Some employers offer multiple choices for health, dental and/or vision insurance, so be sure you take some time to understand which may be best for you. Additionally, couples may want to explore spousal/domestic partner benefits and even compare benefits across employers (keeping in mind that some employers charge a penalty for partners who have access to their own employer coverage).
You’ll want to compare differences in provider networks, prescription coverage, benefits, cost, as well as employer matches to a health savings account (HSA), as different plan selections can result in thousands of dollars of difference in health care costs.
Many employers also allow you to purchase additional life insurance coverage beyond the basic coverage in your plan. If you’ve never given much thought to how much life insurance coverage you need, or if you’ve had a major life event since you last elected (e.g., marriage, divorce, birth/adoption), you may want to make sure you have enough protection. You can use our Life Insurance Calculator or consult with your financial advisor.
Disabilities can be caused by an injury or illness and are categorized as either short or long term. Short-term disabilities are typically those lasting fewer than six months and are much more likely to occur. They include situations like recovery after surgery or injury and pregnancy/birth.
Many employers don’t offer enough paid time off for these events, posing a potentially significant risk for employees (and their families) who depend on their income. If you have access to short-term disability through your employer, it may be especially worth considering if you don’t have an adequate emergency fund, your employer covers part or all of the cost, you know you’ll have a short-term disability in the upcoming year (e.g., a planned surgery or birth), or you simply value having the peace of mind of having the policy.
While a disability lasting longer than six months is less common, it’s far more financially harmful. Options for protection are typically limited to insurance, and a group policy through your employer can help address this need. We recommend insurance that replaces as much of your after-tax income as possible, pays until your planned retirement and uses an Own Occupation (rather than Any Occupation) definition of disability. This level of protection will allow you to continue to meet most of your income and savings needs. If your group insurance doesn’t offer these features, a financial advisor can help determine if supplementing (or replacing) it with an individual policy may make sense.
Accidental death and dismemberment (AD&D) insurance covers accidental death and life-altering injuries such as the loss of a limb. It typically excludes accidents and deaths resulting from injury/illness, suicide, drug overdose, drinking and driving, and high-risk activities. It’s important to note that AD&D shouldn’t replace life insurance or disability insurance since it’s relatively limited in what it covers.
/node/640626Health care savings accounts allow you to use pretax dollars to pay for qualified medical expenses, with the two most common being flexible spending accounts (FSAs) and health savings accounts (HSAs).
- FSAs are use-it-or-lose-it accounts, and you generally can’t change your contributions outside of open enrollment unless you have a qualifying life event. Plan carefully to avoid contributing more than you expect to spend for the year. Some are general health accounts that can be used for any qualified medical expense, while others are for special purposes like dental and vision expenses.
- HSAs are generally more favorable, but you can only contribute to one if you have a qualified high-deductible health care plan. If you can contribute, the contribution limits are higher, you keep what you don’t use (making it a powerful savings vehicle), and you can change how much you’re contributing at any time.
If you have a dependent who needs care while you work, find out if your employer offers a dependent care flexible spending account (DCFSA). These are tax-advantaged accounts that allow you to use pretax dollars to pay for qualified dependent care expenses. Like FSAs, they’re use-it-or-lose-it, so plan carefully for how much you save. Additionally, most people who use a DCFSA won’t qualify for the Child and Dependent Care tax credit, so you may want to consult with a tax professional to determine which is more advantageous (typically DCFSAs become more advantageous the higher your income). If you have a spouse who also has access to a DCFSA, make sure you’re not exceeding the limits if you both contribute.
Retirement savings decisions aren’t generally part of open enrollment, as you can usually change your elections at any time. That said, while you’re evaluating your workplace benefits, it’s not a bad idea to learn about or review your options for saving for retirement. At a minimum, try to take advantage of any employer match that’s offered.