Reporting Jason DeRusha
MINNEAPOLIS (WCCO) — Have you opened that giant envelope filled with health insurance, flex spending and life insurance choices? It’s open enrollment time when millions of Americans will choose which benefit programs to go into. Or not. What are the big things we should look for when we enroll?
“First of all, how sick are you,” said Steve Parente, a professor at the University of Minnesota’s Carlson School of Management.
Parente has researched employee health plans and the way employees choose. He said only about 15 percent of us actively manage and change our benefits every year. The rest of us kind of passively end up in a plan.
“They wait ’till the last minute and they don’t really think about it. Because year after year there are new choices that come online,” said Parente.
And the new health care law means some changes to the options we’ll have. There’s no more lifetime cap on health benefit payments, no more co-pays on preventative health care and dependents can stay on their parent’s insurance until they’re 26.
It’s “what we refer to in the biz as ‘the slacker tax,’” laughed Parente, referring to the kids who still live with their parents well into adulthood.
The research is still be gathered, but the extension of benefits until age 26 “will probably add to your premium,” he said.
Flex spending accounts may be the biggest value in the benefit package, according to Parente, especially if you have a child in day care.
“Almost every parent pays more than $5000 for daycare,” he said.
Under the law, you’re allowed to put up to $5000 in pre-tax income into a dependent care flex spending account.
Because that money comes out pre-tax, the deduction in your taxable income translates into about a 30 percent savings, which is about $1500.
“It’s like a guaranteed win in terms of tax savings,” said Parente.
There are also changes in the health flex spending account. In 2011, you won’t be able to use your flex dollars to buy over-the-counter medications unless you have a doctor’s prescription for them.
When it comes to choosing a health plan, Parente said you need to look closely because premiums are rising.
According to a recent survey of big businesses, 63 percent of employers plan to raise the premiums that employees pay next year. And your old plan may no longer be around.
Consider how much you care about seeing your current doctor.
“That’s usually the first big question, ‘Can I still see the same doctor I’m seeing?’” said Parente.
And then consider how much you’re willing to pay for that.
Also, don’t overlook the options for life insurance.
“If your company has negotiated, and it’s cheaper than otherwise on the open market,” said Parente, “You should consider it.”
He said that depending on your age, or if you have pre-existing conditions, you may end up with a better deal on the employee plan.