Wednesday, April 12, 2006 1:00 PM
You've just checked in for your first day on the job and your new employer has dumped a huge pile of papers in front of you. Health insurance? Dental insurance? Life insurance? And it costs HOW much? In this chat, The Post's January Payne helps you sift through the mess and make the choices that are right for you.
This discussion is part of a series created for The Post's Grad Guide , an interactive collection of stories, resources and information aimed at easing the transition of the Class of 2006.
The transcript follows below.
January Payne: Good afternoon, and thanks for joining me today! I'm here ready and willing to take your questions about benefits.
A bit about me: I am a health reporter here at the Post, so I know a lot about health care and health insurance, disability insurance, etc. I'm also familiar with retirement plan options, though questions about specific investment advice might be better suited for personal finance columnist Michelle Singletary, who is hosting a Web chat for new grads on Friday at 1 p.m. (See Michelle's Chat)
That said, let's get to your questions!
Washington, D.C.: Is it common for employers to offer health insurance, but not dental? I have just accepted a job, but it does not offer dental, only health. Should I be worried? I have always had dental insurance before this. Thanks.
January Payne: I wouldn't say you should be worried, but now is a good time to look into getting an individual dental plan, just in case. Dental emergencies can arise -- from a cavity, to a tooth abscess, to wisdom teeth growing in the wrong way --that could subject you to unexpected costs.
I just did a quick search online and found this web site that might be a good start for finding a dental plan: http://www.dentalplans.com/
Shop around at sites like that one, just as you would with car insurance, to find the best coverage for your money. Good luck.
Virginia: Many plans allow parents to cover their kids till 25 years-old. just look at the small print.
January Payne: Thanks for mentioning this -- This is true, but usually these plans require the child/young adult to be a full-time student to continue coverage up to this age.
January Payne: I should add that there are also usually options for disabled children (who can prove they aren't able to work full-time) that would mean they wouldn't have to meet the full-time student requirement.
Storyville: I have a federal government employee health care plan but I've always wondered what happens to me if I can't work. Do I need to have disability insurance? Thanks.
January Payne: I would definitely consult your human resources department about this. The options offered by employers varies, but yes, usually you can sign up for short- and long-term disability plans that would provide income replacement (up to a degree, usually up to about 70 percent of your current income) in the event you're unable to work. The only way to know for sure what your employer offers is to ask.
Selinsgrove, Pa.: My biggest concern about life after college graduation is finding health insurance. My coverage under my parents is about to expire and I have no idea where to go. I was born with a form of immune deficiency which requires monthly treatment. The medical bills from this total roughly $36,000 a year. My father's insurance was able to pick up 80 percent of that, and a hospital charity paid, thankfully, paid for the rest. I was already denied medical assistance once despite the fact that I pay for college by myself, work 30 hours a week and make about $12,000 a year. Where can I go to find a medical insurance that won't leave me buried in debt?
January Payne: You're smart to be thinking about this now. First, know that you can likely continue coverage under your parents' policy, for a fee, for a defined period of time under a federal law called COBRA. This coverage can be costly, but probably not as expensive as what you'd be looking at without health coverage.
Also shop around for individual health insurance policies, and compare the cost of those with the cost of coverage under COBRA. You can do this by contacting individual health insurance companies to get quotes for individual coverage. You can also shop online: try googling "health insurance," and you'll find lots of web sites that allow you to compare quotes from various health insurance companies. Ask about restrictions on preexisting conditions for any policy you consider to make sure you'll be eligible for care right away for your current medical condition.
Keep in mind that because of your preexisting medical condition, you may find that some companies deny coverage of you for an individual policy. Many states offer insurance policies of last resort for that very reason. I'm not sure what Pa. offers, but contact the Pennsylvania Insurance Department for more advice.
Hope this helps! Good luck.
Springfield, Va.: I graduate in a month and have a job waiting, but will become ineligible for coverage on my parents' federal health plan next month, as well. Should a single new grad bet on their good health and forgo health insurance until they qualify for the company plan in six months? Or should they buy something for the interim just to play it safe?
