- Open enrollment season comes once a year and offers you the ability to re-evaluate your employee benefit decisions—health care and other insurance benefits as well as retirement—and those for your family.
- Consider your personal situation—your finances, family health status, and preferred health care providers and hospitals when choosing your health care coverage.
- Consider any new employee benefit options that can help improve your health, increase your retirement readiness and overall financial security, and enhance your quality of life.
Fall is here and you may be spending time designing your kids' Halloween costumes or hosting the annual family chili cook-off. But there’s typically another big family event on the horizon: annual enrollment.
Now is the time to make some important health and financial decisions for your family such as reviewing your health plan choices for next year and taking another look at how much you are currently saving for retirement.
Companies know they need to offer a range of valuable benefit programs in order to attract and keep the best employees. But they also want to make sure those employees are physically, emotionally, and financially healthy so they can be their best at work.
"Today many employers are now offering a wide variety of wellness programs," says Erin Tatar, senior vice president of benefits consulting at Fidelity Investments. "These benefits may include things like onsite health clinics and fitness centers, weight management support, stress and resilience programs, and help with budgeting and financial planning. There's likely a few new employee benefits this year that you may not have heard about, so it's important to use the resources from your employer to compare your options during annual enrollment season."
To support your health and retirement decision-making process, here are 6 tips to help you make the most of your employee benefits enrollment this year.
1. Build your health care budget
With the cost of health care and health insurance skyrocketing, it has become increasingly challenging for employers to maintain their benefits offerings. In 2018, employees paid some 41% of their total health care tab (employers paid the rest). For the average individual, that figure includes health insurance premiums of over $1,500 and about $1,000 in a variety of out-of-pocket costs.1
Taking a look at your entire household's spending may help you get your arms around your health care budget. Knowing your facts can help you make better decisions during annual enrollment.
To start your budget, ask yourself these questions:
- How much did you pay in premiums this year? Start by looking at the YTD (year-to-date) section of your most recent 2019 pay stub.
- What are your pharmaceutical costs? If a family member has been prescribed specialty drugs (such as for cancer treatment or other injectable medications), you may need to increase your budget. You will also want to carefully review any current brand prescriptions against the 2019 covered drug lists for your current and alternative plans.
- How many trips to the doctor, hospital, or emergency room did you or family members make? Find the bills that you had to pay and tally up those costs.
- What else did you spend out-of-pocket for health care last year? Many health plans have websites where you can log in to see your health care activity and how much you may have spent out-of-pocket.
- What about next year? Add up all of your health care dollars from this year, then estimate if you will spend more or less in 2020. Also, make sure you understand how your per paycheck costs will change from last year, and what they would look like if you enrolled in alternative plans. That should help you decide which plan can work best for you and your family.
Tip: Find out if you can lower your monthly health insurance premiums. Many employers now offer savings such as reduction in premiums or contributions to Health Savings Accounts (HSAs) if you take certain steps to improve your wellness, such as completing an onsite health screening or online health assessment, participating in a tobacco cessation program, or taking advantage of workplace wellness activities.
2. Compare different plans
According to a recent Fidelity health plan survey, 44% of people say it's easier to stick with the current health plan year over year versus trying to decide if another choice is better.2
"We know that many people simply enroll in the same health plan, year after year," says Tatar. "We all fear uncertainty. But now is the time to think differently. Do your homework and take the time to fully understand all the benefit choices now available to you—or you may be leaving money on the table."
Your employer may have several different types of plans to choose from, and the features and prices can vary significantly. Compare the benefits, rules, restrictions, and costs such as copays, deductibles, and out-of-pocket maximums. Different plan types include:
- A high deductible health plan (HDHP) with an HSA. This plan is also known as an HSA-eligible plan. It carries high out-of-pocket deductible costs to you, but the monthly premiums are typically lower. Many HDHPs are offered along with an individual HSA for health-related expenses. You can choose to set one up and fund it through your payroll on a pretax basis, and your employer may provide automatic seed money into the account as well.
- A health maintenance organization (HMO) plan. This type of health care plan may offer lower out-of-pocket costs, but it comes with some specific restrictions. Most HMOs generally require the use of network providers, and typically require a primary care physician to coordinate your health care services, including providing referrals to see other doctors or specialists.
- A preferred provider organization (PPO) plan. In this plan, you'll usually pay more than an HMO, but you can choose your own doctors and specialists. It is more cost effective to choose doctors in your network and you should expect to pay directly when you go out of network. Many employers also now offer PPOs with more restricted networks but lower out-of-pocket costs, so be sure to review the provider network carefully.
There are lots of choices in health plans, and your choices can change from year to year. When choosing your plan, consider your personal situation—your finances, family health status, and proximity to frequently used medical services. Annual enrollment is the time to reassess which plan best meets your family's current needs.
3. Consider new options at various stages of your life
Just like in the board game "The Game of Life®," your path will probably take some interesting and unexpected turns. As you move through various stages, take note of where you are and choose your plan for today. For example, it might be a good time to consider buying more dental, life or disability insurance. Take time to review your options and take advantage of additional health and wellness benefits.
