A Benefits Checklist for Open-Enrollment Season
Sunday, October 18, 2009
QI read your article about open enrollment for employer-sponsored health plans. What other decisions will I need to make during open-enrollment season?
AWithin the next month or so, most employees will get a big pile of paperwork with information about their 2010 benefits. Health insurance is the big-ticket item to consider. But there are some other important decisions. Here are five additional things you might want to do during your open-enrollment period:
Boost your medical flexible-spending account contribution for 2010. If your employer is increasing deductibles and co-payments for your health insurance, as many are, then it's a good idea to put more money into your flexible-spending account. Because your FSA contributions avoid income and Social Security taxes, you can save 35 percent or more compared with spending after-tax money on these medical expenses. Many employers limit medical FSA contributions to $3,000 a year. Plus, you must use the money by Dec. 31 (or March 15 of the following year, in some plans) or lose it.
Make the most of a dependent-care flexible-spending account for child-care expenses (or home health care for a parent or other dependent family member). This money avoids income and Social Security taxes, too, stretching your dollars much further. Most families will come out ahead by using an FSA rather than the dependent-care tax credit.
Consider buying more disability insurance. Many employers offer a limited amount of disability insurance to employees as a free benefit. But these policies generally cover just 60 percent of your base pay (not counting bonuses), and your pretax monthly benefit may be capped at $5,000 to $10,000. If that isn't enough to cover your bills, consider buying extra coverage through your employer.
You may be able to find a policy that provides more specific coverage for your line of work, and you can take the policy with you if you leave your job. Plus, if you pay the premiums yourself, you won't have to pay taxes on the benefits. If you buy a policy now, you can keep it if you leave your job or start your own business -- when it would otherwise become much more difficult to qualify for coverage.
Look into long-term-care insurance. More employers are offering long-term-care coverage during open-enrollment season. In most cases, employees have to pay the full premium themselves, but they'll generally get a group discount of 5 to 10 percent. Long-term-care policies offered through employers are usually a much better deal now than they were in the past. The first generation of group long-term-care policies didn't require a medical exam, so they were a good deal for people with health problems. Otherwise you could find a better policy and price on your own. But newer employer-sponsored long-term-care policies now offer preferred-health discounts, spousal discounts and a much wider range of coverage options.
Check your beneficiaries. Make sure your retirement-plan and insurance-policy beneficiaries are up to date, especially if you've gotten married or divorced or had a child recently. Keep in mind that your beneficiary designations supersede your will, so if you've kept your will up to date but haven't changed your beneficiary designations, the intended person may not inherit your accounts.