January Payne: In my opinion, it's not worth the risk to go without health coverage. Check out how much your COBRA option would be (see answer to the question just above this one). If that seems to expensive, check out individual insurance plan options, also described above, to get you through the six-month gap.
Washington, D.C.: Please -- PLEASE! -- emphasize the importance of disability income insurance.
If you get hurt or sick and can't produce an income, you will need money to live on and pay your insurance premiums. Social security disability payments typically are low (an average of $900 per month), are fully taxable, take up to a year to get, and require you to have four years in the workplace. Disability income insurance is the single most important employee benefit there is.
January Payne: Thanks -- Nuff' said.
Washington, D.C.: If I get married and I join my husband's insurance policy, can I get some form of reimbursement from my employer for not partaking of my firm's insurance?
January Payne: As far as I know, usually companies don't do this, but I suppose it wouldn't hurt to ask your human resources department just to be sure. If anyone out there knows of some exceptions, feel free to chime in.
Anonymous: I hope that you will emphasize (read: scream) that new grads should open and not touch 401K accounts or similar retirement vehicles. I'm 53 and did not do this well -- I spent the money along the way. The average 24-year-old can easily be comfortable if not rich later on (my age) and can QUIT WORKING some day. I know when you are very young, it seems very far off, but I can tell you if you get here and there's nothing much there financially it is terrible. And those who did do it have literally hundreds of thousands of dollars or more. The thing is, IT IS NOT DIFFICULT, IT JUST TAKES A LONG TIME. So for those who have 30 years, PLEASE don't do what a lot of us old boomers did. THINK RICH -- put that 5 or 10 percent away and leave it there. When you have aches and pains -- including a mean boss -- when you're 55 you can tell them you're out of there.
January Payne: There you go, advice from someone who has been there and done that.
Do not go for 6 months without insurance: A friend of mine was convinced by his parents not to do this. In the end he was so thankful because he was in a terrible freak accident that left him paralyzed during that time. Young people are not invincible, and strange and scary things do happen.
Neither he nor his parents could have afforded the treatment he needed. Plus, if what I have been told is correct, if you are not insured at the time of an accident or diagnosis, some insurance policies will not cover you for follow up treatment for the injury/illness -- which could have cost my friend dearly.
January Payne: And here's some more incentive if that's not enough. The Grad Guide did a comparison of the costs of a broken arm with and without insurance. Check it out
Adelphi, Md.: I am switching jobs. I currently have a PPO, but my new company has HRA, HSA, as well as a PPO -- should I switch either of the first two?
January Payne: Now is probably a good time to mention the glossary I put together for the Grad Guide that explains just what all of those acronyms you mentioned mean -- Insurance Terms Glossary
Now for your question, it's hard to say -- As you probably know, there are upsides and downsides with every plan. If you're happy with your current PPO, I'd say to seriously consider the PPO at the new job. Some out-of-pocket spending is required early on with HRAs and HSAs -- but some consumers are very happy with them -- so consider that as well.
For more on HSAs, the Health section ran a story in late 2004 reporting consumers' experiences with them:
Early Users of Health Savings Accounts Say So Far, So-So (Post, Oct. 26, 2004)
Ocean City, Md.: I know this isn't an insurance comment, but I would just like to remind people to have a cash reserve (two to three months of income) for any kind of emergency. After suffering two layoffs, you just never know.
January Payne: Good advice.
Washington, D.C.: I'm 24 and confused about signing up for a retirement plan. My company has a plan where they will put in a certain amount for every dollar that I put in but I'm not sure how much longer I will stay at my job. What kind of plan should I be opening and how much risk should I be taking? I don't have a lot of extra money every paycheck but I do want to start contributing to an account. Thanks!
January Payne: The most important thing is that you start saving *something* in a retirement plan ASAP. It's hard for me to say what specifically you should do without knowing more about what options your employer offers, and of course about your finances, but my advice would be to sit down with your paystub and a budget outline and figure out what you can contribute now without not being able to pay your current necessary bills.
