By Stewart Koesten
Anytime now you’ll be asked to complete your selections for your cafeteria plan benefits for the next plan year. The selection of employee benefits should not be handed off to your personal assistant to decide. These choices are serious and affect both your out-of-pocket expenses and income tax situation for the year.
Selection options typically include the following offerings: Medical Plans, Dental Plans, Vision Care, Long-term Disability, Supplemental Life Insurance, Accidental Death and Dismemberment, Dependent Day Care and Health Care Reimbursement. Some plans also include Pet Care Insurance and Long-term Care Insurance.
Often, you are given a choice of medical plans. Whether to choose a high deductible plan or a low deductible plan depends on many factors, including how much you use health insurance and whether you are electing some Health Care Reimbursement contribution. Dental benefits and Vision benefits are commonly chosen but they can be quite limited in their scope of benefits. Consider your use before selecting either.
Most company disability benefits are inadequate when considered against your lifestyle expenses. Consider taking as much of this benefit as you can. If you are older than 45, also look outside of your company plan. The same would hold true of your supplemental life insurance benefits. If you are young; these benefits are extremely cost effective but not as much as you age. If you have less than stellar health or if you are a smoker/chewer, then the company plan’s benefits may prove more attractive than an outside policy.
If you have the right amount of life insurance and disability insurance for your family, then the Accidental Death and Dismemberment (AD&D) benefit may be unnecessary. If you don’t have the right amount, it may be better to improve your coverage outside of your company’s plan. AD&D within company benefit plans is cheap for a reason. Save the small monthly premium or take your spouse or significant other out to dinner instead.
Use your reimbursement accounts fully. These accounts allow you to pay for applicable medical or child/dependent care on a pre-tax basis. People are afraid they will lose their contributions in health care reimbursement accounts if they are not used. That is true, so carefully plan what you need in advance. For example, if your child needs braces, and it is not covered in full in the dental plan then use the health care reimbursement plan to fund your portion. This provides very favorable income tax consequences.
Evaluate and choose your options carefully and get competent assistance to help you. Give us a call at KHC Wealth Management if you need our help.
For more information, schedule a meeting by clicking below, contact Stewart Koesten –skoesten@makinglifecount.com, or call (913) 345-1881.