By Lynnette Khalfani-Cox, The Money Coach®
Open enrollment season is in full swing, and that means you have the next month or so to decide what to do about key benefits your employer provides. Some people dread open enrollment season, because they think they have to painstakingly pore over mounds of healthcare paperwork, and then spend days upon days trying to figure out what to do.
While it’s true that you’ll need to devote at least some time checking over your healthcare offerings, it’s also true that the process needn’t be painful or overly time-consuming. But you can’t procrastinate: depending on your employer, open enrollment season usually launches around Oct. 1 and wraps up about Dec. 31.Before the deadline arrives, here are three quick and easy steps you can take to make the most out of open enrollment season, all while improving your personal health and your family’s financial wellbeing.
- Review your existing healthcare benefits
According to research from Aon Hewitt, 55% of employees simply default to their current benefit coverage for the coming year, instead of actively reassessing their plan options. But this could be a big mistake — especially if your needs have changed, your family circumstances are different, or even if your old coverage has just gotten too costly.So don’t spend a ton of time on this chore. But do give your current healthcare benefits a serious review. It’s a critical “to do” task for open enrollment season.
As you look everything over, be sure to keep an eye on what your employer is telling you that’s different for 2019 versus what you already have, or had, in 2018. Look at your healthcare spending for 2018 and determine what, if anything is likely to change for the upcoming year.
If you decide to switch plans or change healthcare programs, don’t base your decision solely on cost. Obviously, it’s important to have affordable coverage. However, you should also think about the overall quality of the benefits for which you’ll be paying and receiving.
For instance, if you know you’d like to get pregnant or have a baby in the upcoming year, don’t switch into a basic, low-cost plan that doesn’t even provide prenatal and maternity coverage.
- Consider contributing to a Health Savings Account
Do you participate in a Flexible Spending Account offered on the job? If so, evaluate whether you’ve been socking away too much money, or perhaps not enough based on what you actually spent this past year.
HSAs have been around for the past 15 years and some 22 million Americans have HSAs, especially higher earners. Even better: if you want to put away healthcare dollars on a tax-free basis, plus pad your retirement account at the same time, look into enrolling in a Health Savings Account, or HSA. Although these plans can sometimes be complicated, they’re worth the extra effort.
For starters, you have to pair a HSA with a high deductible health insurance plan. Then you should fund the HSA. By funding your HSA, you’re setting aside money on a pre-tax basis to cover deductibles, copayments, coinsurance, and other qualified medical expenses. Warning: Don’t make the mistake that 20% of HSA holders do — and fail to fund your HSA at all.
OK, so how much can you contribute?
As of this writing (in October 2018), people with an HSA can save up to $3,450 for an individual and $6,900 for a family. Older Americans age 55 and above can sock away an additional $1,000 in an HSA, so that works out to $4,450 for an individual and $7,900 for a family. In 2019, the federal limits for Health Savings Accounts will increase slightly to $3,500 for individual coverage, and $7,000 for family coverage.If socking away that much money is way out of reach, at a minimum you should plan to contribute to your HSA at least enough money to cover your deductible.
According to the IRS, in 2018 a high deductible health plan is any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. Again, most people don’t contribute that much. But if you can swing it, an HSA contribution is definitely worth considering since you get to deduct 100% of these contributions from your federal income taxes.
If you don’t use the money for healthcare expenses, you’ll have extra funds available to you in retirement.
Two other bonuses to having an HSA: the funds in an HSA roll over year-to-year if you don’t spend them. So you don’t have to worry about losing this money if you don’t use it on healthcare costs. (Thus, the aforementioned retirement bonanza). Also, an HSA can earn interest, which is not taxable — another bonus from the Feds. In other words, by giving you certain tax breaks for having an HSA, Uncle Sam is underwriting your efforts to get healthy.
- Resolve to get healthy and save money
And speaking of good health, one easy thing you can do during open enrollment season is to ask your boss or your human resources specialist about any economic perks your company provides to its healthiest workers. Believe it or not, many employers offer substantial financial incentives – such as reduced health care premiums, lower deductibles, and free medical screenings – to workers who get healthy. So now is a great time to start an exercise program and lose a few pounds, stop smoking, or begin eating better to lower your cholesterol.
Don’t wait until January when you’re trying to make some big New Year’s resolution. Launch into a health and fitness regiment now and get a healthy head start on some good habits that will also put a few dollars back in your pocket.
By spending just a bit of time this open enrollment season on the things that matter most, you’ll boost your health, as well as your financial wellness in 2019 and beyond.
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