Workplace Benefits: Your To Do List for 2020

Fall is typically when employers announce any benefit plan changes for the coming year and ask employees to review their coverage and request any coverage changes. Fall is also when many of you ignore all the announcements from HR and just stay enrolled with what you have. Please don’t make this potentially costly mistake. The nitty gritty of health insurance coverage can change from year to year. And you may be missing out on improvements to your workplace retirement plan. Or your life may have changed a bit. A marriage, a divorce, or a newborn can trigger a need to change your coverage. Here’s your 2020 benefit review checklist:   Confirm you are getting the maximum company match for retirement. If you changed jobs this year and were auto-enrolled into the company’s retirement plan, there’s a good chance you are not contributing enough of your salary to earn the biggest possible match from your employer. Boost your contribution level to whatever it takes to earn the maximum match. That is free money you don’t want to pass up.   Check if there's a Roth option in your retirement plan. If you habitually ignore all the emails from HR and your retirement plan, you may have missed the news that the plan added a Roth 401(k) option. Many employers have been adding a Roth 401(k) option to their standard traditional 401(k) offering. If your plan offers a Roth 401(k), I strongly recommend you consider putting your retirement saving in the Roth 401(k). Yes, you lose the upfront tax break on your contribution, as Roth 401(k) contributions come from your after-tax paycheck. But, over the long term, that can pay off big time. In retirement, withdrawals from your Roth 401(k) will be tax free. Withdrawals you make from a traditional 401(k) will be taxed as ordinary income.   Review your health insurance. Don’t focus solely on your monthly premium. That may rise a little bit in 2020, but the bigger concerns should be changes to your deductible and the amount of co-insurance you owe when you actually use your insurance. Many employers now offer high-deductible health plans (HDHPs). If you have ample emergency savings that can cover the higher deductible, an HDHP is worth considering. When you are enrolled in an HDHP, you are eligible to save money in a Health Savings Account (HSA). Money you contribute to an HSA can be used to pay current medical bills or saved for retirement. There is no tax on any money you withdraw from an HSA to pay for qualified medical expenses. Moreover, you get a tax break on the money you contribute, and your employer may pitch in money as well. Another health insurance review tip: If you are a single parent and your adult child is still on your health insurance, I want you to consider having your child get their own coverage. Federal law states that an employer must allow an adult child to stay on a parent’s plan until age 26, but that’s not necessarily the best financial move for you. Take a look at your out of pocket costs for the coming year if you switch from family coverage to just yourself. That might be motivation to help your child move to his or her own coverage. If an adult child has a job where health insurance is offered, this is a no-brainer. But if they don’t have workplace insurance, they can shop for coverage through the Affordable Care Health Exchange. Premiums for young people are typically low, and young adults who have yet to hit their peak earnings will likely qualify for subsidies. I think you both may be surprised how affordable coverage will be.   Don’t rely on the free group life insurance. If you were married or your family grew this year, your need for life insurance likely has grown. The coverage offered as a free benefit through work is not nearly enough. Typically, that coverage provides a death benefit that is equal to a year’s salary. You need much more than that, and my recommendation is to buy more term life insurance outside of work. As I explained in this earlier post, it’s not hard (or expensive) to protect your family. Want to hear more about retirement accounts and life insurance, click to listen to Episode 36 and Episode 58 of my Women & Money podcast.