Don’t Leave Money on the Table This Open Enrollment Season
Open enrollment–the period when employees are required to select their health insurance and other employer-provided benefits for the upcoming year–is right around the corner. If you’re someone who usually puts the benefits-selection process on cruise control and simply lets the previous year’s selections roll over into the next year, you need to break that habit this fall.
Benefits account for about 30% of an employee’s total compensation on average. Selecting the best benefits options for you and your family and taking advantage of all of the tax-savings opportunities can have a significant impact on your bottom line.
This year it’s more important than ever to take a close look at your employer’s benefit options. Some of the most significant aspects of the Affordable Care Act (ACA) are going into effect in 2015, and, as a result, many companies are significantly altering their health insurance offerings to comply with the landmark healthcare reform law.
Healthcare Reform: A Game-Changer for Health Insurance Plans
Under the ACA, all companies with at least 100 full-time employees will be required to provide health insurance to their employees starting on January 1, 2015. For companies with 50 to 99 employees, the requirement has been pushed back until January 1, 2016. Companies that don’t comply with the requirement face a $2,000 penalty per employee.
These new rules could affect the coverage your employer offers and the premiums employees pay. To comply with the mandate, some companies will be offering health insurance for employees for the first time in 2015. Conversely, some companies may be eliminating coverage for spouses in 2015 as a way to compensate for increased health insurance expenses. Also, the rollout out of online insurance exchanges and the elimination of coverage denials based on pre-existing conditions, both of which went into effect last year, could drastically change the price and availability of coverage outside of your employer’s plan.
The Affordable Care Act could affect the health insurance coverage your employer offers and the premiums employees pay this open enrollment season.
In light of these changes, you should closely review the insurance options your company is offering for 2015. In the weeks leading up to your open enrollment period, your employer will send you a packet of information outlining the specifics of its 2015 health insurance options. Take time to study this information and think about what your out-of-pocket expenses and total risk exposure could be under different scenarios.
This analysis can be fairly complicated. At Eilts & Associates, we are available to go through the numbers with you and help you understand the financial implications of the different plan options.
Maximize the Value of Other Benefits
Although health insurance gets most of the attention, many companies offer a bevy of other benefits. During the upcoming open enrollment period, it pays to go through each of these options to make sure you aren’t leaving any money or tax benefits on the table.
Flexible Spending Accounts: Many companies allow their employees to open a Flexible Spending Account (FSA), which lets the employee pay for qualified healthcare expenses with pre-tax dollars.
Life and disability insurance: If your company offers life and disability insurance, check to make sure the amount of coverage is appropriate for your family situation. Events such as the birth of a child, marriage, or a change in your spouse’s employment status could significantly alter your insurance needs. If you decide to revisit your life or disability insurance plans, we are happy to work with you to help you determine the right amount of coverage for your needs.
Vision and dental insurance: Check to make sure the benefits and provider options fit with your family’s needs. Depending on the amount of the monthly premiums, it might make sense to forgo this insurance and instead put extra money in your Flexible Spending Account.
Wellness benefits: Companies are starting to subscribe to the theory that “an ounce of prevention is worth a pound of cure.” That’s why many employers are beginning to offer increased wellness benefits, such as gym membership vouchers and free consultations with nutritionists. Also, many preventative care services, such as physicals, vaccinations, and screenings are fully covered by insurance plans. Make sure you’re taking advantage of all of the different wellness benefits that are available to you.
Dependent care: Many companies offer some form of dependent care benefits. Plus, you can put up to $5,000 per couple of pre-tax dollars into a Flexible Spending Account to pay for daycare and other qualified dependent care expenses. (The $5,000 limit also applies to single parents.)
Retirement savings: Although you can make changes to your 401(k) contributions and asset allocation any time during the year, open enrollment is a good time to check in on your progress.
Make the Most of Your Benefits
We all spend a lot of time thinking about ways to secure that next raise or promotion, but one of the easiest ways to increase your total compensation is to maximize the value of your employee benefits. The changes created by healthcare reform for 2015 have created a more dynamic environment for health insurance, so you’ll need to spend extra time studying the plans offered by your employer this year. The open enrollment period is generally limited to a few weeks, so you need to be on the ball this fall and be ready to act fast.
At Eilts & Associates, we are always available to help you analyze your benefit options. Once you receive your benefit summaries from your employer, you can contact us (773.525.6171 or bart@eiltscpa.com) to set up a time to discuss what makes the most sense for your and your family.
