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It’s that time of year when workers have to make decisions about their benefits.
Many companies are starting to hold their annual open enrollment period, which is when employees can sign up for 2023 health insurance — as well as consider other benefits, if your employer offers them. Some may offer extras like supplemental life or disability insurance, pet insurance, or education assistance.
“People tend to [review] their benefits very quickly,” said Paul Fronstin, director of health benefits research at the Employee Benefits Research Institute. “I think the most important thing is that you actually look at what’s on offer.
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For health insurance, workers may have several options to choose from, including a high-deductible health plan, which in 2023 means a plan with a deductible of at least $1,500 for individual coverage and $3,000 $ for a family plan.
Due to the higher deductible – the amount you pay for covered medical expenses before the insurance takes effect – monthly premiums may be lower than for other coverage options.
Health savings accounts benefit from a triple tax advantage
High-deductible plans may also come with a health savings account, or HSA. This comes with a triple tax benefit: contributions are made before tax, investment growth is not taxed, and withdrawals for eligible medical expenses are also tax-free.
For 2023, the annual HSA contribution limit is $3,850 for personal coverage and $7,750 for family coverage. You can also leave the money there from year to year.
If no HSA is offered, your company may offer a Flexible Health Spending Account, or FSA. The money you contribute to the FSA is also paid before tax and used to cover medical expenses. This year, the contribution limit is $2,850 per employee. (FSA caps for 2023 have yet to be announced.)
However, they usually come with a ‘use it or lose it’ clause – meaning that if you don’t spend the balance by the end of the year, you lose it unless your business decides. be one of those that give you a grace period or allow a certain amount to be carried over to the next year.
“You have to think carefully about how often you go to the doctor, how much of your maintenance medications you have,” Fronstin said. “You could end up losing at least some of [your contributions]depending on the configuration of the FSA.”
Whether or not you use either of these pre-tax savings options, it’s important to think about how you would cover out-of-pocket costs resulting from seeing a doctor or using the system. healthcare, said Jeff Levin-Scherz, executive director for Willis Towers Watson.
“It may cost more in premiums to pay less out of pocket…but many families can’t afford unexpected expenses,” Levin-Scherz said.
Employees contribute an average of $4,412 for their health insurance in 2022, of which $2,520 is paid in premiums and $1,892 is paid through cost-sharing such as deductibles, copays and coinsurance, according to Aon.
Other benefits may be available
In addition to health insurance, disability insurance may be offered to you free of charge or at a reduced cost. The two basic types are short-term disability, which typically replaces 60% to 70% of your salary, and long-term disability, which typically occurs after three to six months and accounts for approximately 40% to 60% of your income. Some companies also allow you to purchase additional coverage.
The same goes for life insurance: you can get a certain amount of coverage—say, equal to a year’s salary—for little or no premium, with the option to purchase additional coverage.
If you’re considering taking out disability or supplemental life insurance, keep in mind that the policy is usually linked to your employment with the company providing the cover – meaning that if the cover is important to you in the long term, you may want to consider purchasing a policy. outside the workplace.
Other common benefits that might be available through your job include financial planning, tuition reimbursement programs and back-up childcare, according to a 2021 survey from Willis Towers Watson. Some companies also offer emergency savings options, provide student loan debt relief, or contribute to 529 college savings plans.