Are You Picking The Right Insurance?

Open Enrollment

It’s that time of year again. You may have already selected or you may have not yet, but with open enrollment upon us it’s time for a refresher in all things insurance:

Health Insurance

All about that deductible …

One of the best places to revisit when you are looking at your health insurance is your deductible. Your deductible remember, is the limit you must reach before your insurance company starts to kick in. You must satisfy the deductible out of pocket. So for example if your deductible is $3,000. You would have to pay that much prior to an insurer helping out.

If you are looking to save money, this should be the first place to look. By lowering or raising the deductible you will see the biggest swing in premiums.

A word of caution.

If you plan on increasing your deductible to a higher limit, make sure you have an adequate cash reserve. Just because your premiums are lowered by raising your deductible doesn’t mean that you won’t have a health event where you might need to hit your entire deductible.

On the flip side if you are healthy and have a cash reserve in place raising your deductible might be a great way to save extra money.

HSA vs. FSA

Both of these tax advantaged savings plans are great. You put money pre-tax into them and it comes out tax-free as long as it is for qualified expenses.

The major differences:

You must have a high deductible plan in order to have an HSA (health savings account). If you don’t have a high deductible plan you could still contribute to an FSA.

An FSA is a use it or lose it plan. If you don’t use the entire amount by the end of the year the money is lost. Some employers will offer a provision to roll over up to $500 to the next year or have until March of next year to use the funds. Though, keep in mind this is not required.

Both HSA and FSA can help save in taxes by reducing your taxable income. Don’t forget to use these types of accounts if they are offered.

If you are getting health insurance through the exchange or through a new employer, double check with your doctor before signing up. Make sure they take your coverage before committing a year to the insurance plan.

Accidental Death & Dismemberment

Skip the coverage. There is a reason that the premiums are so low, the actual likely hood of something happening is very small. If you have coverage through life insurance it should be enough to make you whole.

Disability Insurance

If you are lucky enough to work for an employer who offers disability coverage, make sure you max out the benefit. By maxing out the benefit usually around 60%, you will be able to have an income stream in the event you get disabled. Should you pay pre-tax or post tax premiums? The best bet is usually to pay post tax premiums, so that if you were to be disabled the benefits would be paid out tax free.

Life Insurance

Everyone has their own specific set of circumstances that will determine how much life insurance you need. However, if your health is not great and you are looking for insurance, you may want to get as much as your company allows. Since it is group coverage it will expire when you leave. But since the insurer will cover everybody in the group, this usually makes it cheaper than getting an individual policy.

If your employer offers an additional benefits, such as gym memberships, wellness programs, and most important retirement benefits, be sure to go over all the details to make sure you aren’t missing any benefits.

Lastly, don’t forget to sign up!

Need to review your benefits? Not working with a financial planner? Schedule a free 30 minute strategy meeting with yours truly!

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

IRS CIRCULAR 230 DISCLOSURE:

To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

 

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