Employee Open Enrollment Is Here

Key Benefits for your open enrollment period


KEY TAKEAWAYS

  • The health insurance plan with the lowest premium isn't always your best option.

  • If you're eligible, maximize your HSA savings opportunity and, ideally, invest it.

  • Don't overlook long-term disability coverage - anything can happen.

  • Important life events coming up? Consider group legal coverage.

As employers prepare to kick off open enrollment season, now is the time to start thinking about the benefits you need most. There are many moving pieces to open enrollment, so it’s natural to feel a little confused and stressed - even more so when you add in a global pandemic.


As with all planning, time is your most valuable asset. Set aside blocks of time throughout your enrollment period to implement a benefits strategy that’s right for you.


Here are some of the key benefits to have before the window closes for another 12 months.


Health Insurance


Don’t just pick the plan you had this year. Take note of what your current health coverage costs, and gauge how much your costs will increase next year. As you review your coverage options, keep in mind that if you, like most people, delayed seeking care this year in an attempt to limit your COVID-19 exposure, then you are more likely to need more care in 2021.


Remember that choosing the coverage with the lowest monthly premium doesn’t mean you’ll spend less overall. Your monthly premium has an inverse, or opposite, relationship with your deductible and maximum out-of-pocket. If you select the coverage with the lowest monthly premium, then you’ll have a higher deductible and maximum out-of-pocket threshold to meet before insurance benefits kick-in.


Health Savings Account (HSA)


If you select a high deductible health insurance plan, then you are eligible for a Health Savings Account (HSA). An HSA is arguably the most powerful savings vehicle because of the triple-tax savings potential.

  • Tax-deductible contributions

  • Tax-deferred growth (including interest, investment income and gains)

  • Tax=free distributions for qualified health expenses

On top of the tax benefits, some employers will even make a match contribution to your HSA. With health issues that can arise later in life, this is perfect for long-term care planning. And, unlike a Flexible Spending Account (FSA), an HSA is a savings account, so your balance stays with you.


Flexible Spending Account (FSA)


Not to be confused with a Health Savings Account, a more common and accessible way to save for healthcare expenses is a Flexible Spending Account (FSA). The key distinction between the two is spending vs. savings. While the FSA also offers tax-deductible contributions, you generally must use all of the money in an FSA during the plan year. Because it’s a use-it-or-lose-it scenario with an FSA, you need to project your eligible expenses and contributions carefully.


Wellness Programs


COVID-19 has created many uncertainties for employees and dramatically expanded the need for mental and financial wellness support. If you’re feeling stressed by being fully remote and/or juggling having kids at home, then learn whether any mental health resources are available.


Most employees say that finances are their #1 cause of stress. With the right financial wellness program, you will have tools to keep you organized and on-track and access to certified professionals that can help you implement a personalized plan that gives you confidence for the road ahead.


Life Insurance


According to a recent survey by employee benefits provider Unum, a staggering 45% of American workers don’t have or don’t know if they have life insurance. Even if your employer provides you with life insurance coverage, it usually covers a fraction of what you really need and isn’t portable - meaning that you lose coverage if you were to leave your employer.


Take the time to determine the coverage you need and already have. If you need more coverage, then determine whether it’s best to go through your employer’s supplemental insurance program or get your own individual life insurance policy.


Disability Insurance


Often overlooked by employees, this coverage can replace a portion of your paycheck if you get sick or injured and are unable to work. Short-term disability is often covered by employers and typically replaces 70% of your salary. Long-term disability (LTD), on the other hand, is often not elected because employees pay for it. LTD typically replaces 60% of your salary and starts after three to six months of you being unable to work.


Group Legal Plans


Buying a home? Adopting a child? Caring for aging parents? Need to put an estate plan in place? This voluntary benefit doesn’t get a lot of attention, but it’s not for a lack of value. Most employees glaze right over this benefit and miss out on having trusted attorneys help them during some of the most important and stressful times in life.


Retirement Plan


While you’re looking at your benefits, now is the perfect time to evaluate your 401(k), 403(b), or other retirement plan strategies. With each election you make, you should be able to explain why you’re making that election. If you can’t, then you don’t have a real strategy.


Here are just a few of the common mistakes we see employees making with their retirement plans:

  • Not having beneficiary(s) on file

  • Making Pre-Tax contributions instead of Roth contributions (or vice versa)

  • Not taking advantage of the After-Tax contribution option

This is not the same as Roth contributions

  • Choosing investments based on recent performance

  • Using the Target Date Fund and individual funds

  • Using multiple Target Date Funds

E.g. Using the 2030 and 2040 funds doesn’t increase diversification

  • Using too many individual funds

E.g. Large Cap Growth and Large Cap Value instead of just using Large Cap Blend


Have confidence in your retirement plan by scheduling a free review of your investment strategy today.


Conclusion


Now more than ever, you need to be very intentional with your benefit elections. Pay close attention to all email communications, attend webinars, visit FAQ pages, and ask your HR partners for direction.


If you’d like help putting together a benefit program tailored specifically for your needs, we'd be happy to help.


Frank Iozzo, CPWA®

President, Private Wealth Advisor

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