Fall is a time of many changes. Temperatures cool, days become shorter, and the world starts getting ready for winter. With all that change, there’s one thing people often leave the same: their workplace benefits packages.
November is the beginning of the open enrollment period for many workplace benefit plans. It’s also the open enrollment period for insurance policies on the Obamacare marketplace. This makes it an excellent time to review your insurance information and other benefits.
These perks may have been a big part of what drew you to your job in the first place, so it makes sense to get as much out of them as possible. You may be paying too much (or too little!) for health insurance, and now’s your chance to fix it. Be sure to watch out for these three common pitfalls when enrolling in workplace benefits.
The Passive Opt-In
When starting a new job, it’s easy to be overwhelmed by the barrage of paperwork and decisions. Health insurance decisions are just one of the dozen new responsibilities, so they get a fraction of the attention they deserve. For many people, though, those are the health insurance choices they stay with for much of their careers.
There are two key reasons why sticking with the default option may be a poor choice. First, your life situation has likely changed. As you get older, your need for more comprehensive health coverage increases. You may also need more extensive dependent coverage or you may have more disposable income to contribute to an HSA or FSA.
Second, your employer’s offerings may have changed. Most companies renegotiate their insurance rates annually, and may have negotiated for greater flexibility, lower premiums or better coverage. These are only options you’ll discover if you sit down with your HR representative and figure out your coverage for the next benefits year.
Forgetting Spousal Benefits
Doubling preventative solutions is rarely a bad thing. Having a belt and suspenders seems like the most cautious way to keep your pants up. However, when it comes to health insurance, being covered by both your and your spouse’s plans can be a serious financial hazard.
First, you may be paying more than necessary. Adding a spouse to a workplace policy is usually cheaper than paying for two separate policies. Take a look at both policies and see which one provides the right combination of better prices and better coverage.
More dangerously, double insurance can frequently leave you in the middle of a fight between insurance companies. Both will insist that the other should pay first, and you could wind up buried under a mountain of paperwork for coordination of benefits. This trouble can compound when there are children covered under multiple policies. While you’ll never be on the hook for the whole charge, you may have to work twice as hard to get covered.
If you and your spouse are on different enrollment periods, most companies will provide a preview of the planned benefits offerings outside open enrollment. This allows you and your partner to review and consider the available options. Picking one insurance plan for both of you can really cut down your costs.
Ignoring HSA/FSA Options
Enrolling in a Health Savings Account
(HSA) or Flexible Spending Account (FSA) can sting at first. Seeing dollars go out of your paycheck before you spend them hurts. Don’t let that deter you, though.
HSAs and FSAs are similar in function, but there are important differences. Both allow you to contribute pre-tax dollars that you can use for health care-related expenses. The difference is that HSAs rollover their entire remaining balance to the next year, while FSAs only rollover up to a certain limit established by your plan. There are other differences, like whether or not the account follows you after you leave the company, but the principle difference is the rollover effect.
Enrolling in one of these accounts requires estimating your healthcare costs for the next year. For most people, the safest assumption is that you’ll spend the same amount next year as you did last year. However, if you’ve got a planned medical expense, such as a pregnancy, surgery or other major issue that will arise next year, you can get an estimate to guide your contributions.
Funding an HSA or an FSA is basically free money off your taxes. One way or another, you’ll have to pay for health care costs. By designating money for it early, you can avoid paying taxes on money you’ll spend for health care.
No matter how long you’ve held your current position, it’s worth revisiting your benefits options once a year. Don’t just throw away the paperwork about your insurance, and don’t skip the informational policy meetings. Be an active participant in your benefits decisions. After all, you’ve earned them.