Employer Health Benefit Guide
Trying to choose employee benefits for your family during your employer's open enrollment season is about as exciting as watching paint dry. But, I pinky promise it's important.
Your health-related employee benefits choices can impact your family's financial security. It can cost you potentially thousands of dollars in avoidable expenses.
Use this guide to walk through how to choose employee benefits health-related for you and your family:
Healthcare Plan
Dental Plan
Vision Plan
Disability Options
Critical Care, Hospitals, Cancer, etc.
Choose Employee Benefits: Healthcare Plan
This is an overview of how to pick the best healthcare plan for your family.
Healthcare HMO (Health Maintenance Organizations):
PCP (Primary care physician) referrals to see doctors
Typically no coverage for out-of-network care (emergencies are exceptions)
On average, the lower premiums, deductibles, and copays are the least expensive.
Possible fit: Someone with ongoing medical needs who is cost-conscious.
Healthcare EPO (Exclusive Provider Organizations):
PCP (Primary care physician) referrals are generally not required to see doctors
Typically EPOs have a more extensive network of providers than HMOs; In most cases, no coverage for out-of-network care (emergencies are an exception)
Typically slightly more expensive than an HMO
Possible fit: If you do not want to get a PCP referral every time you want to see your medical specialist or you want access to a more extensive network of doctors.
Healthcare POS (Point of Service):
Requires primary care physician referrals.
The plan offers limited out-of-network coverage.
On average, more expensive due to the flexibility of coverage.
Possible Fit: Someone who wants the flexibility of seeing an out-of-network provider and a doctor but doesn't mind needing a PCP referral.
Healthcare PPO (Preferred Provider Organization):
Typically, no primary care physician (PCP) referrals are required.
Limited out-of-network coverage.
Typically higher premiums.
Possible Fit: If you desire the maximum flexibility to both see a doctor without a PCP referral and get care from an out-of-network provider.
Healthcare HDHP (High deductible Health Plan):
Can have rules similar to an HMO, PPO, POS, or EPO
Typically low premium but high deductible, often linked to an HSA
Possible fit: Someone with no chronic illnesses, healthy family who only sees a doctor for annual checkups. For others, the desire to use the HSA tax-saving benefits for future medical costs, especially if the employer is contributing to the HSA account.
Choose a Medical Savings Plan
Medical savings plans are typically tax-advantaged accounts used to save money for medical expenses. Most medical savings contributions are tax-free, and withdrawals for qualified medical expenses are also tax-free.
Most employers offer one or a combination of the following Medical Savings plans:
H.R.A. (Health Reimbursement Arrangement)
Typically an employer-only funded plan that reimburses employees’ eligible out-of-pocket expenses is generally tax-free.
Employers give each eligible employee a specific dollar amount. Employees submit qualified reimbursable expenses to their HRA administrator for reimbursement.
The amount you get typically rolls over annually
You may lose the plan if you change your job or possibly your healthcare plan (check with your employer).
H.S.A. (Health Savings Account):
Employees and as well as employers can contribute to the plan. Pre-tax savings account for those with a qualified High Deductible Health Plan. HSAs can be used to pay for qualified medical expenses.
In 2021 the IRS contribution limits are $3,600 for self-only; $7,200 for families, 55 catch-up $1,000). For 2022 the contribution limit went up slightly to $3,650 for self-only $7,300 for family coverage. 55 catchup remains unchanged.
The amount in your H.S.A rolls over annually, so you do not lose your contributions.
Your H.S.A. account, in most cases, is yours even if you change plans, retire or change jobs.
F.S.A. (Flexible Spending Account):
Similar to an HSA, employees and as well as employers can contribute to the plan. An FSA pays for qualified medical expenses.
The amount is limited to $2,750 annually for 2021 and $2,850 for 2022.
FSA rollover rules have changed. Typically depending on your employer, you may be able to roll over $550 or have a grace period of 2 1/2 months to spend the FSA funds or $570 for 2022. Now, your employer may allow you to roll over any unused funds from the plan year 2021 to 2022 or extend the grace period from 2 1/2 months to 12 months.
Like an HRA, you lose the plan if you leave your job.
Regardless of your account type, take advantage of the ability to pay for qualified medical expenses tax-free. Check with your employer regarding their contribution limits and rollover rules.
Choose Employee Benefits: Dental Plan
Picking the best benefit for your dental needs means:
Understanding the different types of insurance
Picking the one that will pay the most for current as well as upcoming dental needs.
