It is open enrollment time! Have you reviewed your choices to make sure you are taking advantage of your company benefits? Here are a few points to consider.
How do you decide which healthcare option to choose? First, if you are married, compare the options of both plans. One spouse’s plan may be better than the other. Compare all costs such as premiums, deductibles, co-pays and coinsurance. Also consider major medical needs for the upcoming year. Are you or any family members planning a surgery or a pregnancy? If so, you may want to switch to a plan that covers more of these costs for the next year, then switch back to a lower premium plan the year after.
Should you choose the High Deductible Health Plan (HDHP) or the Preferred Provider Organization plan (PPO)? High Deductible Health Plans typically have lower premiums and allow the participant to save in the triple tax advantage HSA savings. This is a great option if you can afford health care expenses incurred out of pocket. Your HSA savings can also be invested for future use.
If you have chronic or frequent medical needs, the PPO plan may be better for your wallet. It may also be a better option if paying for out-of-pocket medical expenses will put a major strain on your savings. Take to time to figure out which plan is best for you and your family. Tilly recommends putting together a simple spreadsheet to forecast and compare costs.
Life and Disability Insurance
Does your benefit package include life and disability options? Company provided life insurance is typically inexpensive, and sometimes offers a small policy for a spouse. Disability insurance is also an important benefit, especially if you do not already have a personal policy. According to ssa.gov, 1-in-4 20-year-olds will become disabled before reaching retirement age. While social security benefits can help, it can take a long time before becoming eligible for benefits. Evaluate the options offered and take advantage of them if they are affordable.
If your company offers a retirement plan such as a 401k with a matching contribution, please take the free money! If you need to start small, try and contribute the amount that will allow you to receive the maximum contribution from your employer. As your income grows, or as you receive raises, it is a great practice to increase your contributions. This will help you reach your retirement savings goals without feeling the pinch of less income.
Open enrollment is also a good time to review how your retirement contributions are invested. Many plans offer a target date fund that will slowly include more fixed income as you get closer to retirement. This is a great catch all option, but your plan may also offer some other investment choices that could be worth considering. For example, index funds are a great option and typically charge a very low fee. These funds mirror an index such as the S&P 500. Take your risk tolerance and length of time you have until retirement into consideration when choosing the funds that are best for you.
Finally, many employers offer a slew of additional “fringe” (perk) benefits ranging from tuition reimbursement, wellness programs, childcare, paid medical leave for yourself to care for a loved one, stock option plans, and continuing education – just to name a few. Our advice to grab a cup of coffee, sit down uninterrupted and read through these options and seriously consider if you should take advantage of them. Too many people don’t take them seriously and miss out because they didn’t think through them.
That’s it! Tilly spends a great time of time helping our clients think through benefits. If you have questions about your company benefits, ask Tilly!