For more on investment advice for retirement, see an in-depth story that ran in the Sunday Business section (written specifically for young adults) --
Simple Steps To Begin Investing (Post, April 9)
Greenbelt, Md.: What should you do if your employer does not offer disability insurance?
January Payne: Good question. In this case, look for individual disability insurance plans offered outside of your employer. You can shop for these plans much like you can for car or health insurance (find quotes online, over the phone, etc.).
Washington, D.C.: At what age should I start enrolling in 401Ks?
January Payne: As soon as you start working.
Washington, D.C.: I am under my wife's Blue Cross plan for health insurance and she is under my dental plan. We saved money that way.
January Payne: Posting this so others can see how some families work out their benefits.
Silver Spring, Md.: To the person who asked if they would get a reimbursement if they didn't use the company plan: it doesn't hurt to ask, especially at a smaller company. I started my first job out of college two years ago and wanted to keep my Mamsi plan for a couple months instead of taking the company policy in case I didn't stay there. My employer just added what he would have paid for my plan into my paycheck. One of my coworkers gets paid extra because she uses her husband's policy. So, it does/can happen.
January Payne: I stand corrected.
Virginia: How do I get disability income insurance?
January Payne: If you're currently working, visit your human resources office to see if your employer offers disability insurance to its employees. If your company doesn't offer it, look for individual disability insurance plans, as described in a question answered earlier.
newbie Fed: I'm converting from my benefit-less Government contract to a Federal employee this month. (hurray!)
I was looking at the health insurance options and they're a little overwhelming. Okay, maybe a lot.
Any tips on picking a good plan for a healthy, young recent grad that probably doesn't need much, but still needs to have insurance in case something happens?
January Payne: If you're pretty healthy and don't have a need to see a lot of specialists, I would consider an HMO. (Keep in mind -- Some people with chronic medical conditions find that they prefer PPOs or other types of plans because it's easier to see a specialist (no referrals required), and more providers tend to participate in these plans.) But if you're pretty healthy and anticipate mainly only needing to see your primary care doctor once or twice a year (or when you're sick), an HMO might be for you.
Whatever you do, just explore all of your options *thoroughly.* You might find that another option is more attractive to you.
Arlington, Va.: I recently purchased individual health insurance for my wife, as my job does not cover spouses. The company accepted our application but raised the monthly premium by 50 percent because my wife has exercise-induced asthma.
This seems like an over-reaction to me. Is there any way to go about disputing this decision and getting them to lower the premium?
January Payne: Unfortunately, this is all too common. You can try disputing it with the insurance company but may find you don't have much luck. You may also want to price-shop with other companies to see if anyone else will offer a better rate.
For the person thinking about going without health insurance...: Couple of years ago I had a student health insurance while I was doing an internship. The insurance expired on October 1 and I was starting a job on December so I decided two months without insurance (and took care of buy enough medications before the insurance would be expired). Guess what? On October 15, I got chicken pox .And the chicken pox caused a horrible bronchitis (I have asthma and it was so before the insurance ended). Well, I ended paying $400 just on medications. Plus, imagine how was that for my tiny intern income. Please, DONT!
January Payne: Oh my -- that sounds like quite an experience. For anyone thinking about taking the risk, take heed of this advice!
Arlington, Va.: Sorry to go off topic, what's it like being named after a month? Any significance or family tradition behind it?
January Payne: I couldn't resist answering this one, because I get asked this question -- oh, let's see -- every day of my life!!
Here's the deal: Being named after a month is cool...Now.
When I was a kid, it wasn't so fun, of course. :-) But today, it actually has its benefits in my profession, since people remembering my name is a good thing.
As for the history of it, I was named January because I was conceived in January and born in early October (I was a little late). The name was my dad's idea. (Hi, Dad.)
More info for new grads: One thing I found helpful in talking my son in signing up for retirement savings in his early 20s was that usually the money you have taken out for these is pre-tax and the impact on your "take-home" pay is pretty minimal. We did the calculations on his and for 2% (which isn't much, but better than nothing), the difference was negligible.
