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How to maximize the benefits of your employees during open registration

It is open registration season. Use this guide to evaluate the benefits of your employees, find some hidden gems and decide the best way to use them.

It's been a year like no other, and it's not over. But now that autumn is over, the registration season is open as well. It's not quite as fun as saying to see the leaves turn or drinking a pumpkin spiced latte, but it's much more important. (No disrespect for trees or pumpkins.) And given the insecurity of the ongoing COVID-19 pandemic, you can also think about your open enrollment benefits in a new way.

That's why we've created this guide to what benefits will have the greatest impact on your finances. It should help you ask the right questions and make important decisions as you search through the information your employer gives you and start making decisions about your health care plans, retirement savings accounts, life insurance policies and other benefits.

Blocks a qualified life event – marriage, divorce, having a child, changing jobs – the open enrollment period is probably the only window you get during the year to sign up for health benefits or make changes to the benefits you have already chosen to receive. So it is important to spend some time reviewing your options carefully.

Here are the open enrollment benefits that you may want to pay the most attention to – and those you may not need to bother far.

In this article:

Choosing the right care coverage

If there is one benefit that you will probably pay the most attention to during open registration, it is health insurance and with good reason. This is because the amount you pay can vary greatly depending on the type of coverage you choose. And let's be honest – the last six months have reminded us all how important health coverage can be

A majority of the companies surveyed by the Society of Human Resource Managers (SHRM) said they offered two or more types of care plans. The most common are the PPO (preferred provider organization) plans, followed by high-deduction health plans and health maintenance organizations (HMOs). PPOs tend to have higher premiums than HMOs but offer more flexibility to see specialists and suppliers outside the network. Deductible health plans have low premiums because the deductible is high, which means you have to pay more out of pocket before your coverage begins.

Katie Brewer, a CERTIFIED FINANCIAL PLANNER och professional and president of Your Richest Life, says she has many customers who are "gung-ho" about choosing a high-deduction health plan because the premium is lower. But these plans are not ideal if you have a lot of medical costs – especially if you have small children who make many trips to the doctor. And again, the spread of coronavirus is a reminder that you can not always predict when and if you will see an increase in healthcare costs.

To find out which plan is best for you, review your health care costs over the past year, says Brewer. It can be as simple as logging in to your health insurance website and looking at the claims you have submitted. Also think about the cost of your prescription drugs and if you will need any medical intervention in the coming year to get an idea of ​​what your healthcare costs will be. If you expect high medical costs, a deductible health plan may not be right for you.

Even if you are happy with your current care plan, review it under open registration to make sure there are any changes in your coverage or cost, says Laura Gariepy, who has worked in human resources for 10 years and is now a freelance financial writer. “Employees need to be aware of these changes so that they do not encounter unpleasant surprises at the doctor's office – or at their pay stubs.

Do not miss incentives for care in the workplace. Your employer can offer rewards and bonuses for completing health and wellness programs. Almost a quarter of the employers surveyed by SHRM offer this benefit, while a third offer a subsidy or compensation for training courses.

Benefit from a health savings account

If your employer offers a deductible health plan of at least $ 1400 for individual coverage or $ 2800 for family coverage in 2021 and you sign up, there is a good chance you can also benefit from a health savings account. With this account, you can set aside money for medical expenses free of charge.

The money to fund an HSA usually comes from your pre-tax paycheck, which lowers your taxable income. And you do not have to pay tax on the money you charge if you use it for qualified medical expenses. "It's like buying your care for sale because you get your effective tax rate as a discount," says Brewer

2021, you can contribute up to $ 3,600 to an HSA if you have individual high-deductible health insurance coverage and up to 7 $ 200 if you have family coverage. If you do not use the full amount you contribute during the year, you will not lose it. The money will remain in the account and grow tax-free

Your employer can even contribute to an HSA for you. "Why not take advantage of the free money if you are young and healthy?" says Sean Mullaney, CPA and President of Mullaney Financial and Tax, Inc.

"Why not take advantage of free money if you are young and healthy?"

—Sean Mullaney, CPA

Think of a Medical Flexible Expenditure Account

Even if you do not have a deductible health plan and HSA, you may be able to set aside dollars before tax in a flexible health care expense expense account. As with an HSA, it means that you use dollars before tax in an FSA to pay for qualified medical expenses that you pay less – based on your income tax rate.

You can contribute up to $ 2,750 to a medical FSA by 2020. The 2021 limit has not been announced. Unlike an HSA, you must use all funds in an FSA during the year or lose them – unless your employer has a transfer option that allows employees to transfer $ 550 of unused funds to the following plan year. So you need to carefully calculate how much to deposit in an FSA.

Save on childcare costs with dependent care FSA

"Childcare costs are so high today that the monthly costs can be as much as the income for some families," said Echo Huang, founder and president of Echo Wealth Management. So Huang explains that you should take advantage of a flexible expense account for care to help reduce these costs.

Money that has contributed to a dependent care FSA comes out of your paycheck before tax, which reduces your taxable income. When you use FSA funds to pay for child care, the tax benefits of FSA can save you money. Like a medical FSA, you must use this money at the turn of the year, otherwise you would lose it.

