Employer Benefit Enrollment: Trick-or-Treat?

Posted: Updated:

It's that time of year when goblins ring your doorbell and employer benefit enrollment information pings your mailbox. Employers use these benefits to entice us to join and remain at their companies, but personally owned options may be a better choice. Do you know if your benefits are a trick or a treat? Sometimes, you need to pull off the mask and find out!

Retirement Savings Plan

Employer retirement savings plans, such as a 401(k), are almost always a treat. You receive a tax deduction on your contribution, the money grows tax-deferred and your employer may even match your contribution up to a certain percentage. Free money anyone? What’s not to like!

Just make sure your investments are diversified and not concentrated in one security or sector, such as your company stock. The account is in your name, so once you leave your employer you can roll the account to an IRA or your new employer’s retirement plan. Some matching contributions are subject to a vesting schedule. If you depart before you’re fully vested, be prepared to leave some of that match behind.

Health Insurance

Employer-provided health insurance plans can be tricky, but usually they’re a treat.  Review all available options to determine which plan best meets your needs. You should also review your partner’s health coverage to see if his/her employer’s coverage is better or less expensive than your coverage.

Many employers switched to high-deductible health plans with a health savings account (HSA) feature. The treat this coverage offers is lower premiums and the ability to pay for medical expenses with tax-free dollars. The tricky part is the high deductible. With the exception of covered wellness visits, you’ll pay out of pocket for your medical costs until you meet the deductible. That can be $6,000 or more!

If you leave your employer, you’re eligible for COBRA insurance. COBRA lets you stay on your former employer’s health plan for 18 months. When you elect COBRA, you become responsible for the full cost of the monthly premium – your employer no longer contributes.

What happens to your medical coverage if you become sick and take a leave of absence? If the Family Medical and Leave Act (FMLA) applies in your situation, your employer is required to continue to offer you health insurance until FMLA coverage is exhausted. Employers vary on how much, if any, of the premium they will continue to pay. Moreover, since your leave is usually unpaid, you will need to pay your portion of the premiums out of your checking account. When FMLA coverage ends, you typically have the option to elect COBRA.

Life Insurance

Many employers offer life insurance, which is often a paid benefit, in the amount of one times your salary. You may have the option to purchase additional coverage with your employer. The treat with this coverage is that there’s typically no medical underwriting, and the pricing can be reasonable. However, the tricky part is that most employer life insurance pricing is based on age-bands. Coverage is reasonable when you are in the 25-30 age bracket, but maybe not so much if you’re in the 60-65 age bracket. When you purchase your own level-term coverage, separate from what your employer offers, the premium never changes. And, if you leave your employer, you’re still covered by your own policy!

What happens to your employer life insurance benefits if you become sick and take a leave of absence? Or, what if you can’t return to work? Some policies allow you to convert your employer group coverage to individual coverage, but beware, your premiums will be much more expensive. You’ll need to contact the life insurance company that issued the group coverage to determine if your policy is convertible.

Disability Insurance

Disability coverage is an often overlooked, but important, type of insurance. The average worker has a 30 percent chance of being disabled during his/her career. Could you live on your existing investments if you are unable to work? Some employers offer group disability insurance which often pays 60 to 70 percent of your current work income. That’s a treat! Be sure you understand the policy provisions, including the definition of disability (very tricky), the elimination and benefit periods, and inflation protection. Not all employers offer disability insurance. So, if you have it and then change jobs, you might need to purchase an individual policy, and that can be expensive.

Summary

When that benefit packet hits your inbox, don’t automatically enroll in what you had last year. Your needs change as do the benefit plans. Take full advantage of employer benefits, but don’t overlook a need to supplement with personally owned coverage where necessary. Benefits should be a treat basket, not a bag full of tricks!

Meredith Carbrey, CFP, is a Senior Wealth Advisor with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at bedelfinancial.com or email Meredith.

  • Perspectives

    • Expand Your Workforce to Include The Deaf Community

      While there are arguably many minority groups that are grossly underutilized in the workforce, I’d wager that most people do not consider the Deaf community when thinking about diversity and inclusion strategies. The Deaf community shares a unique culture that is closely networked, but few employers know how to tap into this community, which comprises 10 percent of the population. In fact, many people probably see barriers for the Deaf community when it comes to employment...

    More

Subscribe

Name:
Company Name:
Email:
Confirm Email:
HTML
INside Edge
Morning Briefing
BigWigs & New Gigs
Life Sciences Indiana
Indiana Connections
INPower
Subscribe
Unsubscribe

Events



  • Most Popular Stories

    • Mike Strohl and Rob Pruitt

      500 Festival Names Board Officers

      The Indianapolis-based 500 Festival has elected officers for its 2018-2019 board of directors. The nonprofit says Mike Strohl, chief customer officer for Citizens Energy Group, will serve as chairman of the board. Strohl previously served as vice chairman of the board for the 500 Festival. Chief Executive Officer Bob Bryant says Strohl's leadership and relational approach to the nonprofit's mission has been "exemplary."

    • The Union Club Hotel was built in 1929. (photo courtesy of Purdue University)

      $30M Gift to Fund Purdue Hotel Renovation

      Purdue University says it plans to use a $30 million gift to transform an existing building into a world-class hotel. The gift from Bruce White, a Purdue alumnus and former trustee, his wife Beth, and the Dean and Barbara White Foundation, will fund the renovation of the Union Club Hotel, which will also serve as a laboratory learning environment for students. The university says the renovations will feature upgrades in furnishings, fixtures, and amenities for the hotel, as well as a...
    • Cottongim Joins Taft’s Municipal And Legislative Team

      Taft Stettinius & Hollister LLP has added Ann Cottongim as director of municipal and legislative relations. In this role, she will direct the firm's objectives involving local and state government affairs by maintaining and nurturing relationships with municipal, county and state officials. She previously served as deputy director and CFO of Aim (Accelerate Indiana Municipalities, formerly known as Indiana Association of Cities and Towns (IACT)).

    • Indiana Sports Corp. Hires Two

      Indiana Sports Corp has named Sandy Bryant-Willis chief talent officer. She spent the last 15 years at Eli Lilly and Co. Also, Sam Elmore has been hired as business development manager. He previously worked for Pacers Sports and Entertainment in several sales roles since 2008.

    • Indiana Emergency Response Names Award Winners

      The Indiana Emergency Response Conference has presented its annual awards, honoring the best and brightest among Indiana first responders and public safety officials. The IERC serves as the annual gathering for firefighters, emergency medical services, law enforcement, emergency management agencies, hazardous materials professionals, special operations personnel and telecommunicators.