Are you graduating from college and starting your first job? Have you been working for several years and are now considering a career change? Along with these exciting changes comes the need to review and make decisions about the benefits offered by your employer.
Whether it’s your first time making employee benefit decisions or you have gone through this process multiple times in your career, it’s important to take an active role in ensuring that your benefit decisions are appropriate for your individual situation. Benefit plan regulations do not allow you to make changes during the plan year unless you have experienced a qualifying life event (like marriage or a new baby), so you want to get it right the first time. Here are some tips to help you ace the process.
Take an Active Role. Approach the decision-making process the same way you would a major purchase such as a car, appliances, computer, etc. Studies have shown that most people spend more time researching the purchase of a TV than they do their health plan decisions. According to the Department of Labor, your salary equals roughly 70 percent of your total compensation, with employer-paid benefits making up the other 30 percent. That’s a significant portion of your total compensation!
Ask Critical Questions about Your Healthcare Needs.
- How much did you spend in out-of-pocket costs last year?
- What known health expenses do you have for the upcoming year? Include doctor visits, prescription drugs, and expected medical procedures.
- Do you anticipate any life changes, such as the birth of a child or are you getting married?
- Review the provider network to confirm if your physician, pediatrician, or hospital will be in the network. Going out of network can be costly.
Review ALL of your options. If you are married and your spouse has access to their own employer-sponsored coverage, review both plans to determine what makes the best financial sense. While it’s not always the case, more often than not, it is cheaper for your spouse to be covered by their own respective employer plan. If you have access to more than one type of health plan design, be sure to evaluate which plan is right for you. If you do not anticipate using expensive healthcare services in the coming year, you can save a lot of money on the premium cost by electing an HSA Qualified Health Plan.
Pay Attention to What Your Annual Costs Will Be. Focusing solely on the premium contribution cost in each pay period is one of the biggest and most common mistakes. Instead, make sure you know what your annual premium cost is, as well as your out-of-pocket costs for deductibles, copays, and any coinsurance during the plan year.
Understand How FSAs and HSAs Can Save You Money. Both of these accounts allow you to put aside money on a pre-tax basis to pay for future medical, dental, and vision expenses. While a medical FSA makes funds available to you upfront, the downside is that it is a “use it or lose it” account – meaning you have the potential to forfeit funds if you do not spend them.
On the other hand, an HSA allows you to save for future health care expenses with a personally-owned account balance that rolls over from year to year. The only requirement is that you must be enrolled in an HSA Qualified Health Plan.
Take Advantage of any Health and Wellness Programs Offered. Taking part in these programs can help you understand your current health status and could earn you financial incentives for healthy lifestyle choices such as committing to being tobacco free, getting a flu shot, or completing a team-based steps challenge. Besides the monetary rewards, participating in team wellness challenges can be a great way to build relationships with your new colleagues.
So, after you ace the interview, negotiate your salary, and accept that great job offer, don’t forget about the importance of the other 30 percent of your total compensation. When it comes time to make your benefit plan elections, remember to take an active role in the decision-making process. If you do, you are more likely to be satisfied with your decisions and have a greater understanding of how your employer’s benefit plan can help to provide financial security for you and your family.
Ellen Fenstad is the Human Resources Manager at Kreischer Miller. She joined the firm in 2006 after working in the financial services industry for many years and she loves educating our team about employee benefits. In her free time, she enjoys yoga, reading, and hiking area state parks with her husband and her dog. Contact Ellen at Email.
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