Most of your companies will be holding their open enrollment period this fall and the beginning of 2011 for your health and retirement benefits. With the recent health care reform changes, health insurance premiums will rise even higher each year. Recent financial reform legislation may also increase the fees that stock brokers charge within your retirement plans. Don’t be surprised to see a lot of changes to your current health care options and 401(k) options. Expect more out-of-pocket expenses with your health plans and your boss to be throwing incentives at you to get and stay healthy. Here are some quick facts from CNN Money Magazine about what you can expect at your next open enrollment
- 8.9% increase in employer health care costs expected for 2011
- 43% of companies plan to increase the cost of sharing over the next 3 to 5 years
- The average share of premium for 2010 was $3,997 for a family plan
- The average family deductible in 2007 was $1,040 and rose to $1,518 in 2010
- 63% of companies reward workers who fill out health risk questionnaires
- 18% of employers levy penalties for smoking and other health risks
- 29% of employers plan to penalize workers for smoking and other health risks in the next three years
- 85% of companies offer flexible spending accounts, but only 22% of eligible workers contribute to them.
Yeah, I know those statistics and facts are depressing. I’m not trying to be Debbie Downer; I’m just trying to soften the blow as you go into your open enrollment workshop for work!
Here are a couple of tips to consider during your open enrollment period:
- If you’re healthy, go for the smaller premium and larger deductible. You can save a lot of money on your health care by saving up enough money in a saving account for a larger deductible and spending less on a premium. If you’re a healthy single person, a bigger deductible is a good option.Consider the flexible spending account if you have upcoming health expenses. If you can’t think of anything that you’ll be spending money on regarding your health this year, then don’t do the FSA. The reason I say this is because if you don’t spend it, you lose it and they may not allow you to buy up a bunch of Tylenol and allergy medicine anymore to use up the money. But, if you know that you’ll be getting your wisdom teeth pulled, braces for your kids, or new glasses, then putting money into an FSA for the year and getting the tax advantages is a great option.
Choose the Roth 401(k) if your company offers it. A Roth 401(k) is a great product, especially if your company offers a match on your investment. It acts just like a Roth IRA in that it grows tax free and when you take the money out at retirement, it’s not taxed. But, it’s sponsored by your company and you can get the full company match if they offer one.
The most important thing to remember during open enrollment is to use the resources that your company provides to you. Make sure you ask questions to the HR representatives and ask if they have a financial advisor that you can call if you’re confused about the products offered within the 401(k) account. Sometimes the health insurance products can be really confusing, so don’t choose a plan blindly, because you’re often stuck with that plan for a while once you do pick it.