by admin | Sep 21, 2021 | Employee Benefits, Open Enrollment
When the autumn leaves fall and the weather turns cooler, we know it’s time to start thinking of open enrollment. Open enrollment season can be a confusing time. As you begin your research into which plan to choose or even how much to contribute to your Health Savings Account (HSA), consider evaluating how you used your health plan last year. Looking backward can help you plan forward to make the most of your health care dollars for the coming year. Here’s what you need to know about your workplace benefits to maximize them:
1). Know the Open Enrollment Dates
It is up to you to make sure you take advantage of the open enrollment period. Be sure you know when your company has open enrollment because it can be your only time to adjust benefits for the coming year.
2). Evaluate Your Current Benefits
Before open enrollment starts, review the benefits you currently are receiving. Your pay stub can be an excellent resource to find this information; you should be able to find the benefits you are paying for under the deductions or withdrawals section. Standard deductions might include medical insurance, dental insurance, 401(k) contributions, life insurance, vision insurance, long- term disability insurance, health savings account or flexible spending account contributions, and accidental death and dismemberment insurance. Review those deductions to make sure you know what you’re paying for and whether you actually used the benefits.
3). Ask These Questions to Decide What Benefits You Need
Everyone’s situation is different, but most employees should have at least medical, dental and vision insurance and make contributions to a 401(k) or similar workplace retirement savings account.
When evaluating your benefits package, consider what your needs will be or what life changes you can expect for the coming year:
- Do you have a medical condition that requires ongoing care such as diabetes or heart disease?
- Are you trying to get pregnant or are expecting a baby?
- Are you getting married (or divorced)?
- Is your child turning 26 and can no longer be covered under your health insurance?
- Does your significant other have coverage, or will you need to include your partner in your health coverage?
- Are you on track for retirement, or do you need to save more? Don’t forget to take advantage of your company match in your retirement account. This is free money for the future.
All of these are essential questions to ask yourself during the open enrollment season because they can make a difference in what benefits you choose to elect. As you browse the different options, analyze the type of treatment and the amount of treatment you have received in the past. You cannot foresee every expense but focusing on the trends will help you make a sound decision.
4). Compare Out-of-Pocket Cost
Much like health networks, out-of-pocket costs are crucial when choosing the right plan for you and your family. Most health benefits summaries should highlight the amount you will pay in out-of-pocket expenses, including the pocket limit.
Your goal in comparing out-of-pocket costs is to narrow down the plans that pay a higher percentage of your medical expenses and offer higher monthly premiums. These types of plans are suitable for you if:
- You need emergency care frequently
- You are planning to have surgery soon
- You often see a primary care physician
- You have a pre-existing condition or have been diagnosed with a chronic disease like cancer or diabetes
- Your household income is sufficient to cover the monthly premiums
5). Do the Math
People focus on the monthly premium, but you also need to look at the deductible. For instance, if you have a choice between a lower silver plan premium of $345 a month for a plan with a $5,500 deductible, and a higher gold plan premium at $465 a month with a $1,750 deductible, you’re better off with the second plan if you anticipate needing more than $1,500 in medical care. With the second plan, your total annual cost for the premium and deductible comes to $7,330, a $2,310 savings over the lower premium plan.
6). Look at Out-of-Pocket Costs
The deductible is just one out-of-pocket expense; you also have copayments and coinsurance. The three together are your maximum out-of-pocket costs. Under the Affordable Care Act, the maximum out-of-pocket limit is $8,550 for a single person and $17,100 for a family policy.
7). Utilize Tax-Free Benefits
Flexible spending accounts (FSAs), health savings accounts (HSAs), and dependent care spending accounts provide wonderful tax advantages because contributions are made with before-tax income. They can be used to pay for deductibles, prescriptions and health-related costs that are not covered by your insurance (braces, eyeglasses, etc.). At the end of the year, you lose any money left over in your FSA so it’s important to plan carefully and not put more money in your FSA that you think you’ll spend. However, with an HSA, funds roll over from year to year which makes it a great way to save for future medical costs.
