Why You Should Pay Attention to Open Enrollment Time

If you are employed by a company that offers flexibility in choosing your benefits, the open enrollment period is right around the corner. It’s your chance to make changes to your benefits. Many employees simply opt to maintain their current benefits. That could be the best choice for you, but before you default to your existing slate of benefits, consider if there are any potential financial advantages to making a few changes.

Finding cost-effective health insurance

Many employees now pay part or all of their health insurance cost, so finding the option that makes the most financial sense is a priority. Here are six key factors to keep in mind as you assess your health insurance options:

1. If you have to pay for spousal coverage, is your spouse eligible for coverage under his or her own plan in a more cost-effective way?

2. Have you explored your options under the Affordable Care Act? Even if your employer offers health insurance, you can still choose to buy health insurance on an exchange instead. Refer to www.healthcare.gov for more information.

3. If you are considering a change in health plans, check with your key heath care providers (doctors, clinics, etc.) to make sure they accept payment from the insurance plan you may want to select.

4. If you are contemplating choosing a high deductible health plan to reduce your monthly premium, consider family health history to assess whether this is a risk worth taking.

5. If you are enrolled or going to enroll in a high deductible health plan and meet other eligibility requirements, look into the potential benefits of a Health Savings Account (HSA), which provides a tax-advantaged way to pay out of pocket expenses for health care. Money you’ve set aside in your HSA that isn’t spent now can be carried forward indefinitely to meet out-of-pocket expenses in future years.

6. If you have major expenses coming in the next year that aren’t covered by insurance (such as braces for a child), consider setting money aside in a Healthcare Flexible Spending Account. You may be able to defer up to $2,500 into this account (contributions are deducted from your paycheck before taxes). The risk is that dollars set aside must be used by the end of the calendar year or you lose anything left in the account for that year, unless your employer adopts a carryover provision.

Review other benefit options

Depending on what your employer offers, you may be able to take advantage of other benefits. Even if they require some out-of-pocket contribution from you, they may be a good bargain compared to going on the open market. These benefits include:

• Life insurance – many employers offer a limited amount that can provide some protection for your family. Be sure to take advantage of any free coverage provided by your employer.

• Disability income insurance – this can provide cash flow for your household if you suffer a disabling injury or illness.

• Retirement plans – be sure to participate. At the very least, contribute enough to that plan to take full advantage of any amount the employer may match.

Remember to keep track of the deadlines set forth by your company for open enrollment as they can sneak up on you. Also make certain that you’ve listed all family members who need to be included under your health coverage.

Given the important role that benefits play in your overall financial picture, you might not want to make the decision alone. Your financial advisor can help assess what changes to your benefits might be beneficial for your overall financial picture. An advisor also can provide perspective on how to plan for your long-term goals as they relate to your workplace compensation package.

Jeff Mushen, MSF, CFP, ChFC, APMA, is a Financial Advisor and CERTIFIED FINANCIAL PLANNER practitioner ™ with Ameriprise Financial Services, Inc. in Edmonds, WA. He specializes in fee-based financial planning and asset management strategies and has been in practice for eight years. To contact him, www.ameripriseadvisors.com/jeffrey.m.mushen.

Ameriprise Financial Services, Inc. Member FINRA and SIPC.

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