It’s that time of the year again when employers and employees alike have the opportunity to review their health and benefits coverage and make changes. For most employers and government programs, this occurs in the fourth quarter of every year. There are also opportunities to make changes throughout the year if you’ve experienced a life changing event (baby, marriage, etc).
The intent of this post is to walk through my coverage options and to walk through how I made the decisions around my coverage in the hopes that it will help you not only save money by choosing benefits that are appropriate for you, but also how to protect yourself in the event of a loss.
Background: We are a family of 4. My wife and I are in our early to mid-thirties respectively. No major family history of cardiovascular disease, diabetes, etc. We are otherwise healthy. Our children are approaching the ages of 4 and 2.
I have a choice between a traditional Preferred Provider Organization (PPO), an Indemnity Plan, a Reimbursement Account Plan, and a Health Savings Account. The most convenient, flexible, and reliable plan for us is the PPO plan. It is relatively inexpensive compared to the other plans, most services are either fully or almost fully covered, there are no deductibles, small co-pays, and it is cheap. The only other plan we would consider is the Health Savings Account, but I am not comfortable with having to shop around for care, and the pressure to save the money rather than spend it will always be in the back of my mind.
Prescription Drug Benefits
Our company offers only 1 option, so we took it. It offers good benefits on retail and generic prescriptions and an even deeper discount if we use a mail-order pharmacy.
Cost: Included in medical cost
We have two options here. One is cheaper, but we must use an in-network dentist, we must choose our primary dentist, and no out-of-network coverage is available. The other option is more expensive, but you can choose anyone with no referrals. For us, we went with the cheaper option. I have no problem going to an in-network dentist and don’t see a time where I will be forced to go to an out of network dentist.
We have one option so we took it. It covers eye exams and most of the cost of glasses and/or contacts.
Flexible Spending Accounts
We try to calculate how many office visits and prescriptions we would purchase annually and maximize this benefit. The benefit limit has decreased under Obamacare, but the amount is still decent enough to set aside tax-free money.
Basic life insurance pays out 1.5x my annual salary, so I increased this coverage for my family in the event of a loss. I was also able to get coverage for my wife (since she doesn’t get benefits from her job). We also did not take any life insurance on the children as they are not a source of income. This would be an unnecessary expense otherwise.
Cost: Basic Life = Free, Supplemental Life = $25.30 (me), $10.76 (spouse)
Basic long-term disability as well as accidental death and dismemberment is also covered at a basic level. I am not in a high risk safety job, so I see the disability risk as extremely low. There was no need more coverage.
Cost: Basic Coverage = Free
This is an optional service that I found useful. It is basically run like insurance for legal services. Since I have rental properties and my wife is in a field that sees a high rate of liability, this service gives us access to an array of legal services and discounted fees for legal services. Additionally, they allow us to create a will free of charge on an annual basis which more than pays for the annual cost of the service.
Child/Elder Care Flexible Spending Account
We put money into this account for daycare services for our children. Our company also matches 20% of every dollar so we maximize this benefit to the fullest.
Total Cost (not including spending accounts) = $298.64/month
I think we’ve made the right choices for our stage in life. The only benefit I struggle with getting externally (as opposed through my employer) is a term life insurance policy. Since my life insurance policy through my employer is not portable, if I were to ever leave and join another company or start my own company, I would pay more for life insurance than if I would buy a separate policy now. As you age, the more expensive a life insurance policy gets.
Any other comments on my choices?