Getting the most benefit for your money?
For many, it’s open enrollment time for next year’s benefits package. Being protected to the max may give us peace of mind but are we really benefiting by buying into the maximum coverage?
Benefit Points to Ponder
Major Medical Insurance
One plan doesn’t fit every situation. If your employer offers multiple options you’ll need to think this one through thoroughly! You get what you pay for, right? WRONG!
If you or a member of your family has chronic illness, then you definitely need to consider the more expensive, higher coverage options.
But if you and your family are healthy, seldom sick, and rarely hospitalized then you are wasting your hard-earned money paying higher premiums for maximum coverage. You can contribute those savings into your retirement plan!
Short-term and long-term disability
Some employers provide 50-60% short-term disability coverage for free with the option to purchase a higher percent coverage.
If you can’t pay bills on 50% of your paycheck (which most of us can’t) then you need to consider paying for the higher coverage. As nurses our highest risk for disability is our backs!
Most employers do not provide any long-term disability. Therefore, I would strongly consider purchasing coverage. It may take only one back injury to bring your career to a screeching halt.
Vision and Dental
Consider your needs. If you or your family members wear glasses or have extensive dental needs, opt for the higher coverage if available.
If this option is available and you aren’t utilizing it, you should seriously consider it. This is a health-care spending account that allows you to contribute pre-tax funds into an account to be used throughout the year for medical expenses not covered by your medical insurance. You can pay deductibles, office visits, medications, glasses/contacts, out-patient services, etc.
Whatever amount you choose to contribute is available for use in January. Your contributions to fund this account are payroll deducted every pay period.
One word of caution…you can not roll over any unused funds! This requires careful planning to determine what your expenses will be. Cover only those expenses you incur every year…contacts/glasses, monthly prescriptions, yearly exams, etc. What you don’t use, you will lose!
Obamacare changed the rules for FSAs starting January 2011. You will no longer be allowed to purchase OTC medications/supplies without a prescription with your FSA. Maximum contribution limits were also lowered, so make sure you educate yourself on the rules. So much for taking care of the middle class!
And remember, if you choose a High-Deductible option, you can open a Health Savings Account. For many families with adequate income and savings to handle the high deductible, the ability to put money aside that is tax deductible can be valuable. With income limits on traditional IRA’s from the standpoint of deductability, this can be a good tool to build wealth for use on medical expenses as you age.
Educate yourself on available benefit options
Your benefits are a valuable part of your total compensation package. Take time to consider all options in determining what’s best for your situation. Don’t opt for the most expensive coverage if your needs don’t warrant it. Decide what your needs are, educate yourself on all plans available, then make your decisions based on what benefits you and your family the most for the least amount of out-of-pocket expense.
Any expense pre-tax puts more money in your pocket. Isn’t that what we work for? Remember to choose wisely!
What benefits do you find most useful, and are worth the costs?
Are there benefits at your company that you don’t understand?