7 QUESTIONS TO ASK DURING “OPEN ENROLLMENT” PERIOD
It seems that every August has the same vibe. The days will get shorter, children will go back to school and of course, the start of Football season. As the Summer season ends in our personal lives, the workplace will begin their annual Open Enrollment Period during the Fall season.
Here is a list of what most people will overlook when they review their 2016/17 Employer Benefits package:
7 QUESTIONS TO ASK YOURSELF DURING OPEN ENROLLMENT PERIOD
· Do I have the best Health Plan for my needs?
Often people will consider the best plan as the lowest premium cost. Take caution to this method. This could end up costing you more money in the long run; due to copays, increased prescription costs and other fees that can add up fast.
Take time to set up a one-on-one meeting with your benefits representative to help you figure out what makes the most sense for you financially — and wellness-wise.
· Does my employer offer “company perks?”
Ask for perks! Some companies offer perks that are rarely used by its employees. An example, if you use online-pharmacy, you can get a three month supply for two months’ copay. Want to invest in your company? Ask for “employee stock” purchase programs which is another way to buy company stock at a discounted rate. Want to save on other items? Ask for discounts on event tickets, gym memberships, cell phone provider and auto & homeowners insurance. There could be hundreds in savings if you ask HR for company perks.
RELATED: HOW DOES AN EMPLOYER BENEFIT FROM A 401(k) MATCHING PLAN?
· Am I Maximizing My Retirement Savings?
Contribution plans such as 401(k) and 403(b) plans have grown in popularity, as traditional pension plans have declined. However, not all employees take advantage of these plans, or if they do, they don’t always take the time to look into their company’s matching program. If your employer matches your contributions, take advantage of it. You wouldn’t throw away free money would you? This is money your employer wants to add to your retirement contribution- take it.
Tip: Request a recent copy of your retirement statement. How much are you contributing on an annual basis? Does the company match my contributions?
· Can I withdraw money from my 401(k) or 403(b)?
Something you have to realize is that your 401(k) &/or 403(b) are retirement plans that are on a tax deferred basis (before taxes). How much on taxes? It’s based on your tax bracket AND the amount of money you are withdrawing on that particular year. For example, you make retirement contributions now (2016) at a tax bracket of 28% but, you decide to withdraw money in 2025 and the tax bracket is 40%. You will have to pay taxes on the 40% tax bracket (time of withdraw). There are conditions available to you when you can withdraw money from your retirement account without any penalties and taxes. If you plan to purchase a home and need help with closing costs that money can be withdrawn as a loan. Or if you are terminally ill, funds from your account is available to you without any penalties.
· Should I Revisit My Benefits Now That I’ve Had a Major Life Change?
Whether it’s tying the knot, having a baby, getting a divorce or even nabbing a raise, a change in your financial situation can change what’s best for your benefits.
Beyond just checking to see if you can add a new baby or spouse to your insurance, there may be other options you can take advantage of, such as special child care programs for new parents.
If you are recently divorced, you may want to update the beneficiaries on your work-related retirement accounts or life insurance policies. And if you’ve scored a nice raise, it may be a good time to update your retirement account contribution amounts.
TIP: Use open enrollment season to make sure your health insurance and other benefits match your life as it is today — or will be very soon.
· Do I get to keep my companies life insurance policy?
Companies may offer or have a basic life insurance policy for their employees as a perk for working at the company. When you decide to retire, transfer or quit your job, chances are that life insurance policy will not go with you. Consult with your benefits administrator and ask if the life insurance policy is portable. They may offer you to keep the insurance policy. This can be upsetting for some pre retirees that will learn that their life insurance policy will be void when you retire from their workplace. It’s best to ask these questions ahead of time rather than find our upsetting news.
· What Benefits Election Mistakes Do People Often Make That They Regret Later?
The all-too-common mistake with the biggest potential impact: missing your open enrollment deadline.
Another common faux pas: Employees forget to talk to their spouses about their own employee benefits changes for the next calendar year before making their elections. For example, it may be worth it to join your spouse’s health insurance plan as a dependent, rather than keep a separate plan through your employer.
Financial Questions?Email me your question and I may feature it in my blog.
-Mauricio Rodriguez
The views on this article is based on the author’s opinion. You should consult with your financial advisor first, before making any decisions. Mauricio Rodriguez is a licensed agent CA Insurance License 0F83045.
