The following is a staff writer post from MikeS. He is a married father of 2. So, with the cat, he ranks number 5 in the house. He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.
It’s that time of year again for my employer, Open Enrollment. It’s that one time a year that I can make changes to my health benefits for the following year. I normally make very few changes to my benefits. Most years, it is just seeing how much the premiums are changing and what, if any, changes I will need to make to my monthly budget. This year, was different. I am going to be making some big changes, mainly to keep my costs as flat as possible.
I have four main benefits that comprise my normal paycheck deductions: medical, dental, long-term disability and my flexible-spending account. The current medical plan that I have for my family has a $1,100 deductible per family member and a $5,000 out-of-pocket maximum for any family member. The maximum deductible for the family as a whole is $3,300 and the maximum out-of-pocket for the family is $9,000. There is co-insurance, generally only about 10% or 20%. Overall, it’s not a bad plan.
I currently pay $176 semi-monthly and my employer pays about twice that for me. The long-term disability is for 60% of my pay and costs me $7.51 semi-monthly. This goes along with the life insurance that I have after looking at a guide to life insurance. The dental insurance has a $50 deductible and I pay $16.96 semi-monthly. I have had issues with my teeth in the past, that’s why the deductible was so low. Finally, I contribute $62.50 semi-monthly to a flexible spending account which reimburses me for any additional medical expenses I pay for during the course of the year.
2014 Benefits Additions
There is a new benefit being added for 2014, a vision plan. Seeing as my wife wears contacts daily and I need glasses for long-distance, I was pretty excited about this new benefit. The cost seems entirely reasonable, $5.84 semi-monthly for coverage for the both of us. It covers an annual eye exam, as well as glasses or contacts. I know I haven’t had a full eye exam in about 10 years and my glasses also haven’t been updated in that time either. I easily see the coverage being worth it.
2014 Cost Changes
As always, the new year brings about changes to the costs. Normally, the cost increases are not too bad. This year, if I did not modify my benefits, I would have seen my costs increase about $70 a month. With a cost increase like that, I investigated how I could mitigate the impact to my bottom-line.
For the long-term disability, the cost increase was minimal ($0.17 semi-monthly) and I was unwilling to drop my coverage below 60%. For the dental insurance, the increase would have been about 66% ($16.96 to $28.21). I elected to change my deductible for the plan to $100 and my new cost will be $20.43. The biggest driver of the cost increase was the medical plan ($176.80 to $200.29). I decided to look at what other options I had for plans.
The only option to mitigate the premium increase was to choose the high-deductible plan. That cost was only $184.53. The biggest difference between the plans was how the deductible would be applied. The high-deductible plan has a $2,500 family deductible and the deductible applies to a few more items than my current plan. For the high-deductible plan, I would be eligible to open a healthcare savings account (HSA) and the company would contribute $800 to it. So, all of this meant a discussion with my wife and some analysis.
After some calculations and discussions with my wife, we opted for the high-deductible medical plan and maxing out the HSA with contributions totaling $6,550. We had been planning on setting aside money for medical expenses anyway; this just allows us to do so in a pre-tax manner. The combined premium savings and $800 company contribution were just too good to pass up.
We also opted for the higher-deductible dental plan to trim costs. I have been taking better care of my teeth over the last few years and as a result have had fewer cavities. During my analysis, I realized that our out-of-pocket medical costs would have been virtually unchanged this year had we been on the new plan. This gave some comfort to my wife that costs wouldn’t explode next year. We have also been fortunate enough this year to be able to bolster our emergency fund. That will help in case costs come in well above our projections.
Are your benefits changing next year?