As we head into fall, we also run into a string of holiday delight. It begins with a ghoulish Halloween, then family Thanksgiving, the entire six week Christmas run, followed up by the New Year’s hangover and diet resolutions.
Despite all the craziness and fun of the season, there’s another date that you should be looking forward to: the start of open enrollment for your work benefits.
For most people, this is just another day on the calendar — sort of like April 15th — when important financial decisions must be made, but the excitement level around them is not exactly ‘off-the-charts’.
But before you just write it off as another box to check on your to-do list, it’s in your best interest to understand the benefits your employer is offering and how they will affect you.
Heck, they don’t call ‘em benefits for nothing.
Here are a few things to consider as you weigh your options for the year to come.
Health Insurance and Health Savings Accounts
As you’re probably already aware, health insurance premiums are increasing across the board, but so far there have been no major governmental changes.
Even if you’re happy with your current coverage, now is the perfect time to review all of your options. Although it’s not quite as risky as having no insurance at all, choosing the wrong insurance plan could cost you hundreds (or even thousands) of additional dollars in the coming year.
That’s why it’s important to consider all of the different services offered by each plan and choose the one that best suits you and your family’s needs.
Here are a few things to consider:
- Discounts. Some insurance plans offer discounts for health and wellness services, like gym memberships, massage sessions, or LASIK surgery.
- Education. Many plans offer classes and seminars on fitness, nutrition, or other healthy living topics.
- Health coaches and assessments. Most plans have programs that will offer members free blood pressure, cholesterol, height, weight, and body mass index screenings. In some cases, you might even be offered a health coach to assist you in meeting your health goals.
- Rewards. Many plans reward members for being healthy, fit, and well. You might get money for exercising, eating right, taking surveys or meeting other fitness goals.
If saving money is your goal, enrolling in an FSA or HSA (if they’re offered) might make sense since you can save on healthcare by setting some money aside before you need it.
Short and Long-Term Disability
If you’re suddenly injured or facing a debilitating illness, short-term disability coverage may help provide income while you recover.
The problem: not all short-term policies are created equal.
For example, depending on the plan, a short-term disability benefit can pay anywhere from 40 to 60 percent of your weekly gross income. In addition, the duration of short-term benefits can vary anywhere from 9 to 52 weeks.
The good news is, short-term disability plans are relatively inexpensive which means the difference between a basic plan and the premium-level alternative, shouldn’t be more than a few dollars.
Long-term disability insurance is an added expense, but something you probably need.
Depending on your employer, they may or may not offer long-term disability insurance as a part of your benefits. If not, you can (and probably should) purchase an individual policy on your own. As always, since every state has different insurance regulations, be sure to check specific determining factors and qualifications.
Dental and Vision Insurance
In both dental and vision insurance plans, preventative procedures (i.e., check-ups, exams, etc.) are generally covered at one hundred percent of the cost. After that there is a tiered system of the amount they will pay for fillings, crowns and root canals — in the case of dental; and contacts, eye glasses, etc — in the case of vision.
In both instances, you can expect to bear at least twenty percent of the cost of these additional services.
It’s not uncommon for many employees to question whether dental and/or vision insurance is even worth it. That’s because the maximum benefit amounts are often so low that the out-of-pocket expenses rival the amount that you would pay for your premium.
To find out if the decision is right for you, read your plans carefully and find out exactly what is covered. If you find that your maximum benefit amount is close to the same amount that you would pay for your premium, you may consider declining coverage and paying for vision or dental expenses out-of-pocket.
By the way, if you don’t wear contacts or glasses, you don’t need vision care. I’ve seen it happen.
Life Insurance
Even if you have a life insurance plan in place, basic employer-provided life insurance is an excellent addition because it’s generally free.
The key takeaway is to view this insurance as supplemental and NOT your only source of life insurance. That’s because employer-sponsored coverage is usually only offered at one-to-two times your annual salary. If you’ve been a visitor of the blog for awhile, you’re probably aware that not everyone needs the same amount of coverage. You don’t want too much, or too little, and your needs will change over time. You’ll likely need more coverage when your children are young than when they are grown and out of the house.
A good way to determine how much coverage you need is by using an online life insurance calculator, like this one from Bankrate.com. Then, see how that coverage recommendation stacks up to how your current plan or what is available to you at work.
Retirement and Pension Plans
Open enrollment is also a time for you to check your retirement benefits. This is important because some 401(k) plans will only allow for changes during this time. So use this time to make sure you’re contributing to the right plan, and if they offer a company match, be sure you’re taking advantage of all of the free money that you’re entitled to.
Additionally, look at your investment mix and performance and make sure your investments are still aligned with your risk tolerance and on track to reach your goals.
Other Benefits You May Have
While we’ve covered a lot of employee benefits in this post, there are still a few that, if offered, you should look into to see how they may work for you.
Here are a few:
- Paid Leave / Sabbatical
- Work from Home / Flex Scheduling
- Legal Assistance
- Tuition Reimbursement
- Child Care Reimbursement
Don’t let these choices get overlooked, either. They deserve just as much attention as the others especially since you (generally) have only one time during the year to make these changes.
The bottom line is: your salary isn’t the only important employee benefit to consider. We’re all different and everyone has individual needs that can be addressed by an employee benefits program. Even if your paycheck isn’t as high as you’d like, the monetary value of the right benefits might more than make up the difference.
Pamela J. Horack, CFP® of Pathfinder Planning LLC provides personal financial planning advice and asset management for a simple fee to young adults and working families in North and South Carolina through group classes, one-on-one planning, and ongoing advice.