If your company offers a multitude of voluntary benefits options, congratulations. These offerings are a valuable benefit that can make your life easier. Still, the open enrollment process and all the paperwork that comes with it can sometimes feel like a hassle. How do you decide which benefits are worth it?
Here are a few tips to help you choose the voluntary benefits that will work best for you and your family this open enrollment season.
Calculate Costs and Benefits
Most voluntary benefits by themselves are relatively inexpensive and are less so when you purchase them through an employer rather than on the open market. That said, anything you pay for but don’t need is a waste of money.
To help you determine which benefits are smart buys for your unique needs, Aoife Quinn, founder of Quinn HR Consulting Group, suggests a two-pronged approach:
- Look at the services you’ve needed in the past. “Employees should review personal records to see what medical, dental or non-planned events have occurred in recent years, and how much income they used to pay for expenses out of pocket,” Quinn said.
- Evaluate your contingency plans. Consider what you would do if you experienced a loss of income, either temporary or permanent. There are worksheets online at budget-planning or vendor sites to help you work through these scenarios and determine your basic insurance needs.
Also, if your employer is set up for Section 125 pre-tax deductions, your voluntary benefits budget may be a little larger than you think. Many voluntary benefits can be deducted from your paycheck on a pre-tax basis, which can increase your spending capability by as much as 10 to 25 percent, says Rudy Garcia, president of Qandun Insurance Agency. Life and disability insurance cannot be deducted pre-tax.
Cover the Basics
Obviously, you’ll want to sign up for any benefits your employer pays for 100 percent. You may think you don’t need to sign anything if it’s totally free, but that’s not always the case. Make sure you’re officially enrolled in any of these benefits that apply to you.
Other basics include life and disability insurance to account for any loss of income you may experience if a spouse dies or you’re suddenly injured. “Other coverages such as short-term and long-term disability should be added in unless it’s a financial impossibility — the risks are simply too high,” says David Bakke, financial expert at Money Crashers. “You never know when a major medical event or accident might occur.”
Evaluate Your Priorities
Once you’ve covered the basics, the remainder of your benefits budget should be tailored to you. When he talks with clients about voluntary benefits, Garcia likes to get to know them and hear a little about their life outside the office.
If he’s speaking with a healthy, young adrenaline junkie who’s into extreme sports and travel, then accident insurance is a typical recommendation. Garcia may even recommend a hospital supplement plan so the daredevil won’t go broke from a couple of broken bones. If he’s talking with an animal lover with a senior pet or two, he’ll often suggest purchasing pet insurance.
Parents often feel their first priority is to get their children as much coverage as possible, but it may not be necessary, says Garcia. For example, if children are covered by the parents’ health plan, vision and dental may be redundant. “Pediatric dental and vision coverage is now included in health plans for children under PPACA,” says Garcia. Additional coverage is likely of no benefit.