It’s Annual Benefits Enrollment Time
November 9, 2008 – 8:18 amAt my company it’s time to enroll for my annual benefits for 2009. Three main things you might want to consider:
- Don’t forget to consider long-term disability insurance. My company offers this free of charge, but it only covers 35% of my income. For an additional few hundred dollars a year it will cover 60%, which is a good deal based on some other policies I priced online. Before kids I didn’t feel that I needed this coverage because my wife had a good job. Going to one income though and with more mouths to feed I’ve decided to add it this year.
- Don’t forget to consider AD&D insurance as well. AD&D is Accidental Death and Dismemberment insurance. These policies don’t pay out very often, and the upside from this is that they are very inexpensive. Life insurance typically covers you in the event that you pass away, including from illnesses. AD&D covers you if you die or are injured from an accident. Risky hobbies are typically not covered (sky-diving, etc). You could also think of this as a bit of added life insurance. If you’re young, work a desk job, and heaven forbid something did happen it’s likely to be an auto accident or an unexpected illness. My company offers 1x my pay for less than $50 per year, which is less than half what my term insurance costs for the same amount of coverage. I’m going to have to give this choice a little more thought before signing up, but it seems like an affordable way to get a little more coverage.
- Don’t forget to fund your flexible spending account. My company doesn’t roll over my FSA amount from last year, so I need to sign up for it every single year. You should check your own plan to be sure, but some plans (like mine) now allow you to spend the funds by the middle of march of the following year. This gives you about 14.5 months to use the funds before losing them. The key here is the tax savings since these funds are pre-tax, so if you’re off on your estimate by less than your tax bracket percent you made a good decisions. For example, if you’re in the 25% tax brack and you contribute $1,000, you made a good decision to fund the FSA if you spend at least $750.
On a related note my wife and I decided to choose an “enhanced” medical plan, which has a lower deductible and percentage copay but a higher annual premium. Our company did the legwork to figure out that if you plan to spend $10,000 on medical expenses in a single year that it will be less expensive going with the enhanced option. I spoke with three separate people here at my work, two of which had twins recently, and all three recommended that I go with enhanced option. The one person I spoke with that didn’t have twins said that his (singleton) baby’s delivery costs would have been around $8,000, but a C-section casued them to double to over $16,000. Sounds like with twins it’s a no brainer. I’m thankful for the timing of the due date though, so we had the opportunity to change to the enhanced plan for one year and refill our now-empty flexible spending account.
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