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3rd Quarter 2018

Open Enrollment Strategies for Your Employee Benefits

This is the time of year to make the most of your employee benefits for 2019. Your employer may give you access to several perks that can help stretch your income. Here's how to make the most of them.

Pick the best health insurance plan for your family. If your employer gives you several health insurance options, don't just look at the premiums when choosing a plan. Some plans with low premiums may have high deductibles and small provider networks. Instead, compare the premiums as well as out-of-pocket costs you'd have to pay for the type of care you tend to receive. Also, find out how much you'd have to pay for your prescription drugs under each plan and ask whether your doctors and hospitals are included in the plan's network. And find out what happens if you use out-of-network providers. Some plans charge higher co-payments if you leave the insurer's network, while others don't provide out-of-network coverage at all, except for emergency care.

Make the most of tax-advantaged accounts for health-care expenses. If your health insurance policy has a deductible of at least $1,350 for single coverage or $2,700 for family coverage, then you may be able to make pre-tax contributions to a health savings account (HSA). You'll be able to use this money tax-free in any year for eligible medical expenses, including your deductible, co-payments, prescription drugs, dental and vision care that isn't covered by insurance, and other expenses. Your employer may even give you extra money to contribute to the HSA. You can't make new contributions to an HSA after you sign up for Medicare, but you can use money you've already accumulated in the account tax-free to pay premiums for Medicare Part B, Part D prescription-drug coverage, and Medicare Advantage plans (but not for medigap) after age 65.

If you have a lower-deductible policy, you may be able to contribute to a flexible-spending account (FSA), where you can set aside pre-tax money (currently up to $2,650) to pay out-of-pocket medical expenses in that year. Money in an FSA must usually be used by the end of the year, although some employers give you to March 15 to use the money or let you roll over up to $500 in the account to the next year.

Take tax-breaks for child care. Your employer may also offer a dependent care spending account, which lets you set aside up to $5,000 pre-tax to use for child-care expenses for kids under age 13 while you work. You can use the money to pay for day care, a nanny, before-school or after-school care, and even day camp during the summer.

Consider extra disability and life insurance. Your employer may automatically provide some short-term disability insurance and some life insurance to all employees. But you may also be able to buy additional coverage during open enrollment.

Look into long-term-care insurance. Some employers let you buy long-term care insurance at group rates during open enrollment. These policies can help you pay for care in a nursing home, assisted-living facility, or in your home — costs that typically aren't covered under Medicare and can quickly deplete your retirement savings. For more information, see www.icmarc.org/ltc.

Sign up for tax-advantaged transportation benefits. Your employer may also let you set aside pre-tax money during open enrollment to help pay for parking or commuting benefits.

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