November is the beginning of open enrollment for public health insurance through the ACA marketplace and falls within the Medicare open enrollment period. Employer health insurance plans may have different enrollment periods. This is a great time to reflect on your health insurance coverage, as well as your other benefit programs, to determine if they are still the best fit.
Whether you are on a Medicare, ACA, or employer health insurance plan, it is important to regularly reevaluate the balance between your monthly premium and your copay or coinsurance amount. Generally, the higher your premium, the lower your copay/coinsurance, and vice versa.
If your employer only offers one type of health insurance plan, your choice has been made for you. If you have the ability to choose from many types of plans, estimate how often you go to the doctor or see a specialist in an average year. Paying the highest premium when you only see the doctor rarely may not make financial sense. Call your AMM advisor for help evaluating your options, or read our article “Healthcare How-To’s” for more information about how to evaluate your plan options.
You may be able to select a plan with an HSA (Health Savings Account) or FSA (Flexible Spending Account) feature. You can contribute pre-tax money to either account, but only the HSA lets your balance roll over from one year to another. These accounts are only available under a high-deductible health plan, so you must be able to pay the deductible in case of a medical emergency.
Your health insurance plan may offer the ability to cover family members as well. In a two-income household, comparing the health insurance plans offered by each employer could result in household savings. Selecting the best plan for a new child is also important as they will have different medical needs than an adult [Note: Read our New Parent Checklist here].
Your employer may offer dental, vision, disability, or life insurance plans. Any benefit that does not cost you anything is an immediate yes.
Dental and vision coverage is usually less expensive through an employer than what is available to individuals. However, if you need extra coverage in either of these areas then your employer plan may not be sufficient.
Disability insurance is important for all workers to have; the Social Security Administration estimates that 25% of workers will become disabled before reaching retirement age. Social Security Disability or state disability programs may provide some assistance but it is usually not enough to maintain your current standard of living. Both short-term and long-term policies are needed for the average worker.
Your employer may offer a range of life insurance coverages, which is most appropriate when someone else depends on your income to maintain their standard of living. This could be children, an older parent, or your spouse even in a two-income household. Coverage over $50,000 could increase your taxes if your employer pays some or all of the premium.
This is a great time to reevaluate your retirement contributions and to increase them for the year ahead, if possible. The maximum contribution for 401(k)s and other employer retirement plans increases most years so make sure you continue to increase your contribution proportionately.
This is also a good time to look forward to next year to decide if you should contribute to a Roth, Traditional, or both plans. If you are in a lower tax bracket now than you expect to be in retirement, a Roth plan may be the most beneficial.
Most people love getting a tax refund because it feels like bonus money. When you realize you have given the IRS an interest-free loan for the year, it may not feel as great. Reassessing your tax withholding (federal and state) for each upcoming year will help you withhold just enough to meet your tax liability. The IRS has a helpful calculator online which you can use throughout the year as your tax picture changes, located at www.irs.gov/individuals/tax-withholding-estimator.
Whatever your situation, the beginning of November is a great time to reflect on the current year and look forward to the year ahead. Making this a part of your annual routine can help ensure you are maintaining adequate insurance coverage, keeping up on retirement contributions, and withholding an appropriate amount. Call your American Money Management advisor to discuss your situation and any changes you are considering.