"Remember, your employer had made a large investment to offer you a variety of benefits that support your physical and financial well-being, no matter your age," says Tatar. "They do this because they need to attract the right employees, and so you can better focus on your job and be productive at work."
Where are you on your life's path? Weigh all your health care options before you choose.
Single? Consider looking for a low-cost health care plan with a good network. If you are in good health, try using an HDHP with an HSA to get a head start saving for future health care expenses
Adding a spouse or partner? Take a fresh look at all choices. You may see a big jump in costs going from single health care coverage to a "plus 1." Coordinate access to your spouse's doctors and other health services that work for both of you.
- Some employers are now assessing a "working spouse surcharge". For example, if your spouse is eligible for health care coverage at their employer, but is enrolled in your plan, then you may have to pay $50-$100 a month extra to have them covered by your plan. This could apply to either "employee +1" or family coverage. So, it may make sense for you to be covered under separate plans and have your spouse or partner enroll in their employer's plan.
Having your first baby? You'll need "family coverage." Make sure your pediatrician accepts the plan you're considering. Weigh an HDHP with an HSA against HMO or PPO options. If you anticipate having to pay a lot for day care next year, consider contributing to a Dependent Care Flexible Spending Account (FSA), if your employer makes it available.
Have young children? With frequent visits to the pediatrician and other family health care needs, choose the plan that your doctors take and that offers you flexibility at an affordable cost. Make the most of a dependent care FSA, if offered. For added protection for your family, ask your employer about supplemental life and disability insurance options.
Kids in college (and under age 26)? Do the math! Is it less expensive to keep older children on your family plan or to access a student health plan at their college?
Newly divorced? If you are now on your own due to divorce or death of your spouse or partner, you'll want to look at the best options for you to enroll in single coverage. You may find an HDHP with an HSA an effective way to pay for health care plus save for future health care expenses.
About to retire? Talk to your employer about any health plans for Medicare-age workers or retirees. There may be options for you to consider.
4. Find creative ways to save
The ways that people seek and purchase health care services continues to evolve. Today, there’s more choice, more convenience, and more ways to save money.
Consider these options:
- Using walk-in clinics or urgent care offices on main streets or shopping malls
- Getting flu shots at your employer, local pharmacy, or town hall
- Buying store-brand versions of over-the-counter drugs such as aspirin or vitamins
- Asking your doctor to replace brand-name prescriptions with generics
- Comparing the price of your spouse or partner's health plan with the cost of your plan
- Using telemedicine to do virtual visits by phone or online for certain common conditions at a reduced cost
- Seeking non-hospital treatment options such as having blood drawn at an local lab, getting an MRI taken at an independent x-ray lab, or using an ambulatory surgery center for common surgical procedures
Use employer tools to help choose the best plan option for you and your family based on your needs. Owning your health and wellness decisions can indeed be complicated. The good news is that your employer may provide tools and resources to help make the selection process easier. Among them:
- Online comparison tools and calculators. You'll likely be able to compare plan options, features, and pricing. With some calculators, you can enter your personal information to get a list of choices and prices that best fit your situation.
- Paper or online statements with your benefits summary. These documents can help you see where you spent your health dollars. Use them to set up your budget and find areas to save.
- Your HR or benefits resources. Search your HR intranet to get answers to your questions during annual enrollment. You may also have access to a benefits fair or various "lunch and learn" gatherings, team meetings, or webinars to discuss choosing your benefits. Take advantage of everything offered.
5. Make decisions before the deadline
This fall your employer will give you some time to review your current benefits, compare any new options and benefits, and figure out how much they'll cost you next year. These few weeks are often referred to as annual enrollment since it's the one time during the year you can make changes to your benefits (unless you experience a qualifying life event such as having a child, divorce, or death of a spouse).
It's critical that you don't miss your annual enrollment deadline and that you familiarize yourself with all benefits open to you and look for ways to save money. Tatar adds, "Don’t forget to explore options that go beyond traditional employee benefits. There's a lot to consider from joining a company fitness center and adding pet insurance to enrolling your child in onsite day care or opting for special critical illness coverage."
6. Review your retirement savings too
Annual enrollment is generally focused on selecting the best health plan for you and your family. But while you're making important decisions about your health, take a few extra minutes to give your retirement savings plan an annual checkup too.
- Are you saving enough to meet your income needs in retirement?
- Can you increase your contributions by 1% in 2020?
- Can you save enough to get the full match from your employer?
- Are your beneficiary designations up to date?
- Has your employer added new benefits such as financial counseling or student loan repayment programs?
It's important to remember that your health decisions and retirement savings plans are closely related. If you can find savings in your health dollars, you may be able to direct a little more to retirement.
Next steps to consider
See if you're on track in the Planning & Guidance Center.
Learn ways to cut your prescription drug costs.
This information is intended to be educational and is not tailored to the investment needs of any specific investor.
With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation.
The information provided herein is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, you are strongly encouraged to consult your tax advisor before opening an HSA. You are also encouraged to review information available from the Internal Revenue Service (IRS) for taxpayers, which can be found on the IRS website at IRS.gov. You can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses, online, or you can call the IRS to request a copy of each at 800.829.3676.
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