Open enrollment key considerations
It’s that time of the year that your company will likely offer new benefits for 2020; here are some key considerations as you elect for those new benefits.
Health insurance costs are increasing for individuals and companies across the board. A way for companies to keep plans relatively inexpensive is to offer employees Health Savings account (HSA) eligible plans. These plans have high deductibles but allow for employees to make tax-deductible contributions of $3,550 (individual) or $7,100 (family plans) in 2020 less any employer-made contributions. This can be invested and distributed tax-free on eligible medical expenses. If you anticipate high medical expenses next year, this may not be the plan for you.
Disability insurance is critical to insure against a loss of income from long-term sickness or injury. Generally, it’s recommended to max out on your group long-term disability coverage which can often cover 60% of your salary. Group disability benefits are taxable, meaning that if you’re in a high tax bracket, expect a much less amount than stated. Supplementing your group coverage with private insurance is almost always suggested and those benefits would be tax-free.
Life insurance is necessary if you have dependents. Any short and intermediate-term debts, such as a mortgage should be covered by life insurance so that the beneficiary can remain financially viable. Group life insurance can be good for these types of scenarios, however, keep in mind that group insurance goes away once you leave your company. For life insurance to last over a longer period, it’s suggested to obtain this in the private marketplace.
Estate planning services may be offered by your company’s plan. If you elect for this service, they have a network of attorneys who can draft you a will, power of attorney, and health care directive. This service may not be needed every year as you should generally update your documents once every five years or if there’s a change in your financial situation.
At Eureka Wealth Management, I’ll review your workplace benefits with you in order to take advantage of any available benefits. I also do financial planning and broker life, disability, and long-term care insurance as needed. Call for a free initial consultation at (760) 537-0791 or online at eurekawealthmanagement.com.