A lot of people don’t fully understand their benefits package, and blindly make important healthcare choices.
This year, challenge yourself to do a little preparation so you can make the best possible decisions for you and your family. Here are some questions to help you get prepared:
It’s important to know how your medical coverage has changed. You may sign up for a plan without realizing your network of doctors and healthcare providers has changed or the deductible is higher than last year.
To make sure this doesn’t happen, take a look at your current plan to see if it still meets your needs or if a different plan would work better. Then determine if the plan you want fits your budget. Be sure to pay attention to how much the plan costs each month and how much you have to pay for deductibles and co-pays when visiting the doctor. Also, make sure all of your medications are covered.
Out-of-pocket medical costs are expenses you have to pay that are not covered by your insurance. Be sure you have a good understanding of these costs. For example, how much does your healthcare plan cost each month? Do you have a co-pay when you go to the doctor? How much is your deductible (which is the money you have to pay before your insurance starts covering your medical expenses)? This will help you identify which additional benefits you’ll need to supplement your healthcare insurance and cover those costs.
Some plans offer a Flexible Spending Account or a Health Savings Account. A Flexible Spending Account, or FSA, is a benefit account that allows you to sock away money to cover out-of-pocket medical costs like co-pays, deductibles, dental care, and prescriptions. Best of all, you don’t have to pay taxes on the money you put into this account, and you don’t even have to have healthcare coverage to use it. A great thing about FSAs is that whatever money you choose to set aside is available to spend on the first day of the plan year. You do have to be aware, though, that you may lose any funds you don’t spend by the end of the plan year.
A Health Savings Account, or HSA is similar to an FSA, except HSAs are only available if you enroll in a high-deductible health plan. An HSA allows you to save money to cover deductibles, dental visits and other out-of-pocket medical costs. Plus, you don’t have to pay taxes on the money you save in this account either. Unlike FSAs, though, HSA contributions roll over to the next year, so you won’t lose ANY money if you don’t spend it all by the end of the plan year.
With both accounts, you use the money tax-free for qualified healthcare expenses.
This is one of the most commonly asked questions, and the answer is different for each person. First, it’s a good idea to look at what you spent last year, including doctor visits, prescriptions, and dental and vision expenses. Add these up for yourself and your dependents. Then think about whether or not you have any big expenses coming up –Are you expecting a baby? Are your kids getting braces? Take these into account as well to help you figure out how much money to put into your FSA or HSA. There is a limit to how much you can set aside each year, so check with your human resources department.
One other big expense you may have is for childcare. Many employers offer a Dependent Care FSA, also known as a DCAP, which allows you to set aside money, before taxes, to pay for care expenses while you’re working for children through age 12 and adult dependents.
Making sure you have the answers to these questions can help you have peace of mind knowing that you made the best decisions for you and your family. If you still have questions, be sure to talk to your HR representative.