you are being offered, whether it is a vision benefit plan or a discount vision plan. Then calculate how much you have spent on vision care the past few years. If you are generally in good eye health and don’t spend more on eye care each year, the discount vision plan will be the best option. However, if you are spending more than a couple of hundred dollars a year on eye care, a vision benefit’s plan could be your best option. Regular, comprehensive eye exams for everyone are also an important factor when selecting your plan.
Nerdwallet’s blog post lists the pros and cons of choosing life insurance through work and clarifies the difference between basic and supplemental life insurance that is offered through your employer. Basic life insurance coverage is typically free and covers $25,000, $50,000 or an employee’s annual salary.
How do you decide?
1. Take advantage of the free basic life insurance offering.
2. Compare the costs of supplement life insurance offered at work versus what you can purchase on your own.
a. If you find a plan that is a slightly higher individual plan, it is probably a better bet because of the portability.
b. If you have many dependents, both an individual policy and a supplemental group policy through work, may both be beneficial.
c. If you believe you will not qualify for a good individual rate due to a medical condition, group life insurance is a good option.
401(k) or other Retirement Plans
Three types of retirement plans that are offered by employers are 401(k)s, 403(b)s, and 457(b)s. These plan names are based on the corresponding IRS codes. 401(k) are offered primarily by private employers, 403(b)s are offered by hospitals and schools and 457(b)s are offered by government entities.
Retirement plans allow you to contribute either a percentage or set dollar amount to your account through before-tax and/or after-tax contributions or deferrals. The amounts that are contributed accumulate in your account and are invested in a variety of investment options and most even allow the employee access to a broader array of investment options through a brokerage account. The 2017 maximum contribution limit is $18,000 and if you are over age 50 it is $24,000. The 457(b) has a double limit catch-up contribution that allows you in 2017 to contribution $36,000 if you are within 3 years of your normal retirement age.
When deciding whether to use your employer’s plan or an outside Individual Retirement account (IRA) I agree for the most part with Nerdwallet’s blog post.
1. Take advantage of your company match, then maximize your ROTH IRA contributions, any remaining amounts can be contributed to your employer-sponsored plan.
2. No company match, no problem. Maximize your ROTH IRA contributions and any remaining amounts can be contributed to your employer-sponsored plan.
3. Mandatory contribution, then maximize your ROTH IRA, any remaining amounts can be contributed to your employer-sponsored plan.
Health Care Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs)
Flexible Spending Accounts are an employer-sponsored benefit that allows you to save pre-tax dollars for medical expenses for you and your dependents. The contribution limits for an FSA is $2600 for 2017. Flex spending account dollars are typically used to pay health insurance deductibles and qualified medical expenses. If you do not use the funds by April 15 of the following plan year, the funds will be forfeited. FSA contributions are non-transferable.
Health Savings Accounts (HSAs) are a tax-advantaged medical savings account that is available as a complement to a high-deductible health plan. Withdrawals for non-qualified medical expenses are taxed and penalized if withdrawn prior to age 65. 2017 Contribution limits vary: Employee only $3400, Family $6750, over age 55 catch-up $1000. You have the choice to keep the same account even in retirement.
1. If you have a chance of many medical expenses, Select FSA.
2. If you do not have a chance of many medical expenses, Select HSA
In conclusion, when making your benefit elections, comparison shop. You can make these small changes that will add up over time. Hope this information was sweet!