Common Mistakes During Open Enrollment


Fall is a time of many changes. The temperatures cool, the leaves change color, and the world starts getting ready for winter. With all that change, there’s one thing people often leave the same: their workplace benefits packages.

November is the beginning of the open enrollment period for many workplace benefit plans. It’s also the open enrollment period for insurance policies on the Obamacare marketplace. This makes it an excellent time to review your insurance information and other benefits.  Destinations Credit Union has a partnership with TruStage Insurance which offers members good pricing on plans through the marketplace.  Watch our website for details.

These perks may have been a big part of what drew you to your job in the first place, so it makes sense to get as much out of them as possible. You may be paying too much (or too little!) for health insurance, and now’s your chance to fix it. Be sure to watch out for these three common pitfalls when enrolling in workplace benefits.

1.) The passive opt-in

When starting a new job, it’s easy to be overwhelmed by the barrage of paperwork and decisions. Health insurance decisions are just one of the dozen new responsibilities, so they get a fraction of the attention they deserve. For many people, though, those are the health insurance choices they stay with for much of their careers.

There are two key reasons why sticking with the default option may be a poor choice. First, your life situation has likely changed. As you get older, your need for more comprehensive health coverage increases. You may also need more extensive dependent coverage or you may have more disposable income to contribute to an HSA or FSA.

Second, your employer’s offerings may have changed. Most companies renegotiate their insurance rates annually, and may have negotiated for greater flexibility, lower premiums or better coverage. These are only options you’ll discover if you sit down with your HR representative and figure out your coverage for the next benefits year.

2.) Forgetting spousal benefits

Doubling preventative solutions is rarely a bad thing. Having a belt and suspenders seems like the most cautious way to keep your pants up. However, when it comes to health insurance, being covered by both your and your spouse’s plans can be a serious financial hazard.

First, you may be paying more than necessary. Adding a spouse to a workplace policy is usually cheaper than paying for two separate policies. Take a look at both policies and see which one provides the right combination of better prices and better coverage.

More dangerously, double insurance can frequently leave you in the middle of a fight between insurance companies. Both will insist that the other should pay first, and you could wind up buried under a mountain of paperwork for coordination of benefits. This trouble can compound when there are children covered under multiple policies. While you’ll never be on the hook for the whole charge, you may have to work twice as hard to get covered.

If you and your spouse are on different enrollment periods, most companies will provide a preview of the planned benefits offerings outside open enrollment. This allows you and your partner to review and consider the available options. Picking one insurance plan for both of you can really cut down your costs.

3.) Ignoring HSA/FSA options

Enrolling in a Health Savings Account (HSA) or Flexible Spending Account (FSA) can sting at first. Seeing dollars go out of your paycheck before you spend them hurts. Don’t let that deter you, though.

HSAs and FSAs are similar in function, but there are important differences. Both allow you to contribute pre-tax dollars that you can use for health care-related expenses. The difference is that HSAs rollover their entire remaining balance to the next year, while FSAs only rollover up to a certain limit established by your plan. There are other differences, like whether or not the account follows you after you leave the company, but the principle difference is the rollover effect.

Enrolling in one of these accounts requires estimating your healthcare costs for the next year. For most people, the safest assumption is that you’ll spend the same amount next year as you did last year. However, if you’ve got a planned medical expense, such as a pregnancy, surgery or other major issue that will arise next year, you can get an estimate to guide your contributions.

Funding an HSA or an FSA is basically free money off your taxes. One way or another, you’ll have to pay for health care costs. By designating money for it early, you can avoid paying taxes on money you’ll spend for health care.

No matter how long you’ve held your current position, it’s worth revisiting your benefits options once a year. Don’t just throw away the paperwork about your insurance, and don’t skip the informational policy meetings. Be an active participant in your benefits decisions. After all, you’ve earned them.

YOUR TURN: Insurance questions are difficult. What matters most to you when picking an insurance policy? Help your fellow benefit strugglers in the comments with your best advice!

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Single At Retirement


Most of the retirement advice out there is for people “growing old together.” What does a person need to do to plan for a fabulously single life after work?
Take a look at nearly any retirement guide, and there’ll be a section on what to do with your spouse’s income and savings. If you don’t have a spouse, there are several benefits you won’t have: spousal Social Security benefits, life insurance payouts and equity, and preferential tax treatment for married couples. It can seem like the deck is stacked against you.
Regardless of why you find yourself planning for a single retirement, whether it’s death, divorce or just not meeting the right person, you’re not alone. According to the US census, 54% of men and 27% of women over age 65 are single. They’ll face a much more difficult retirement landscape than their married counterparts.
That doesn’t mean you need to find the first available partner to get hitched, though. There are many strategies that are easier for single people to execute than their married counterparts. Here are three steps you can take to make your retirement years safe and secure.
1.) Start saving now
One area where single people lag behind married couples is in retirement savings. More than 40% of unmarried women and 34% of unmarried men have saved less than $1,000 for retirement. There may be any number of reasons for this, but the bottom line remains the same: Start saving more.
It may be helpful to start small. Try a dollar-a-day saving challenge by saving one dollar every day for 30 days. Use that money to start or add to a tax-advantaged retirement account like an IRA. After 30 days, one dollar every day will start to feel like a habit and it’ll be easier to add more to it.
Beyond putting more money away, single retirement may require a more cautious retirement plan. You may need to work longer to achieve the same level of security in retirement. For most people, the years they work just prior to retirement are their peak earning years. A few more years at your max salary (and max savings rate) can add up quickly!
2.) Choose your accounts wisely
There are a few common retirement situations that put single people at greater risk. These risks mean that you’ll want to prepare a little differently than married couples. Most notably, single people have less support and flexibility if they start outliving their savings. For married couples, the larger pool of assets and supplemental income streams help to keep this from being a serious worry. Singles don’t have access to these benefits, so they need to be more careful in their selection of retirement vehicles. Looking to guaranteed sources of income, such as lifetime annuities and defined benefit plans, can help alleviate these concerns. While these investments may have a place in every portfolio, the additional security they provide to single people makes them especially useful.
Also, major medical problems pose a more significant challenge. Instead of having to depend on a partner to take care of you if you require long-term care, you may need professional assistance. This might come in the form of either in-home care or a residential facility. Long-term care insurance, though expensive, can be an excellent way to protect yourself against these costs. Similarly, keeping a robust Health Savings Account (HSA) can help save on taxes now and pay for medical expenses later.
3.) Take advantage of the opportunities
While being single in retirement does pose a number of challenges, it also opens up a number of exciting opportunities. For example, there’s no reason why your retirement years have to be in the same community where you worked. You can take advantage of your new lifestyle to move to a place with a lower cost of living, thus extending your retirement savings.
There are also many bridges to retirement that are available to singles that may not be as desirable for married couples. Starting a small business using your workforce skills can put you in a position to maximize your tax benefits while also bolstering your income over those early retirement years. Whether it’s in consulting, freelancing, or something unrelated to your career, you can put your skills to work pursuing your passions.
Since there’s no guaranteed inheritance outside a marriage, your estate planning has many more options. You don’t have a partner depending on your assets when you’re gone, so you can dedicate your remaining savings to a cause that’s important to you. You’ll want to set up an estate plan that reflects your values and commitments, and you have the opportunity to do just that.
If you’re ready to take the next step in your retirement planning, you owe it to yourself to see what benefits are available to credit union members. Call, click, or stop by Destinations Credit Union today!
YOUR TURN: What are you most looking forward to in retirement? How do you plan to make that dream a reality? If you’ve already retired, what tips do you have for the next generation?