January Payne: More good real-life advice from someone who has been there, done that.
Washington, D.C.: Insurance: I don't have a health savings account because, well, I am in school. If I could, I would. It seems to me that my insurance covers nothing, and I pay out of pocket for most things. I have to keep it in case of catastrophe, but I get almost nothing out of it for check-ups or prescriptions. Are many firms moving to the health-savings account model to reduce costs? Are there any pitfalls?
January Payne: This is why I say that health insurance is such an individual thing. For you -- as I assume you're pretty healthy -- you might see it as spending more than you feel you're getting out of it. For someone with diabetes or asthma, they might feel they're getting more out of it than they put out. It really depends on the person and the plan.
I think I may have mentioned this story earlier, but this is an article from 2004 that reports on the progress of health savings accounts. Check it out for more detail on your question as to whether they're getting more popular, and if there are pitfalls.
Early Users of Health Savings Accounts Say So Far, So-So (Post, Oct. 26, 2004)
Regarding non-coverage (again): As in the example of the person that got chicken pox, he/she already had a condition that predisposed him/her to complications should an illness take hold. Sure, $400 for medications sounds like a lot but how much would an insurance policy cost? At my job, a single person coverage with Blue Cross/Blue Shield TOTAL cost (employee + employer contribution) is $175 every two weeks. Six weeks of that and you've already spent $525.
January Payne: Thanks for your response. That again is an example of the individual risks and benefits. Your employer-provided coverage sounds rather costly; some employers offer coverage for less money than that. But whatever the cost, taking that regular hit out of your paycheck is cheaper than a several thousand dollar hit that can occur with an unexpected hospitalization.
(In other words, while I know having chicken pox couldn't have been fun, the writer is lucky it wasn't a lot worse, as in something that required an expensive, long hospital stay.)
Regarding non-coverage: For the young people going through a period without coverage, I was advised to get a catastrophic plan only.
They are much cheaper since they only kick in after your medical expenses hit a couple of thousand (or more - depending on the plan). Look back over the last few years. How many times did you go to the doctor? How much was spent on medical care? You're young and (hopefully) healthy. You don't NEED regular coverage for this short period of time.
Instead, get a catastrophic policy and SAVE the difference. This will cushion the cost should you have expenses and when you don't have to spend it, it is a great start to a retirement plan.
January Payne: This is another option -- IF you're healthy. But those with even relatively minor chronic medical conditions might need more coverage.
Vienna, Va.: To the person who asked: "If I get married and I join my husband's insurance policy, can I get some form of reimbursement from my employer for not partaking of my firm's insurance?"
Definitely ask. I did, and wound up getting some additional money kicked back to me on each paycheck. I'm assuming you and your husband have already figured out whose policy is better, and that his won ('cause he could always go on yours, too).
January Payne: Another vote for asking to be sure.
Silver Spring, Md.: Is it worth it to hire a financial planner or advisor of some sort when you have absolutely no clue about savings and different options for the future? It seems premature to be thinking about these things in my mid 20s but at the same time, I don't want to be clueless 10 years from now. How else can I learn? I don't feel like I can trust what bank people tell me because they're trying to sell me their different plans. Is there a simple, catch-all type of book aimed at young people you would recommend on saving up for things like retirement?
January Payne: It's definitely not premature to be thinking about these things now -- in fact, it's wise! Some employers offer a discount on financial planning advice through a company they contract with. See if your employer does that, and use that company as a starting point.
For recommendations on books or web sites to see for advice, I'd ask the same question of Michelle Singletary in her Web chat on Friday; she's our resident personal finance expert. One web site I've seen her mention is http://www.investopedia.com/, which says it is a source for "investment education." Check it out.
January Payne: This has been fun, but I have to wrap things up for now. I apologize to those readers whose questions I didn't get to. I'm excited that so many people are interested in learning about benefits.
For those of you who had questions about retirement or investments that I didn't get to today, please do check out Michelle Singletary's chat on Friday at 1 p.m.
Thanks again for stopping by! Take care.
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