8). Review the Provider List
Most health plans today have “in-network” providers. If you see those doctors and visit those hospitals, you pay less out of pocket than if you go outside the network. So, if you want to keep your own doctor and go to a certain hospital, make sure they’re on the provider list.
When it comes to choosing the best workplace benefits plan for you, education is your most significant defense against making substantial financial mistakes, including not taking full advantage of your employer’s benefits. If you have questions about any of the benefits offered, ask your HR department for help or clarification. And remember, looking backward on your past habits and expenses can be an important tool to help you plan forward for next year.
by admin | Sep 14, 2021 | COBRA, Medicare
Enrolling in Medicare does not cause COBRA to start. Under the federal rules, COBRA must be offered to persons enrolled in the employer’s health plan only if they lose coverage because of certain specific events. Termination of employment is an example of a COBRA qualifying event. Becoming eligible for Medicare, or enrolling in Medicare, is not a COBRA qualifying event.
On the other hand, if someone is already on COBRA due to a prior event, and then they enroll in Medicare, COBRA will end. Early termination of COBRA due to Medicare enrollment only affects that person. If other family members also are on COBRA, they may continue for the remainder of the COBRA period assuming their premiums are paid when due and they do not enroll in Medicare or another group health plan.
Let’s look at another scenario: An employee enrolls in Medicare while continuing as an active employee covered under the employer’s health plan. Then the employee leaves the company. This will trigger a COBRA offer since loss of coverage due to termination of employment is a COBRA qualifying event. Can the former employee elect COBRA despite being enrolled in Medicare? Yes, because they were already enrolled in Medicare before they elected COBRA. They probably will choose not to elect COBRA due to the cost, and since Medicare will be the primary claims payer, but they have the choice.
There is one other rule about COBRA and Medicare that can be confusing. As we said, the employee who enrolled in Medicare while still working and covered under the employer’s plan later had a COBRA event. When loss of coverage is due to termination of employment, the COBRA continuation period is 18 months. Due to a special provision in the COBRA rules, the maximum COBRA period for the spouse or child (if also enrolled in the employer’s health plan when the COBRA event occurred) might be longer than 18 months. If the employee had first enrolled in Medicare no more than 18 months before the COBRA event, the maximum period for the spouse and children is 36 months counting from the employee’s Medicare enrollment.
For instance, let’s call the active employee Mary and say she enrolled in Medicare in January 2021 and then lost her group coverage when she terminated employment in May 2021. So, she enrolled in Medicare fewer than 18 months before her COBRA event. Her maximum COBRA period will be 18 months counting from May 2021, but COBRA for her spouse and children (if enrolled) could run for up to 36 months counting from January 2021.
Lastly, employers sometimes ask whether they can automatically terminate an employee’s (or spouse’s) group health coverage at age 65. Due to the federal Medicare as Secondary Payer (MSP) rules, employers with 20 or more workers cannot take into account anyone’s potential Medicare status in administering the group health plan. An employer with fewer than 20 workers also may be prohibited from basing health plan eligibility on the employee’s age due to the federal Age Discrimination in Employment Act (ADEA). We recommend employers review these matters with legal counsel.
By Kathleen A. Berger, CEBS
Originally posted on Mineral
by admin | Sep 9, 2021 | Financial Planning
Life insurance provides financial protection for your loved ones when you die. Essentially, in exchange for your premium payments, the insurance company will pay a lump sum known as a death benefit to your beneficiaries after your death. While this money can never replace you, it can help your loved one(s) live the kind of life you hoped to provide.
