With Obamacare going live on 10/1/2013, many of you will begin your own adventure of filling out your company benefits. Instead of completing the package at 10 p.m. the night before it is due, you should spend some energy and effort sitting with your Private CFO® to make these important family financial decisions. Since many companies are going to be affected by Obamacare, you will want to closely study what changes may have occurred between this year and last year. Here are my top 10 Your Smart Money Moves to analyze for 2015 going into 2016.
- What changed with your company’s health insurance– See what changes were made to the construct of the health insurance plan offered at work, what alterations were made to the cost splitting arrangements, and review what total costs you spent as a family in 2015. Also, are there potential upcoming surgeries you expect in 2016? Figuring out what’s changed with your health insurance can often be complicated. If you do a Health Savings Account because you typically haven’t met your deductible, then make sure you set aside cash to max out the pre-tax opportunities.
- If you work for a small employer, ask the CEO what direction they are headed with health insurance– Under the current rules, health insurance is costing more and more for the small business owner. Many of them will begin the renewal process at this time of the year. The reason most small employers had a group health insurance plan was to either use it as a recruiting tool or they installed it to ensure that everyone could get coverage on a guaranteed basis. Now that costs are rising, will your employer continue group coverage? Will they give you stipend and tell you to shop the new insurance exchange? Or it is possible they bag insurance all together?
- Examine How Much To Put In Your Flexible Spending Account (FSA or MSA account)– If your company has a Flexible and/or Dependent Care Savings Account, this could help you reduce your overall tax liability. Be sure to examine your out of pocket expenses closely as these programs are not use or lose. Remember, that FSA accounts will have a cap of $2,500 and are use or lose accounts which means you need to think carefully about how much to deploy to these accounts.
- Understand Your Life Insurance Need– Your company may allow you to purchase additional term insurance for you, your spouse, and your children through work. This is a great time of year to determine whether your overall financial situation has changed, and whether you need more or less life insurance rather than just signing up for the same amount you did the year before. One big question in this category is whether or not your life insurance plan will have guaranteed insurability or if you will have to take a physical.
- Consider Buying Supplemental Disability Insurance– Most regular group long term disability plans cover 60% of your base salary only (not commissions, bonus, or stock options). Larger companies offer the ability to purchase supplemental long term disability insurance through work. This can be an important part of your overall financial plan as your income is really what drives reaching your financial goals.
- 401(k) or Roth 401(k) (or both?)–To Roth or not to Roth, that is the question. Many employers have now have added the Roth 401(k) provision to their overall 401(k) plan. With tax brackets having changed in 2015, this is a great time to determine how much money to put away pre-tax and post-tax for your retirement for 2016.
- Examine Your Withholdings–Did you get a refund last year or did you owe money? Did you have a new child this year? Did you get married or divorced this year? Asking these questions will allow you to determine the right amount of withholdings from your paycheck so you don’t get too large a refund or owe too much money come tax time. Many people fill their withholding forms out once, and then never change them again.
- Review Your Beneficiaries– This is an important thing to do on a yearly basis. Purchases you make through work such as life insurance and your 401(k) plan allow for both a primary and a contingent beneficiary. If your family situation has changed at all, it will certainly merit making a review of your beneficiaries.
- Get Rid Of Accidental Death And Dismemberment Insurance– You need a certain amount of life insurance . . . period. You don’t need more insurance if you die accidentally. A sound financial plan should allow you to avoid these little extra insurance costs.
- Should You Sign Up For The Legal Plan? – At the larger employers, one small benefit that can be offered is a legal plan. Typically, these legal plans will cover basic issues including a simple will, trusts, and possibly divorce. If you have planned to write your first will or update a trust, this could be a good opportunity to select the benefit and use it in 2016. It doesn’t mean you need to select the benefit every year, just in the years that you know the legal services will be used.
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