For instance, next year, my daughter may need braces. So the #1 thing I am looking for this enrollment season is which benefit will pay the most for her dental care.
Below is a guide to the types of dental insurance most employers provide:
Dental HMO (Health Maintenance Organizations)
Similar to medical HMO, coverage is limited to in-network dental providers
On average cheaper than other plans
Possible Fit: As you research to pick the best benefit for your needs, this option may be a consideration if you have consistent, extensive dental care and you want more predictable coverage
Dental PPO(Preferred Provider Organization)
Similar to medical PPO, you have a provider network but have limited out-of-pocket coverage.
On average, costs are cheaper than indemnity but more expensive than HMOs.
Possible Fit: Consider if your favorite dentist isn’t in your network; you want the flexibility of working with a broad range of dentists.
Dental Indemnity Dental Plan (sometimes called fee for service)
Typically more expensive
The amount insurers will pay for care is capped at what is called “usual and customary fees.” Any dental charges above usual and customary amounts are typically paid by the patient.
You pay for the service and then file a claim.
In most cases, you aren’t limited to a provider network.
Possible Fit: Consider if you don’t need ongoing dental care, aside from an annual checkup, and/or you want the flexibility to see a dentist outside of your network.
Medical Savings Plans For Dental Care
An HSA can be used to cover eligible dental expenses.
Even if you have an HSA, you may be able to have a limited-purpose FSA for qualified dental and vision expenses. A consideration for someone who:
Maxes out their HSA
Want additional funds saved for services like braces or major dental surgery
Check for FSA-eligible dental expenses.
You can use HRA accounts for qualified vision care expenses.
Choose Employee Benefits: Vision Plan
Most employer vision plans are similar to medical and dental plans:
Vision HMO
Works similar to medical and dental HMO
Limited to the vision provider network.
Possible Fit: If you get ongoing vision care- glaucoma, cataracts, etc, and the overall cost- premiums, deductibles, etc. is important
Vision PPO
Similar to medical and dental PP0
Lower costs for use of in-network providers.
Limited coverage for out-of-network care.
Possible fit: You want the flexibility to use in-network and out-of-network providers to use your favorite provider or multiple options for getting glasses.
Vision Indemnity
Similar to a medical and dental indemnity plan.
Participants can see almost any doctor.
The vision insurance provider pays a portion of the total charge.
Some plans may require you to pay for the service upfront and then get reimbursed for care.
Possible Fit: You only get an annual exam; your favorite provider is out-of-network.
Use vision plan comparison checklists like All About Vision
Medical Savings Plans For Vision Care
Medical Savings plans work similarly for vision coverage. Reach out to your plan provider for details about eligible and non-eligible expenses
Choose Employee Benefit: Disability
Short Term Disability
Temporarily covers your income needs immediately following an illness or injury.
The coverage is roughly 3-6 months. Contact your employer for specific coverage.
May provide maternity coverage
Most plans have a seven-day waiting period
Long Term Disability
Long-term income replacement
Typically follows short-term disability coverage
Definition of "disabled" can vary, so check your employer's definition
The time long-term disability benefits can be used can vary from a few years to retirement. Contact your employer for more information.
The amount may be impacted by other benefits like Social Security
Disability insurance coverage can vary wildly from employer to employer. Income replacement amounts can vary per employer, but on average most plans cover roughly 50-60% of your income. Contact your provider for more details about your plan.
Choose Employee Benefit: Critical Care, Hospitals, Cancer, etc.
There’s a lot of debate as to whether this type of insurance is needed. The following are factors to consider:
Current, past, and family history medical history
Comfort level with medical expense risks
Your current finances and your ability to pay the premiums
One of my family members paid for her and her husband's critical care, hospital, and cancer insurance. Both she and her husband had several medical issues. They both also have family histories of significant illnesses. She was diagnosed with cancer within a year, and her husband had emergency heart surgery. For them, it was the right choice.
You can read all the arguments for or against this type of insurance. Ultimately, you are the only one who has to face the consequences of your decision.
CONCLUSION
As you begin to choose your employee benefits, take the time to review the following health-related benefits.
Healthcare Plan
Dental Plan
Vision Plan
Disability Options
Critical Care, Hospital, Cancer.
Reviewing your coverage is essential to helping you become and stay financially secure. Take the extra time to review your options; your financial future self will thank you!
