As summer ends and fall begins, another seasonal event is about to happen: workplace open enrollment. If your employer offers benefits, now is a good time to reexamine your options and coverages to see if you should make any changes before enrolling for your 2022 plan year. Not all employers have their open enrollments in the fall, but this is still a good time to evaluate what is on offer so you’ll be ready when the time comes. And of course, at Cadence we’re available to help you navigate through your options.
Health Insurance Plans
Even if you plan to keep your existing coverage, take a look and see if your plan’s features will remain the same. If you are married and your partner’s employer also offers a plan, it may make sense to compare what they have available to see if it would offer you a better cost-benefit than your existing coverage, especially if your situation has changed since the last time you enrolled in a health insurance plan.
Premiums are getting more expensive every single year. Deductibles and co-pays are increasing in addition to monthly costs. Some employers may offer a high-deductible health plan (HDHP) with much lower premiums, so consider whether it is better to pay a higher monthly premium for a lower deductible or a lower monthly premium for a higher deductible (which may allow you to use a Health Savings Account).
Health Savings Account (HSA) and Flexible Spending Account (FSA)
To participate in an HSA, you must be enrolled in a high-deductible health plan (HDHP). An HSA allows you to save pre-tax money in an account to use for eligible health care expenses. Any money that is not spent in a calendar year can be rolled over every year, which makes an HSA a great way to save pre-tax money that will not be taxed later for health care costs.
Contribution limits for an HSA in 2022 are:
55 & older: $1,000 (catch-up contribution limit)
If you don’t have a high-deductible health plan (HDHP), a good way to save pre-tax money for health expenses is a Flexible Savings Account (FSA). Unlike an HSA, FSA plans typically require you use what you have saved during the calendar year or lose it. Only $500 can be rolled over into the next year, though this exception can vary by employer, so check your company’s options. You may also lose your FSA balance if you leave your job, so check your company’s rules regarding FSA rollovers.
Contribution limits for an FSA account for 2022 are:
Married Households: Each spouse can contribute $2,850 to their individual account
Other Insurance Benefits (Life, DI, LTC)
Open Enrollment is also a good time to look at your current life insurance amounts, disability insurance coverage (long-term and shot-term options) and if your employer offers it, long-term care insurance. Work with your advisor to make sure you are taking advantage of what your employer offers and to discern the proper amount of coverage.
Workplace Retirement Plans
If your company offers a 401(k), 403(b), or 457 retirement plan, see if there is a Roth option and review with your advisor to determine if contributing any amount to the Roth portion makes sense. Keep in mind, even if you save some in your company’s Roth 401(k), and some in your company’s traditional 401(k), you cannot save the maximum employee contribution dollar amount in EACH of them. The total amount you can save, whether it goes in to one kind of 401(k) or into both, is the maximum contribution limit plus catch-up contribution if you qualify.
If your company has a match, try and take full advantage of the free money your employer is offering by saving at least the amount that would qualify you for the maximum employer match. Taking full advantage of the match is a great way to help grow the size of your account.
For 2022, contribution limits are:
401(k)/403(b)/457 Employee Contribution: $20,500
401(k)/403(b)/457 Catch-up Contribution: $6,500
SIMPLE IRA: $14,000
SIMPLE IRA Catch-up Contribution: $3,000
Some employers may also offer deferred compensation plans available for highly compensated workers. Unlike a 401(k)/403(b)/457 plan, deferred compensation plans normally offer no protection from an employer’s creditors. Usually open enrollment is the time where you need to make the election to participate in next year’s deferred compensation programs so work with your advisor to determine the risks of your company’s plan, and if you participate, the proper amount to contribute.
This is by no means a complete list of all the company benefits that may be available to employees during open enrollment (legal plans and employee stock options are a few that come to mind) but they are the most common options we see. As mentioned earlier, we’re available to help answer any questions you may have regarding your company’s benefits and help tailor your open enrollment selections for your family’s needs.
Editor’s Note: This article was originally published in the October 2021 edition of our “Cadence Clips” newsletter.
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