How to Handle the End-of-the-Year Open Enrollment Insurance Period
These days, if you see a bulky envelope from the human resources department in your mailbox, you're liable to run the other way as fast as you can. Actually, that packet may not be bad news, but information about your end-of-the-year open enrollment for insurance and other company benefits. This is not something you should dread, but instead see as an opportunity to save yourself money and give yourself an important piece of financial security.
To take full advantage of that opportunity, you need to arm yourself with a copy of your current benefits and, if possible, your financial records. The adjustments you make to your insurance needs are all personal, so taking your particular case into account is extremely important. But there are some rules of thumb that govern what to seek out and what to avoid.
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Instructions
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Life and Disability Insurance
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Before you get to health insurance, take a look at what your company offers in terms of life insurance. You may automatically get life insurance from your employer in addition to a supplementary policy. The number you are looking for in terms of life-insurance coverage is seven to 10 times your annual income. You should be able to get to that amount with little expense on your part.
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Investigate whether your company offers a supplemental life-insurance policy for your spouse. This is especially helpful if your spouse doesn't work or doesn't have the same benefits at her own job. If she doesn't work, the benefit amount should cover the cost of her funeral and the cost of any childcare she provides at home.
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Sign up for the disability insurance if it is offered as a benefit by your company--regardless of your age. You need to have some guaranteed income in case you are hurt and can't work. You will get some income from Social Security, but the rule of thumb is to sign up for a policy that secures at least 65 percent of your current income.
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Don't go without insurance. A younger, healthier worker may gamble on opting out of any insurance benefits to have more income. This is a terrible idea, since health problems can hit people of any age, and the high cost of health care is the leading cause of bankruptcy. Without insurance, bills can pile up quickly.
Health Insurance
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Consider the cost of the premium vs. the cost of your deductible. If you are able to lower the monthly cost of your health-insurance premium and throw that money into a savings account, you are basically self-financing your deductible. This will result in overall cost savings, self-financing of your health cost (especially if you never meet your deductible) and peace of mind. You are able to take control of your own money, instead of it being controlled by the insurance company through your premium payments.
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Ignore any specialized insurance, which is usually not worth the extra premium payments. Cancer insurance or other policies that are disease-specific are rendered moot by your existing policy, if you have a quality plan with good coverage. And if you have a good health-saving account, you will be able to cover any costs of deductibles that will kick in with the higher costs that come with these diseases.
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Always sign up for a health saving account or a flexible spending account if you have the opportunity. These programs will enable you to automatically pay yourself first and finance a savings account to cover any out-of-pocket health care costs, including your deductible. A flex spending account, though, is a use-it-or-lose-it proposition, so you will need to get a good estimate of your annual health spending and spend it all by the end of the year. You also benefit from this money being taken out of your pretax earnings, which will lower your overall income and tax burden.
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Look for and take advantage of any no-cost benefits in your health-insurance coverage. Many policies offer free annual physicals and other types of preventive care, since it benefits your health and keeps costs down for the company. Don't let these benefits slip by. Keeping up with your health year-to-year will allow you to spot any problems early on.
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If you are over 50, investigate any long-term-care insurance policies your company may offer. When you get to retirement age, your health-care cost can really pile up, especially if you require full-time care. Some companies even offer to buy a long-term-care policy for your parents. Compare that offer to other long-term-care policies that are available to them. This is a must-have for the aged.
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Tips & Warnings
It may be difficult, but read all of the material your human resources department provides you with at this time of year. It is only through really understanding how your insurance policies work that you can save yourself money and get all that you are paying for. You have have free benefits (see above), but without reading your policy, you may never discover them.
