Tuesday, November 03, 2009

How To Take Advantage Of Open Benefits Enrollment

Just a reminder that it might be the time (only twice a year, unless a major life event happens) for you to review your health care and other benefits.  This year, a growing theme is more consumer driven health plans, that is you, the consumer, taking more control of your health care costs vice your employer.  We all know that the subject of health care coverage is a major headache, and in debate in Congress.  Until that is sorted out, you can do a few things to lower your costs:

1) If you are using a traditional plan, that costs more per month, but has lower out of pocket costs, be sure to take advantage of the Flexible Spending Account (FSA) option.  These allow you to set aside pre-tax dollars for expenses like doctor's co-pays, contact lenses, and other other IRS-approved items. 

2) Consider a high (er) deductible health care plan that comes with a Health Savings or Health Reimbursement Account.  These are designed for you to pay lower premiums monthly, but face a higher threshold of cost in the event that you have medical needs beyond the routine.  Good thing is that many plans still cover preventative care visits- gratis.  Look for a Health Savings Account (HSA) plan among your options.  The difference is that the Health Reimbursement Account (HRA) belongs to your employer (because ideally they are contributing along with you to offset health care costs) and must be sacrificed when you leave your firm, although it still grows year by year, just like the Health Savings Account.  The Health Savings Account is portable, meaning, you can take it with you, and it grows year to year as well. And, hopefully your employer is contributing to that as well.  It saves them money.  You can contribute pre-tax dollars as well, up to statutory limits, which vary by age.

For more information on these alternative plans, especially about the types of medical costs that can be covered with HSAs, HRAs, and FSAs, visit the IRS.  (It's a surprisingly straightforward document and worth a look.)

Bottom line: carefully research your options and don't just take your default choice out of laziness.  There's money to be saved.  Ask your company's HR practitioner for help, too.  Some plans are clearly better for than others.