Life insurance coverage offers affordable financial protection and invaluable peace of mind. You can choose a legal entity, organization or anyone to be your life insurance beneficiary. You can name multiple beneficiaries and decide what percentage they each will receive when you die. Common choices include:
- Your spouse
- Family members
- Friends
- A trust
- Charitable organizations
You can customize your policy to fit your family’s needs by choosing the type of policy you buy, the number of years you want it to last and your coverage amount. If you die while your life insurance policy is active, your beneficiaries can file a claim and the death benefit will be paid out to them.
There are two primary types of life insurance: term and permanent life. Permanent life insurance such as whole life insurance or universal life insurance can provide lifetime coverage, while term life insurance provides basic protection for a set period of time.
Term life Insurance:
- Term life insurance guarantees payment of a stated death benefit to the insured’s beneficiaries if the insured person dies during a specified term.
- These policies have no value other than the guaranteed death benefit and feature no savings component as found in a whole life insurance product.
- Term life premiums are based on a person’s age, health, and life expectancy.
- Simplest and most affordable type of life insurance.
Whole Life Insurance:
- Whole life insurance lasts for a policyholder’s lifetime, as opposed to term life insurance, which is for a specific number of years.
- Whole life insurance is paid out to a beneficiary or beneficiaries upon the policyholder’s death, provided that the premium payments were maintained.
- Whole life insurance pays a death benefit, but also has a savings component in which cash can build up.
- The savings component can be invested; additionally, the policyholder can access the cash while alive, by either withdrawing or borrowing against it, when needed.
Universal Life Insurance:
- Universal life (UL) insurance is a form of permanent life insurance with an investment savings element plus low premiums.
- The price tag on universal life (UL) insurance is the minimum amount of a premium payment required to keep the policy.
- Beneficiaries only receive the death benefit.
- Unlike term life insurance, a UL insurance policy can accumulate cash value.
How Do I Choose What is Right for Me?
It can be confusing to choose the right type of life insurance. When you compare some of the biggest differences in life insurance, it is easier to choose.
The biggest difference in term life vs. whole life or universal life insurance is coverage length. Term life insurance is good for people who want a financial safety net for a specific number of working years, such as the years of paying off a mortgage. Different term lengths are available such as 10, 15, 20 or 30 years. Term life insurance is much cheaper than whole life but if you outlive your term, there won’t be a life insurance payout. Term life is a simple, inexpensive way for you to proactively take care of your loved ones so they don’t have to worry when you’re gone.
Whole and universal life insurance give you coverage for the duration of your life. It also includes a cash value component. The biggest difference between whole life insurance and universal life insurance is the cost. Whole life insurance is generally the most expensive way to buy permanent life insurance because of the guarantees within the policy: premiums are guaranteed not to change, the death benefit is guaranteed and cash value has a minimum guaranteed rate of return. Whole life insurance is good for people who like predictability and want lifelong coverage to build cash value. Your beneficiary will get a guaranteed life insurance payout as long as you’ve paid the premiums to keep the policy current. This type of policy tends to cost more in the early years to support the guarantees it provides. But, as the cost of living goes up in the years ahead, your whole life insurance premium will remain identical every month and will never cost more.
Universal life insurance often offers more flexibility than a whole life insurance policy. These policies offer lifelong coverage, provide flexibility when it comes to paying premiums and choices for how the policy’s cash value is invested. A standard universal life insurance policy’s cash value grows according to the performance of the insurer’s portfolio and can be used to pay premiums. With a universal life insurance policy, the cash value will build depending on the policy type. If you want to build tax-deferred savings and don’t expect to tap into the funds for a long time, universal life may be a suitable option for you.
No one wants to talk about it, but we have to. You need life insurance. When you’re gone, those you love will be grieving. This is unavoidable. Leaving them to struggle financially, however, is avoidable. Talking to a professional when you choose your life insurance plan can help you to find ways to afford the right kind of coverage.
