It’s that time of year again! Most companies are starting their open season for work benefits. I’m writing this to remind everyone that this is very important. If you have your own separate policies that is probably one of the best moves you can make. You might be spending more in some areas but you have a contract directly with the insurance company that you can take with you. When you work for a company and leave that company you lose those benefits. It is important if you don’t have your own policies you take this open season very seriously.
This is where you can save a lot of money during the year. Let me explain why.
1. Health Insurance – Make sure you understand and ask questions about your health insurance options. Due to costs with health insurance premiums more companies are increasing the burden on employees.
Look carefully at the cost per month and per year. This is pre-taxed which saves you a lot of money. It lowers your income for tax time and since it comes out of your paycheck automatically each month you won’t miss it.
- Exactly what type of policy are you paying for? – Make sure you understand what the policy covers. Is it for emergencies only? Most people don’t look at the fine print or like myself get confused easily about the cost, so ask HR. HR should know and if they don’t find someone that does. This is extremely important.
- A good example is when the policy only covers 80%. You might say, okay, I think I can cover 20%? However, 20% of a $10,000 procedure is $2,000! What if it is $50,000 then that will cost you $10,000.
- What are the deductibles? – $1000 per person or $3000 per family? Can you afford the deductibles? Can you use a Flexible Savings Account to cover the deductible? Is there an option without an deductible? Is the premium too costly per month without a deductible?
- What happens after you pay the deductible? Does the insurance start to kick in at 100% after you reach the deductible?
- Do you need a referral to see a specialist? – This means you need a primary care provider. Do you have on that accepts this insurance? Talk to your doctor to find out if they accept it or not.
2. Dental Insurance – I highly recommend looking carefully at the option(s) that your company is providing you for dental insurance. Just recently the federal government gave dental insurance to federal employees, as an example I mentioned this to a friend and they had no idea that it was offered. Make sure you look carefully at all of your options. I saved him over $1,500 a year by telling him that. Similar to the above questions what is the cost and what are the deductibles?
- If you have a lot of dental work done I recommend getting the premium plan since dental work is very expensive and most premium plans cover more usually 50% to 90% for extensive work.
- If your dentist is not on the plan, talk to your dentist and ask if they will still accept or work with the insurance. You will be surprised to find out that most dentists will do this.
- I highly recommend whenever you need some extensive work done to get a quote before because then you can work with your dentist on a payment plan and even negotiate the cost. Plus most insurance plans require this.
2. Flexible Savings Account (FSA) or Health Savings Account – You must sign-up for this! If your company has a FSA please sign up for it. I’m a strong believer in this. It saves you a lot of money during the year. If you have a deductible as mentioned above this is how you would pay for it. Plus, most FSA accounts now allow you to pay for a lot of over the counter medications, co-payments, contact lenses, dental work and much more. In addition, some companies give you a debt card to use in the store to make the process really easy. If your FSA doesn’t offer a debt card the paperwork isn’t that difficult to fill out and you will save usually 20% or more because of the federal and state income tax and the state and local sales tax savings!
Some drawbacks on the FSA account is you have to estimate your yearly cost and it can’t be more than $5,000 and if you don’t use it you lose it! You have to estimate wisely. I estimate this by taking the number of visits I did in the last year looking at any changes to the current insurance policy such as co-payment costs and deductibles then estimating the cost of over-the-counter medications and adding that to any costly items I might need during the year like contacts and coming up with a number. By November I look at what I have left and make sure that I spend the rest of it before December 31. I usually buy extra over the counter medications that I know I will need like Tylenol and Advil.
Flexible Savings Account for Dependents– As far as I understand the limit on this is $5,000 per family and for most people living in a metropolitan area $5,000 barely covers half a year of daycare expenses per child. However, $5,000 pre-taxed can easily save you over $1,000 in taxes! So, Sign-up! We did this and it has saved us quite a bit for having 1 child.
3. Disability Insurance – Everywhere I look it is recommend to get your own policy. If you don’t have a separate policy make sure you sign-up for a disability policy through your company. Most financial experts say to sign-up for this no matter what. Don’t even think twice about this. Most company policies cover 60% of your income if you become disabled.
4. Life Insurance – I recommend you getting your own separate policy because term life insurance is cheaper then most companies unless it is difficult to insure you, then pay for as much as you can through your companies policy.
Disclaimer – The information above is from my personal experience and research. This is my opinion and my suggestions. Do your own research and take this advice at your own risk.
What suggestions or experiences do you have when it comes to saving with your open enrollment period?