“Insuring” You’re Covered
Many times we plan for things we can expect; however, we must also plan for those that are unexpected. While this week’s blog is focused on a totally different topic, I would be remiss if I did not acknowledge the deeply saddening geopolitical events unfolding in Israel. The current human toll is unimaginable and while we try to make sense of what is happening overseas, we will continue to do our best to provide some context as it pertains to market conditions. We are here if you have questions.
For those who are looking to plan for both the expected and the unexpected, October is a key month as it related to insurance coverage. If you are still working and covered by employer benefits OR if you are covered under Medicare October kicks off most plans open enrollment period.
For those receiving employer benefits, open enrollment is the span of a couple of months when you can enroll or make changes to your benefits outside of Qualifying Life Events. You may have the option to change / sign up for benefits such as:
- Supplemental health insurance (e.g., hospital, accident, cancer, and critical illness insurance)
- Legal insurance
- Life insurance
- Disability insurance
- Dental insurance
- Vision insurance
- Pet insurance
- Health savings and spending accounts including HSAs, FSAs, DC-FSAs, commuter benefits and more
For those who are on Medicare, open enrollment runs from October 15th – December 7th each year in which you can make changes which include :
- Switching from Original Medicare to a Medicare Advantage (MA) plan (or vice versa)
- Switching to a Medicare Advantage plan with or without prescription drug coverage
- Switching from 1 Medicare Advantage plan to another
- Joining, switching or leaving a Medicare Part D prescription drug plan
- Switching to a new private insurer
Whether you are receiving employer benefits or Medicare or both, there are several key steps to take to ensure you are making the most of your coverage.
Review your current situation:
- Take a moment to refresh yourself on what you are actually enrolled in. Many employees make their elections at the beginning of their employment and forget what they actually signed up for! Some helpful questions to ask yourself when planning for benefits:
- Have doctors or prescriptions changed or are you wanting to make a change next year? Do you anticipate healthcare consumption and spending will increase, decrease, stay the same in the coming year? Have you been putting off a big procedure until next year? If you are covered mainly by Medicare, are you planning on traveling overseas for an extended period of time as original Medicare typically does not cover services overseas?
- For employer sponsored benefits, if you are expecting to add or remove dependents next year, this is considered a Qualifying Life Event and therefore changes can be made outside of open enrollment. Medicare also has Special Enrollment Periods for major life events.
Familiarize yourself with any plan changes:
- Double check to see if there are any changes or additions to vision and dental care, healthcare flexible spending accounts, dependent-care flexible spending accounts, life insurance, dependent-care FSAs, student loan repayment programs, public transit assistance, and long-term-care insurance.
- Review how your premiums may be changing as well as deductibles, copays, and out-of-pocket maximums. Doing so now can give you plenty of time to budget for these costs in the upcoming year.
- Many companies have been starting to offer high-deductible health care plans, which tend to have lower premiums and may be a great option for those who are in good health and do not have medical expenses beyond preventative screenings and annual physicals. These pair nicely with a Health Savings Account (HSA) and are the only type of health insurance that can utilize the HSA.
- For those receiving Medicare, costs and benefits can change annually, so it is still recommended to review the plans prior to the open enrollment period on October 15th
Make your HSA / FSA Elections if applicable.
- The reality is most individuals will have out-of-pocket expenses for healthcare even with medical coverage and many companies offer either Health Savings Accounts and / or Flexible Spending Accounts. Both offer tax benefits, but have significant differences:
- Flexible Spending Account (FSA) funds are contributed pre-tax and the money must be distributed by end of calendar year. These are great if you know for certain there are going to be bigger health / medical related costs (i.e braces!) where regular health insurance won’t cover the full cost.
- Health Savings Accounts (HSAs) can only be contributed to if you are covered by a high-deductible health plan. Funds are contributed pre-tax and the funds in the HSA can be rolled over from year to year.
Review Disability and Life Insurance Coverage
- You hope you never need them, but these two types of coverage are critical to preserving your hard earned savings and maintaining quality of life for you and your family. From Morningstar, “According to the Social Security Administration, one in four workers age 20 or over will encounter a disabling condition that lasts a year or longer. Meanwhile, 5% of workers will experience a short-term disability (six months or less) owing to illness, injury, or pregnancy on average every year.”
- Disability – most employers offer short-term disability covering periods of 3-6 months at no cost to the employee. Long-term disability coverage begins after short-term disability ends. Ideal long-term disability should cover between 50-70% of income. If your employer provides a long-term disability coverage option, it is recommended to pay the premiums with after-tax dollars so that disability benefits are non-taxable. This strategy enhances the benefits during a period of time where income replacement is crucial.
- Life Insurance – a common default in large employer plans is to provide life insurance coverage of either $50,000 or 1x salary; however open enrollment is an excellent time to review what the options are to increase this coverage depending on your needs. Group plans tend to have lower costs as well as less stringent underwriting processes. For those who have dependents, growing families, or have pre-existing conditions, group life insurance can provide needed additional coverage that may be too expensive through a private insurer.
Utilizing the open enrollment period to re-evaluate our individual and family needs to ensure we protect ourselves from one or more losses may feel like small potatoes in the grand scheme of everything that is going on in the world. But certainly it can provide us with some perspective to count our blessings / benefits.