Open enrollment season for healthcare coverage is well underway, which means more quality time with the healthcare exchanges and weekly reminders from HR. Getting smart about your benefits and your health insurance now can save you time and money later. But you better get cracking, as the open enrollment window will soon close.
Do know your dates (and deadlines)
Private employers have different deadlines and requirements for their open enrollment periods, but the end of fall is when things start coming due. This gives the carriers time to make sure everything is in place to begin coverage on January 1st.
Read all of the information provided by HR, the benefits department, and your insurance carrier. If you are self-employed or planning to get insurance through one of the healthcare exchanges, open enrollment started on November 1.
The other critical date is when the enrollment window closes. After that date you won’t be able to make any changes to your coverage unless you have a “qualifying life event” – such as marriage, divorce, or birth of a child. To be covered as of January 1 through one of the healthcare exchanges, you must enroll by December 15, and the absolute final cutoff is January 15, for coverage that will become effective February 1.
Do the math
Are you a person who has frequent medical expenses or requires regular prescription medicines? Are you planning on having or adopting baby? Or are you relatively healthy and generally only see your doctor on a preventative basis?
If you utilize a lot of health care, a low-deductible plan with a higher monthly premium might be best for you. If not, you might want to choose a plan with a lower monthly premium and a higher deductible.
Health savings accounts (HSAs) are a popular option some employers offer with higher deductible plans. HSAs allow you to contribute pre-tax dollars to use to cover healthcare expenses. Unlike flexible spending accounts (FSAs), which are use-it-or-lose-it plans to cover healthcare expenses, HSAs allow you to roll over unspent money from year to year.
Commenting on the HSA option, Marcy Keckler, a certified financial planner and vice president of advice strategies at Ameriprise Financial told CNBC, “It really is a tremendous benefit to people both for medical expenses you incur now but also for healthcare expenses in retirement.”
Do a benefits audit (and watch out for the evergreens)
Take advantage of this time to look at all of the benefits your employer offers and to assess your retirement and insurance plans. Review your coverage amounts for life insurance and disability coverage. Does your employer offer discounts on gym memberships or weight-loss programs? Many do, but few employees take advantage of these wellness programs. Talk to HR or your benefits representative.
Alison Kade of Forbes recommends asking this simple question: “Can you help me find more ways to save?” It sounds simple, but it helps start the discussion about company-sponsored benefits that you might be missing.
Another useful but often overlooked activity is to review the beneficiary designations on all your insurance and retirement savings programs. You might not want your ex to be your beneficiary, especially if the divorce was acrimonious.
Finally, be wary of evergreen coverage—the type that just rolls over and doesn’t require you to make any changes. Experts warn against such benefit inertia. While it is often the easiest choice, it doesn’t take into account any changes that have happened to your income or situation. Even if you do end up enrolling in the same plan, make sure you do so on purpose, after you have taken a good look at all of your options.
Don’t Get Penalized
Under the Affordable Care Act, almost all legal residents of the United States are required to have healthcare coverage or pay a penalty. Healthcare.gov breaks it down for you. The penalty for 2016 is the higher of 2.5% of your yearly household income or $695 per person and $347.40 per child under age 18. The maximum for a family is $2,085.
Those are real dollars that you will have to pay when you submit your federal income tax return—and a big increase from the 2014 rates, when the maximum for a family was $975.
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