Beating The Fear of Open Enrollment & Employee Benefits
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It’s that time of the year again--October.
Are you engulfed in a tidal wave of confusion or anxiety?
You’re not alone by a long shot. There are a lot of people who are confounded about the decisions they must make around open enrollment and employee benefits.
It wasn’t so long ago that I was among those people. That’s why I hope today’s blog gives you some comfort and clarity.
I recently sat down with Michael Policar, who specializes in working with people on their company benefits.
He also hosts a podcast called the 15-Minute Financial Advisor. You might check out his four-part series about employee benefits and employee wellness programs.
We both feel that with these benefits they’re a win-win situation. When they are free, it can’t hurt, and there is absolutely no downside.
Are you financially stressed?
PricewaterhouseCoopers have been doing an employee wellness survey for eight years. It basically indicated that two out of three people at work are financially stressed.
He said they’ve been doing this survey since 2012, but that’s the highest amount of stress they’ve recorded.
I mean, consider that something happened between 2017 and 2018, and the amount of financial stress people are under has gone up drastically.
The people in the study indicated that financial stress is impacting their health. That’s hardly a surprise, we know that stress can be a silent killer.
Have you heard of the concept of social indifference?
In the Data Points survey, it’s basically what we call keeping up with the Joneses. That means that the people who are stressed out and worried about their personal finances are still trying to keep up with the neighbor’s “success”!
What does that look like?
You might buy a new car or house. You might plan an equally expensive vacation.
Then to top it off you probably don’t know how to communicate about finances in a meaningful way with your spouse, which can compound your financial concerns.
Even if we get a new job, our problems may not be resolved if we don’t know how to negotiate salary, deal with open enrollment, or choose employee benefits.
That’s the reason it’s important to open a dialog that will help you make better choices so that you can help yourself.
Everyone wants to succeed in their personal and professional lives.
We all want to have a good day!
Free Money...Or Is It?
Do you contribute to your 401k because your company will match with free money?
Let’s take another look!
It turns out that your match isn’t free money.
Mike explained how it really works. He said when you take a job, and the employer offers a 401k and pays a 401k match. That is a part of your negotiated compensation.
He emphasized that it’s not one size fits.
However, in most situations it’s a responsibility to yourself and your future, to contribute at least the maximum that the company will match.
Other Pieces of the Puzzle
Your 401k is just one piece of the puzzle.
What are some of the other ones?
Employee stock purchase plans
Let’s look at the childcare incentive, which is usually approximately $2,000 per year. That’s not a lot if you look at one chunk, but over time it adds up.
It all does!
The good news is you are spending money that you don’t have to pay taxes on.
Employee Assistance Program
Have you ever taken advantage of your EAP?
Perhaps it’s time to look at what your employer offers...and use it!
Let’s see what assistance is available:
It makes sense for you to take that packet home and read it.
I have my clients bring in their employee benefits information. We’ll go through it and make sure that they're making the right decisions for each individual situation.
There are other ancillary benefits that may be offered:
Your individual situation will vary, depending on prior existing health issues.
Some of those health issues may be related to stress because you didn't read your employee benefits manual and take care of them.
Your open enrollment and employee benefit are hard to digest. It’s a lot of information.
However, by taking the time to understand the information now, you could be saving yourself a lot of time, money, and heartache later!
There are so many different plans….
There are a couple of things you’ll need to know before we dive into the two that I wanted to specifically address.
First, let me explain that HSA stands for Health Saving Account. When you are looking at the Employee Benefits packets, the HSA looks very similar to the Flexible Spending Accounts.
You need to know they are very different.
A Flexible Spending Account: Money put in a pre-tax account (you’ll lose the money if it’s not spent).
A Health Saving Account: Tax-free deposits put into the account. You can withdraw the money to pay for medical expenses (anytime). After the age of 65, you can withdraw any of the remaining HSA funds.
Michael isn’t a fan of the FSA, which most employees are eligible for through their employers.
The High Deductible Plan with the HSA
The term high deductible is self-explanatory. An example might be a family deductible of $10,000 for the year. That means you are responsible for hitting the $10,000 before your coverage starts paying for additional costs.
The Regular Health Plan Without the HSA
We all know how our insurance works:
You have health insurance from your employer
Pay the copay when you visit a doctor
Payout of pocket expenses
It goes without saying that with any health plan, you're going to have premiums. That is the monthly payment that you have for this health insurance.
Typically in a standard health plan, your deductible is going to have to go toward your co-insurance.
The high deductible health plan means you're basically paying the full amount of your medical care up to your deductible limit. Once you hit that deductible for the year, most of your future medical expenses will be covered by your insurance.
The results of your insurance plans will vary.
Are you single?
Are you married?
How is your health?
How many children do you have?
These questions will determine whether you hit your deductible or not.
The best thing you can do is take some time to educate yourself every day so that you can go into open enrollment, and confidently make the best choices in regard to your employee benefits.