Written by Broadridge Investor Communication Solutions, Inc. and Provided by Ken Fortuna, Financial Advisor with Waddell & Reed.
Open enrollment season is your annual opportunity to review your employer-provided benefit options and make elections for the upcoming plan year. To get the most out of what your employer has to offer and potentially save some money, take time to read through the enrollment packets or information you receive before making any benefit decisions.
Review Your Health Plan Options
Even if you’re satisfied with your current health plan, compare your existing coverage to other plans your employer is offering for next year. Premiums, out-of-pocket costs, and benefits offered often change from one year to the next and vary among plans. You may decide to keep the plan you already have, but it doesn’t hurt to consider your options.
Some tips for reviewing your health coverage:
- Start by reading plan materials you’ve received in your open enrollment packet and find out as much as you can about your options. Look for a “What’s New” section that spells out plan changes.
- List your expenses. These will vary from year to year, but what you’ve spent over the course of the last 12 months may be a good predictor of what you’ll spend next year. Don’t forget to include co-payments and deductibles, as well as dental, vision, and prescription drug expenses.
- Reevaluate your coverage to account for life changes. For example, getting married, having a baby, or retiring are events that should trigger a thorough review of your health coverage.
- Consider all out-of-pocket costs, not just the premium you’ll pay. For example, if you frequently fill prescriptions, you may save money with a plan that offers the broadest prescription drug coverage with the lowest co-payments, even if it charges a higher premium than other plans.
- Compare your coverage to your spouse’s if he or she is eligible for employer-sponsored health insurance. Will you come out ahead if you switch to your spouse’s plan? If you have children, which plan best suits their needs?
- Take advantage of technology. Some employers offer calculators or tables that allow you to do a side-by-side comparison of health plans to help select the best option.
Decide Whether to Contribute to a Flexible Spending Account
You can help offset your health-care costs by contributing pre-tax dollars to a health flexible spending account (FSA), or reduce your child-care expenses by contributing to a dependent-care FSA. The money you contribute is not subject to federal income and Social Security taxes (nor generally to state and local income taxes), and you can use these tax-free dollars to pay for health-care costs not covered by insurance or for dependent-care expenses.
If your employer offers you the chance to participate in one or both types of FSAs, you’ll need to estimate your expenses for the upcoming year in order to decide how much to contribute (subject to limits). Your contributions will be deducted, pre-tax, from your paycheck.
One thing to watch out for this open enrollment season: Because of a change to the “use-it-or-lose-it” rule, employers may now allow participants the chance to roll over $500 of health FSA funds that are unused at the end of one plan year to the next plan year. So before you decide how much to contribute to your health FSA, read through your employer’s materials to see whether this change will apply to you—employers aren’t required to adopt this new carryover approach. If your employer has not, you’ll lose any contributions you don’t spend by the end of your benefit period (including any grace period). And remember, you must enroll in a health or dependent-care FSA each year; enrollment is not automatic.
Find Out What Other Benefits and Incentives Are Available
Many employers offer other voluntary benefits such as dental care, vision coverage, disability insurance, life insurance, and long-term care insurance. Even if your employer doesn’t contribute toward the premium cost, you may be able to conveniently pay premiums via payroll deduction.
To avoid missing out on savings opportunities, find out whether your employer offers other discounts or incentives. Common options are discounts on health-related products and services, such as gym memberships and eyeglasses, or wellness incentives such as a monetary reward for completing a health assessment.
Get the Information You Need
Ask your benefits administrator for help if you have any questions about your benefits, the options available to you, or enrollment instructions or deadlines. You generally have only a few weeks to make important decisions about your benefits, so don’t delay.
This article is meant to be general in nature and should not be construed as investment or financial advice related to your personal situation. The article was written by an independent third party, Broadridge Investor Communication Solutions, Inc. and is provided for informational and educational purposes only. Copyright 2016 – Broadridge Investor Communication Solutions, Inc.
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Ken Fortuna, M.B.A.
Financial Advisor at Waddell & Reed, Inc.
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