One major advantage of working as a full-time, salaried employee is gaining access to a host of workplace benefits. At the same time, sorting through those benefits can be pretty confusing, especially when it comes to things like health insurance. In fact, nearly a quarter of Americans feel unprepared for the upcoming open enrollment season, according to a United Healthcare survey.
Whereas things like vacation days generally aren't within your control, if you work for a larger company, there's a good chance you'll have the option to select a particular health plan, as well as dental and vision coverage. Some companies offer additional add-ons such as life insurance, disability insurance, and even pet insurance. Here are some key things you'll need to do during this open enrollment season.
1. Review your healthcare options Choosing a health plan is perhaps the most harrowing decision you'll make by the time open enrollment draws to a close. Now if you've already been getting health coverage, you might be tempted to retain the same plan (assuming it's available) and call it a day, but rather than do that, take the time to evaluate your needs for the upcoming year. Not all health plans are created equal, if your employer offers a costlier one with superior coverage, it could make sense to pay up if that'll save you money in the long run.
Another factor to consider when choosing a health plan is your deductible. Your deductible represents the amount of money you'll need to pay out of pocket before your insurance company starts paying for the services you use. Generally speaking, higher deductible plans come with lower monthly premiums, and vice versa. If you don't expect to rack up much in the way of medical expenses in the coming year, then a high-deductible plan might pay off, but if you go that route, you should see about funding a health savings account, or HSA, as well.
2. Look into long-term disability insurance If you're injured on the job or are out of work for a limited period of time because of an accident or illness, you can typically fall back on workers' compensation or short-term disability coverage, which most companies provide. But what happens if you're unable to work for an extended time -- say, years? That's where long-term disability insurance comes in handy, and if your employer offers a plan, it pays to look into it.
Long-term disability insurance will typically pay out anywhere from 50% to 70% of your salary during the period in which you're unable to work. In other words, it's a good way to secure some income in the event that you're still out of work once short-term disability runs out. Given that the typical worker has a 30% chance of becoming disabled at some point before age 65, those premiums could end up paying off.
If you are going to purchase long-term disability insurance, make sure you understand what you're signing up for. Some questions to ask include:
What percentage of my salary will my plan cover if I'm unable to work?
At what point will my coverage kick in?
Does my plan exclude specific illnesses or pre-existing conditions?
Is my plan portable (meaning, can you take it with you if you leave your company)?
3. Fund a flexible spending account
Flexible spending accounts, or FSAs, let you use pre-tax dollars to pay for the medical and child care services you're already planning to use. Say you typically spend $2,000 on copayments during the year, and another $2,000 on child care. If you're able to pay for those things via an FSA, and your effective tax rate is 25%, you'll shave $1,000 off your IRS bill.
FSAs work on a use-it-or-lose-it basis, which means that if you overfund either type of account and don't rack up enough eligible expenses to deplete your balance, you'll forfeit that money.
Open enrollment can be a stressful time for workers, but it doesn't have to be. Take the time to review your choices, and with any luck, you'll make the best decisions going into 2019.
If you are looking for employee benefits coverage for your business,