- Open enrollment for employer benefits begins at many companies each fall.
- This period is a good time to consider additional benefits to help cover the gaps in health insurance coverage.
- Consider factors such as costs and your age, familiarize yourself with the rules of the coverage you're considering, and avail yourself of all the tools your employer provides.
Many companies in the next few weeks will offer employees a chance to review and enroll in workplace benefits for the following year. During this open-enrollment period, many people focus on their health insurance, which makes perfect sense.
Insurance offers financial backing for annual wellness doctor visits or visits to the hospital if you get sick or injured. Some employers might also offer additional benefits that can help cover some of the unexpected costs not covered under a specific health insurance plan.
The financial impact from uncovered health-care expenses can be a shock and even affect a person's financial wellness. But there are ways to alleviate the stress.
Let's create a scenario. Elizabeth is a single mom with two children. She was at home when she suddenly experienced troubling symptoms that turned out to be a heart attack. She had surgery, was hospitalized and was out of work for months with no pay. That's a very expensive scenario all around.
Hospitalization for a heart attack could run from around $6,500 to nearly $21,000, according to the Healthcare Bluebook. Fortunately, Elizabeth had purchased two types of voluntary benefits through her employer — critical illness insurance and hospital confinement indemnity insurance.
Having these benefits helped reduce her stress, allowing her to focus on her own recovery. Through this coverage, she received lump-sum benefit payments that she was free to use as she chose. The benefits helped her cover mortgage payments, groceries, utilities and child care, as well as some of her out-of-pocket medical costs.
Anyone can be injured or become sick unexpectedly. Accidents, sports injuries and diagnoses of serious illnesses are common, and the costs can add up. An average family has more than $4,500 in out-of-pocket medical costs each year, according to 2017 Milliman's Medical Index.
Many people can't absorb that cost. A recent study by the Urban Institute found that 4 in 10 Americans are struggling to pay for basic needs, such as groceries or housing. Unexpected costs can compound that and also derail retirement planning.
Your company's annual benefits open-enrollment period is a good time to consider additional benefits to help you cover the gaps in health insurance coverage.
Workers can cover themselves, and possibly even their spouse and children, if eligible, and it is usually far less expensive than most would expect. In addition to critical illness and hospital confinement indemnity insurance, other common benefits your employer might offer include accident insurance — which typically covers common injuries, such as fractures, lacerations and concussions — and disability insurance.
Here are four tips to help you think through which of these additional benefits could be right for you.
Consider your age and stage. An illness or injury affects the individual and family, particularly if the impacted person is the primary breadwinner. It can also put retirement savings at risk. About 30 percent of hardship withdrawals from retirement plans are to cover medical issues. However, withdrawing money from your 401(k) plan as you near retirement can upend your plans and jeopardize your future.
Understand the terms of your medical insurance. Much of the responsibility for health-care costs has been shifted to individuals. Among covered single workers, 57 percent are in a plan with an annual out-of-pocket maximum of more than $3,000, while 18 percent are in a plan with an out-of-pocket maximum of $6,000 or more, according to a study from the Kaiser Family Foundation.
Do the math. Invest some time in calculating what would happen financially if you were faced with a high, unexpected hospital bill or a reduction in income while out on disability. Could you afford to pay your bills or would you end up with a longer-term financial burden? Don't forget, high-deductible health plans can also increase the individual's financial responsibility.
Voluntary benefits are designed to help, and keep in mind that benefits offered by your employer may be at a lower, group rate than if you were to purchase them on your own. Plus, your employer has already taken the guesswork out of finding a provider.
Use the tools available. Employers increasingly have easy-to-use, personalized tools to make it easier to choose benefits. There may be quizzes, videos or interactive features. One thing to keep in mind is that not all employers offer every benefit and, even if they do, you may not need or want all of them. But it's nice to have the choice.
It's easy to hope for the best and focus on the present but the data are clear: We will all get sick and injured at some point, and that costs money. Voluntary benefits are designed to help mitigate financial and emotional hardship.
As open enrollment comes around, take a closer look at all of the benefits your employer offers, and consider which ones make sense for you and your family. When the unexpected happens, you may be glad you did.
— By Robert Grubka, president of Voya Financial's employee benefits business