Employer Flexible Spending Accounts
A flexible spending account option allows you to put a portion of your pre-tax salary into an account for health care or dependent care costs. The important thing to remember with these accounts is that they have differences. The limits are different for each, and you are not allowed to transfer funds from one account to another. Another detail to remember with FSAs is that you have to be fairly accurate with how much to put in an account. You need to have qualified expenses to use up the amount in the account, so if you don’t use it, you might lose the money you’ve got saved.
You can also look into Health Savings Accounts (HSAs) to save up for any medical costs. HSAs are available to families and individuals who are enrolled in high-deductible health insurance plans. Money in your HSA can be rolled over from one year to the next, they have tax-deductible contributions and withdrawals for qualified health expenses are tax-free. One of these qualified costs is long-term insurance, which is particularly important for the retirement years. Most retirees will have extra health care expenditures; why not start saving for them?
Anyone who depends on their income from work should seriously consider disability coverage. Many employers offer long and short term disability coverage, so it’s smart to have an idea of which would be best for you going into open enrollment. If you have a stable enough emergency fund to cover you for six months or so, you may be able to skip the short term disability coverage. However, most people’s emergency fund doesn’t cover them for years, so long term disability is an important consideration.
Updates to coverage
Coverage options change year to year, so don’t gloss over the benefits you had last year. Your company many have introduced new benefits, taken some away or made changes to spouse or dependent coverage. There may have also been price changes in premiums. Usually, your employer will provide a notice, reading material or meeting to get you up to speed on what’s new for the coming year. Look out carefully for benefits that you need to have, because that coverage may be changing as well. If you’re losing a benefit that’s critical, take this time to find supplemental coverage elsewhere.
If you and your spouse both have coverage through your employers, take some time to compare each of your plans. One plan or the other could save you more money in the long run, compared to being on your own plans. The more you know about what you’re each being offered, the better decision you make for your coverage going forward.