Reviewing Your Retirement Savings Options

You can review and make changes at any time to the amount you contribute to your 401 (k) or similar retirement plan at work. "But why not take advantage of open registration to make sure you optimize your 401 (k)," says Mullaney

. For example, if you were automatically registered in your workplace retirement plan, the standard fee may be too low to get the entire matching contribution from your employer, he says. If your employer matches contributions up to, for example, 6% of your income, but you only contribute 3% of your salary to your 401 (k), you will miss out on free money.

Ideally, a good goal to save is 10% of your income annually. So if your employer offers an option to automatically increase your retirement account contribution annually by a percentage point or two, consider taking advantage of this feature to get to a point over time where you save 10% or more, says Brewer. [19659005] You may want to check if your employer offers a Roth 401 (k). Unlike traditional 401 (k), contributions are made to a Roth 401 (k) with money after tax, so qualified retirement is generally tax-free. (To avoid paying tax on your Roth 401 (k) withdrawals, your account must be held for at least five years and you must be at least 59½ or the dividend must be due to disability or death). Brewer says you may want to consider contributing to both a Roth 401 (k) and a traditional 401 (k).

Also do not miss the financial planning offered by your employer. According to SHRM, 57% of employers surveyed offer pension planning or investment advice as an advantage. Find out if your employer offers this benefit and consider taking advantage of it if you need help figuring out how much you can save for retirement and what investments can help you reach your financial goals. Employers offer group disability insurance. Disability insurance is an important benefit that is often overlooked, says Brewer. The disability insurance protects part of your lost income if you become too ill or injured to work. And as the pandemic has unfortunately reminded us, illness can strike when we least expect it.

If you already have disability coverage, consider if you have enough, Brewer explains. Ideally, you want disability insurance with a benefit that reimburses more than half of your income if you become disabled and can no longer work. Coverage varies, but in general, short-term disability insurance will reimburse a percentage of your income if you are too ill or injured to work for a shorter period of time. The group's long-term disability insurance generally pays out benefits if you meet the definition of disabled for extended periods of time. . But do not assume that your employer's basic coverage is sufficient, she explains.

The coverage will probably be an amount equal to two to three times the amount of your annual salary, which will probably not be enough to cover your financial needs. when you die. To avoid being underinsured, you can consider signing up for group life insurance and then apply for an individual life insurance policy, says Brewer. The individual policy can complement your group coverage. Most group life insurance policies are not portable, so if you were to quit your job, your group life insurance policy would probably expire. In that case, if you had purchased an individual life insurance policy, you would still have some coverage in place.

Find out if you really need accident insurance

Accidental death insurance is so cheap that many employees sign up for this benefit, says Brewer. However, they often confuse it with life insurance.

Accidental death insurance pays out a benefit if you die – but only if your death is a direct result of an accident, says Brewer. "The probability that the payout is small," she explains. For that reason, you may want to consider whether you need this extra benefit.

Find Out If You Really Need Visual or Dental Insurance

Dental insurance may seem vague, but it turns out that many dentists accept out-of-pocket payments, and that this cost is actually less than what you would pay in premier. In addition, any dental situations may already be covered by your regular health care coverage – and many dental care plans have coverage of $ 1000 or $ 2000, far too little for a real emergency

That said, dental (and vision) insurance can be included in many plans for "family coverage", which can prove beneficial if you have children (and therefore several people get their teeth cleaned twice a year). Be sure to see what plans your employer offers and what the cost of these plans may be.

Everything we just said about dental care plans applies to vision plans. But unlike teeth – which everyone has and which require regular maintenance – your vision can be in perfectly fine shape, in which case coverage would be unnecessary. Everyone's situation is different; As with health insurance, it is good to look at the previous year's expenses and determine what works best for you and your family in the coming year.

Legal services can be a throw up

One third of the employers surveyed by SHRM offer a legal benefit that gives employees access to affordable legal aid. If you know you will need legal help next year – perhaps because you need to prepare property planning documents or if you are divorcing – you may want to sign up for this benefit. "Sometimes a prepaid legal plan is a cheap way to access a lawyer," says Brewer.

However, if you do not need to prepare any legal documents and do not anticipate legal issues in the near future, you may want to consider whether you need this benefit.

Be Careful With Pet Insurance

The pet insurance plan your employer offers can seem like a bargain if you want to make sure your hairy friend is protected. Before you sign up, however, read the fine print to make sure you know what type of coverage you actually get, says Brewer. The premium you have to pay may not be worth it if the maximum benefit is not enough to cover the cost of expensive procedures for your pet, she explains.

When reviewing these and other benefits offered by your employer, coordinate with your spouse or partner – if you have one – to ensure you are not duplicating benefits. As tedious open registration may seem, also resist the urge to rush through the process. As Gariepy says, it is always a good step to see what your employer has to offer to ensure that you take advantage of the best possible employee benefits.


About Louis Wilson

Louis Wilson is a freelance writer whose work has appeared in a wide range of publications, both online and in print. He often writes about travel, sports, popular culture, men's fashion and grooming and more. He lives in Austin, Texas, where he has developed an unlimited passion for breakfast tacos, with his wife and two children.

Read more by Louis Wilson

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Haven Life is a customer-centric life insurance agency supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and general well-being can be refreshingly easy.

Our Editorial Policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and general well-being can be refreshingly easy.

Our content is created for educational purposes only. Haven Life does not support the companies, products, services or strategies discussed here, but we hope they can make your life a little less difficult if they suit your situation.

Haven Life is not authorized to provide tax, legal or investment advice. This material is not intended to be provided and should not be relied upon for tax, legal or investment advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

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