Check out these great resources to better educate yourself on choosing life insurance:
Term vs. Whole Life Insurance: How to Choose
Life Insurance Basics
8 Smart Steps for Buying Life Insurance
by admin | Sep 7, 2021 | Hot Topics, Human Resources, IRS
Employers, have you reminded your employees to check that they are having the right amount of tax withheld from their paychecks? It’s a good idea for everyone to check their payroll withholding every year, but it is particularly important this year due to the many proposed tax changes.
The law’s changes do not affect every taxpayer the same way. Some workers may need to increase their withholding so they will not face a tax bill —and possible penalties — next April when their 2021 tax return is due. Many other workers, however, benefit from the law’s changes and can take home more pay because the withholding amounts are less.
Help your employees avoid being surprised next spring when they prepare their 2021 returns. Remind them now to check their year-to-date withholding so they can make adjustments, if appropriate, on their paychecks for the rest of this year. It’s easy and convenient using tools provided by the IRS.
Here is a sample message to employees:
The IRS encourages everyone to use the Withholding Calculator to perform a quick “paycheck checkup.” This is even more important this year because of recent changes to the tax law for 2021.
The Calculator helps you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck at work. Use the Calculator to see if you should give your employer a new Form W-4, Employee’s Withholding Allowance Certificate, to adjust your income tax withholding going forward.
To get started, gather your most recent pay stubs and a copy of your last federal tax return (2020 Form 1040). You’ll use the information to estimate your 2021 income and taxes.
The Withholding Calculator does not ask you to provide sensitive personally-identifiable information like your name, Social Security number, address, or bank account numbers. The IRS does not save or record the information you enter on the Calculator.
Ready to start? Make sure Javascript is enabled and go to: Withholding Calculator
by Kathleen Berger
Originally posted on thinkhr.com
by admin | Sep 2, 2021 | Human Resources, Workplace
The employment market has taken the American worker on a roller coaster ride over the last year and a half. Unemployment rates hit record highs in 2020 with the spread of the coronavirus (COVID-19) pandemic. Nearly a year later, the Job Openings and Labor Turnover Survey reports new jobs have increased to “a record 9.3 million, as the economy rapidly recovered from its pandemic depths.” To add another piece to the employment puzzle, nearly 4 million workers quit their jobs in the same month, coining the term “the great resignation.” What caused this dramatic exit? Many employees were spurred to reflect on their priorities during the pandemic and identified more free time as a key factor in their employment future.
As the pandemic spread last year, workers were forced to make arrangements of all types. Those on a temporary hiatus from the office scrambled to adjust to a work-from-home setup. Others who were laid off were pushed to conduct job searches in a market where jobs were few and far between. Additionally, families were pressed to juggle childcare and remote school arrangements with little to no warning. The changes were big and hard, but between all the hustle and bustle workers adjusted to this “new normal.” During that transition, many evaluated their prior work-life balance – more specifically, what was working and what was not. COVID-culture put priorities into perspective for many.
Americans experienced burnout at record levels during this stressful time and many came out of this period with a newfound respect for putting their mental health first. As “return to office” notifications landed in inboxes, many decided they were not willing to return to the office full time. A study conducted by Prudential, a global insurance and financial services firm, concluded that approximately 33% of Americans are disinclined to work for employers that aren’t offering remote work for a portion of their week. This introspection helped many workers see that their priorities needed to be rebalanced. Many wanted to spend less time commuting and working in the office, and more time on personal interests and with loved ones. This “aha” moment, coupled with a resurgence of new jobs in the market, led many to feel a newfound sense of confidence in finding a new opportunity. And that resulted in a dramatic shift in the number of employees choosing to leave their jobs, feeling they would find roles with more flexible work hours and supportive work environments.
There is no doubt we will continue to see fluctuations as our economy responds to this newly resurgent employee market. Employers can be proactive in retaining employees who may be evaluating their current work-life balance. Managers and Human Resource staff can engage with employees early and often. Don’t wait for your employees to raise a concern about workplace flexibility – lead the charge by looking into what your company can do to support this interest.
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