We recently posted a video, blog and financial tips regarding the importance of creating and implementing an end of year financial checklist. As part of your annual checklist, a main focus during the month of November should be your employer’s open enrollment period.
For many employers, open enrollment runs through early December. This year, as a result of the pandemic, there are some new offerings aimed at mental, physical and financial health. Here are some things to revisit during your open enrollment period this month:
- Health Insurance
When reviewing your health insurance options during your open enrollment period, you should consider what your health coverage costs you now that premiums and deductibles are changing. Annual family premiums for employer-sponsored health insurance will likely be about 3% lower in 2022, after factoring in subsidies enacted under the American Rescue Plan Act. However, more workers have a deductible — the amount you pay before insurance kicks in — and that deductible is rising. In 2020, the average single deductible was $1,945, roughly twice what it was a decade ago. If you are shopping for a plan, make sure to not only focus on the premium, but also the total out of pocket
- Health Savings Accounts
As discussed in a prior blog, using tax-advantaged accounts for medical expenses, specifically, health savings accounts or flexible spending accounts, is one way to help with health care costs.
To be able to use an HSA, you need to be enrolled in what’s called a high-deductible health plan, or HDHP. Contributions grow on a tax-free basis, and any unused money can be rolled over year to year. For 2022, employees and employers can contribute a total of up to $3,650 for individual coverage and up to $7,300 for family coverage.
Health Flexible Savings Accounts (FSAs) have lower contribution limits ($2,750 for 2021) and you don’t need to have a high-deductible plan in order to be eligible. You don’t need health coverage at all to sign up for an FSA. There are also dependent care FSAs, which allow employees to pay for eligible childcare expenses using funds on a pre-tax basis.
Generally, you must use the FSA money by year-end or you lose it. However, recent legislation could also allow you to roll over any unused funds from 2021 to 2022 for use at any time next year if your company has opted in.
- Life Insurance
According to a recent survey, nearly 45% of U.S. workers don’t have or don’t know if they have life insurance. Due to the pandemic, people are now interested in life insurance policies more than ever. Since most employer-issued life insurance policies typically amount to a year’s worth of salary or less, it’s important to consider what’s the right amount for you and your family. You can then decide if you want to buy additional coverage, or supplemental insurance, through your workplace group plan or shop for your own individual term life insurance policy, which many advisors recommend.
- Disability Insurance
Disability insurance is often the most overlooked employee benefit. These plans can help replace a portion of your paycheck if you get sick or injured and are unable to work. Short-term disability generally replaces 60% to 70% of your base salary and premiums are often paid by your employer. Long-term disability, which ordinarily kicks in after three months to six months, typically replaces 40% to 60% of your income. If your employer offers some kind of disability insurance, you should consider enrolling.
- Wellness Initiatives
The pandemic has many Americans turning to their companies for help dealing with work-life stressors and personal issues. Due to increased demand, many companies are now offering a variety of financial wellness benefits. Some of the wellness resources available this year include financial coaching, stress management classes, web-based resources for healthy living and even discounts on gym equipment. There could also be tuition assistance, student loan repayment programs, backup child care, tutoring services for older children and stipends for enrichment programs and camps. Companies that understand the importance of their employees’ well being often have a more productive and successful workforce.
If you have any questions about your company’s open enrollment options, you should contact your human resources department. If you are interested in having us help you create your end of year financial checklist, please contact us for a free 30 minute consultation.