Open Enrollment - What You Need to Know About Your Benefits
If you’re working at a corporate job that offers you some benefits - take advantage of it! I know it’s confusing and annoying to have to go through that thick packet of wordy information in language that is hard to understand but trust me - if you can invest some time now to know and understand these benefits, you’ll really get more out of your job.
Here’s a quick checklist of things to think about before making any final decisions:
What has or will change for you in the next year
Will you need to add anyone to your health insurance? If you’ve gotten married, review both of your benefits to determine which one it’d make sense to be on. Or if you’ve had a baby or are expecting, make sure you review the health insurance so you know what’s covered.
Think about how you’ve used your benefits this year and assess what’s worked and what you’ve been frustrated with. Did you have any unexpected costs that you weren’t aware of?
Assess your take home pay after you’ve made your decision about your benefits so you know if and how much it’d change
What are the changes in benefits, providers, coverage that your company is offering
For healthcare: there’s a lot to learn and it’s really a personal decision on what you’ll need but here are some common terms and what they mean.
Deductible - how much you have to pay before the insurance kicks in. So if you have a total medical bill of $5,500 and your deductible is $1,000 - you will pay $1,000 and the insurance will cover the rest.
Premium - how much you will pay to have that insurance policy.
HMO — stands for “health maintenance organization” and it gives you access to only see doctors that belong to that particular network. Usually more affordable but have more restrictions and less coverage.
PPO — stands for “preferred providers organization” and it gives you flexibility on what doctors you want to see. Usually more flexible and have more coverage options but you’ll pay more.
FSA (Flexible Spending Account) or HSA (Health Spending Account) — a pre-tax account you contribute to per paycheck that allows you to pay for health-related expenses. You can put away pre-tax money (so lowers your taxable income) to pay for any medical expenses (i.e. copays, medicine, glasses, contacts, dental visits, etc.)
For retirement: many companies offer their employees 401K’s - this is just a fancy term for an employer sponsored retirement account.
Many companies will offer two kinds:
Traditional — contributions are pretax so the advantage is you lower your taxable income now and you then will pay taxes when you withdraw money at retirement
Roth — contributions are post tax so the advantage is later. You pay taxes now and when you withdraw the money at retirement, you don’t have to pay any taxes on it.
It’s also a good time to review what other benefits your company may offer such as employee stock purchase program (for publicly traded companies), tuition reimbursement, childcare and fitness/wellness programs.