Open enrollment 2020: Overlooked benefits you should consider
Thanks to the coronavirus pandemic, this year’s open enrollment season could be the most pivotal.
Many workers sure think so. According to one MetLife survey, half of workers say that open enrollment this year is more important than in 2019, with two-thirds citing COVID-19 as the reason, followed by financial reasons, and health care costs.
Another survey from Aflac found that the pandemic served as a wake-up call for many Americans to invest more time researching their health benefits.
Typically 9 in 10 workers select the same benefits as the previous year — without accounting for major changes in their life. On average, they spend just a half-hour reviewing their options, meaning they probably overlook many helpful benefits.
Cashay spoke to several financial planners to find out which benefits employees shouldn’t skip over during open enrollment. Here’s what we found out.
Long-term care insurance
Usually a benefit for adults in their 50s and beyond, this type of insurance may prove helpful, especially if you’ve contracted COVID-19, said Lou Abrams, founder of Fisecal in New York, where he helps people achieve their version of financial freedom.
“This may seem excessive, but depending on your situation, it may make sense to enroll in this benefit if it’s offered by your employer in case you experience severe long-term effects,” he said.
Long-term disability insurance
Long-term disability insurance is the most important, and most overlooked benefit, according to Herschel Clanton, principal of Chancellor Wealth Management in Atlanta. This coverage protects a portion of your income if you become injured or ill and can’t work for a long period of time. While employers offer this benefit, you may need to add more coverage on top of that, so you have an adequate amount.
“Incurring a long term disability does happen,” Clanton said, “and when it does, all of the other goals in life — retirement, college savings — can be put at risk.”
Estate planning assistance
More companies are providing either full or partial assistance to cover the cost of establishing an estate plan for their employees.
“This can be a huge financial win for the employee and comes at a time when many are concerned about their affairs but may otherwise decide to put off these critical tasks due to their cost,” Richard Vazza, founder of Driven Wealth Management in San Diego.
Working with a lawyer can often cost a few thousand dollars, Vazza said, so the perk could save you quite a bit of money. The benefit may not be one of the headline benefits, so make sure to read the company literature to see if it’s included.
Telehealth services
While this may not be a stand-alone benefit, it may be a feature included in your health care coverage. The importance of telehealth services has only increased since the pandemic began, said Jonathan Bednar, a certified financial planner at Paradigm Wealth Partners in Knoxville, Tennessee.
“Even after the pandemic, patients will continue to enjoy the convenience of receiving care in the comfort of their own homes,” he said. “States are rapidly relaxing regulations that have gotten in the way prior to COVID-19.”
When comparing plans, make sure this is covered as a long-term benefit, not just throughout the pandemic.
Health savings accounts (HSAs)
Health savings accounts are a favorite of many financial planners. This account allows you to put pre-tax savings into the account, and if you use the funds on qualified medical expenses, you don’t pay taxes on your withdrawals. Any money you earn on the HSA funds is tax-free.
The funds also roll over from year to year, so you don’t lose any money if you don’t use the funds in a given year. Once you reach 65, you can withdraw funds from your HSA for whatever purpose, not just for qualified medical expenses.
These accounts are typically paired with high-deductible health care plans.
In 2021, you can contribute $3,600 for self-only coverage and $7,200 if you are on a family medical plan, according to Judson Meinhart, a financial advisor at Parsec Financial in Winston Salem, North Carolina. Any money that you’re saving on eating out less or postponed vacations can be directed into this account.
Many people are spending less on eating out and going on vacation this year, so you may be able to put those funds in a tax-advantaged account that could help down the road.
“It’s also good to know that if you have previously funded an HSA and are now out of work you can use your HSA funds to pay for COBRA premiums,” Meinhart said.
Janna is an editor for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @JannaHerron.
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