October and November are generally the months when annual benefit enrollment takes place. This is an important process that shouldn’t be taken lightly, as benefits should be evaluated and updated as a person’s or family’s needs change. Benefit elections can include things such as insurance coverages, tax-advantaged spending accounts, and more.
The list of benefits below is meant to highlight various enrollment options - many of which we receive questions on during financial plan reviews. The list below is not meant to be exhaustive or a specific set of recommendations as each person and family situation is unique.
Healthcare Coverage
Medical Insurance: Two of the more common medical insurance plan options are PPO and HDHP. Each can be an appropriate type of coverage depending on the situation.
- PPO (Preferred Provider Organization): ffers a broad provider network and generally there is freedom to see specialists without a referral. This coverage typically comes at a higher monthly premium cost compared to the HDHP but can offer lower deductibles. If you frequently need medical care, this could be the right plan.
- HDHP (High-Deductible Health Plan): Features lower monthly premiums compared to the PPO but higher deductibles before coverage kicks in. One advantage to the HDHP is that a qualifying plan may allow for a tax-advantaged Health Savings Account (HSA).
Dental and Vision Insurance: Many benefit plans allow for the selection of Dental or Vision coverage. It is important to research these oƯerings inside your plan description document.
Tax-Advantaged Accounts
Health Savings Account (HSA): If enrolled in an HDHP for Medical Insurance coverage, you may have the option of contributing to an HSA. Contributions to these accounts may provide a tax deduction, including savings on FICA taxes if made through payroll. Funds inside the HSA account have the option to be invested and will grow inside the account tax-free at the federal level. Unused funds roll over year to-year for healthcare expenses in the future. If used on a qualifying expense, distributions from the account are also tax-free at the federal level. These three tax advantages make the HSA something to closely evaluate when comparing pros and cons of health insurance coverages.
Flexible Spending Account (FSA): Allows pre-tax contributions for eligible out-of pocket medical or daycare expenses. This type of account generally requires you to use the funds within the plan year; some plans allow a limited carryover or grace period, so review your plan’s rules. An FSA may also limit your ability to contribute to an HSA.
Life & Disability Insurance
Group Life Insurance: Employer-provided benefit (sometimes 1–2x annual salary) at little to no cost to the employee. Pricing on group life insurance is often provided with little to no underwriting. Depending on your health history, it may be advantageous to price third party insurance policies that have underwriting, potentially oƯering a lower monthly premium than group coverage through your employer.
Supplemental Life Insurance: Optional additional coverage for an employee, an employee’s spouse, or an employee’s dependents. Payments for the monthly premium are generally paid via payroll deduction.
Accidental Death & Dismemberment (AD&D): Pays a benefit if an accidental injury results in loss of life or specific severe bodily injuries.
Disability Insurance
- Short-Term Disability (STD): Replaces a percentage of income if a non-work illness, injury, or childbirth prevents working for a short time (typically 3–6 months).
- Long-Term Disability (LTD): Can replace a portion of income for extended illnesses or long-term disabilities after short-term disability period runs out. There are many options to consider within long-term disability coverage.
Other Potential Benefit Options
Legal Plans: Enrollment in these plans gives you access to a network of attorneys for services like estate planning, contract reviews, and real estate transactions. You may be able to enroll in a Legal Benefit Plan and create a Trust, Will, Powers of Attorney (Medical and Financial), and Advanced Medical Directives, which may cost less than hiring an attorney outside of this benefit option. Covered services and costs vary by plan and state, so review your plan details.
Pet Insurance: Covers veterinary care for unexpected illnesses, injuries, and emergency surgeries for family pets.
Employee Assistance Program (EAP): Provides confidential short-term mental health counseling, legal consultations, financial counseling, and referral resources.
Again, plans can carry many benefit options. It is important that you review each option carefully before making selections during your annual enrollment. Note that while a life event (marriage, birth, divorce, death, etc.) can allow for mid-year changes, annual enrollment is generally the one time each year where changes can be made outside of those life events without penalty or loss of coverage.
This is an important time of year, and it is imperative to make informed decisions when it comes to benefits. Coordinating your selections in the context of a personal financial plan can be extremely helpful. If you have questions regarding benefits or some of the strategic decisions that can be implemented during the enrollment opening, don’t hesitate to reach out.
Not advice: This content is for general informational and educational purposes only. It is not investment advice, is not intended as a recommendation for any individual, and is not an offer or solicitation. Investors should consult their own advisor.
Tax and legal: This content is not a substitute for individualized tax or legal advice, and The Wealth Consulting Group does not provide tax or legal advice. Discuss your situation with a qualified tax or legal advisor.
Risk: Investing involves risk, including possible loss of principal. No strategy can assure a profit or protect against loss.
WCG affiliation status: Investment advice offered through The Wealth Consulting Group, an SEC-registered investment adviser, doing business as Impact Wealth Planners
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