Employee Benefits To Consider After Marriage



benefits consultant, employee benefits

 

It’s that time of year again. You know, the time where your employer sends you this nice, colorful booklet labeled “Employee Benefits” where all of your benefits are explained. And while everything is sort of explained, you still call your HR representative to make heads or tails of this until they give you their opinion on what you should get.

I remember a time when I was single and really didn’t care about what recommendation the HR rep would give me because frankly it was just me. I would just “figure it out” eventually. I was young, in great shape, and felt invincible. “Health Insurance? What for?” I’d say. But now I’m married. I have a duty to my spouse to make sure that we are okay in case things go down south. I have to “adult,” right?

So if you’re married, here are a few things to consider during open enrollment time:

 

Health Insurance

 

I live in the Rio Grande Valley and it’s easy to say, “If I get sick, I’ll just hop over to Mexico and go to the doctor.” I’m guilty of saying this too but let’s face it, if you’re ill anytime in the evening, you probably aren’t going to make the drive to the border. So how do you select your health insurance coverage?

If you and your spouse are both employed, each of you may want to consider keeping the health insurance plans that your respective employers offer as they may be subsidized in your favor and help you save money. Also, cheaper doesn’t always mean better. Generally speaking, the lower the cost of the plan, the higher deductible you have to pay. This means you’re responsible for a higher cost of medical care up front so you want to make sure you have the savings for that.

On the opposite end of the spectrum, your employer may offer a more expensive option. Typically, the more expensive option is best for anyone who frequently visits the doctor. Your upfront cost to visit the doctor is lower but the higher premiums make up for that fact. These plans generally have copays for doctor visits and lower deductibles to meet. From a cash flow perspective, if you don’t have a lot of savings in place for medical expenses and frequently visit the doctor, this is a viable option.

 

Disability Insurance

 

Disability insurance is often overlooked. Many of us rely on Social Security Disability benefits in the event we become disabled, but the time frame of applying for these benefits, getting approved, and receiving them can take up to six months or more after being disabled. There are two types of disability insurance coverages to consider, short-term and long-term.

For married couples wanting to have kids, a short-term disability policy may cover pregnancy and help mothers-to-be take full advantage of unpaid leave to be with their newborns. A short-term disability policy can also be the gap coverage between the time of collecting Social Security Disability benefits or long-term disability benefits.

So why apply for long-term disability benefits if you can apply for Social Security Disability benefits, right? Say you’ve been working for a few years and just got a promotion. Social Security collects your historical pay information and calculates your benefits on what you have earned. So if you've had low earnings historically, your benefit will be low. On the other hand, a long-term disability policy will pay you a percentage of your most recent salary. This is particularly important for younger couples who are starting to get promotions and rise through the ranks of their companies but still have 20-30 years of work ahead.

 

Life Insurance

 

“Death is a part of life.” “There are only two certainties in life, death and taxes.” Whatever the sales pitch is from your insurance agent, it’s something to consider. I’m a product of what happens when one spouse is not properly insured. After my father passed away, we were in jeopardy of losing our house, I focused on working to help support a household which cost me to delay education, and I gave up numerous opportunities that were presented to me. This isn’t a situation you’d want to place a family member in.

So for couples considering the purchase of a life insurance policy, consider your combined debts, your after-tax salary, and goals like funding a college education for your kids if you have any. This should give you an idea of how much life insurance you need. There are two major types of life insurance, term and whole life.

Whole life insurance is a type of life insurance that will provide you coverage for your entire life at a specified monthly premium. This type of life insurance is a bit costly because of some of the features that can vary with this product. For the purpose of covering what I think the general public should consider, I will not get into specifics of whole life insurance.

I am, however, an advocate for term life insurance. It gives you the most bang for your buck. While this type of coverage only lasts for a certain term, hence the name, the idea is to use the savings from paying a lower premium and allocating it into a retirement account. The ideal outcome is that if you have hefty savings from investing the difference, there won’t be a need for life insurance in the future when your home is paid, your kids are in college, and you are probably out of debt. Which leads me to the last benefit, retirement savings plans.

 

Retirement Plans

 

There’s another certainty in life that doesn’t get considered until later in life, retirement. It’s never too late to save and it’s never too early. Whatever kind of plan your employer offers, take advantage of it. Look out for any matching contributions that your employer offers. It’s free money! The rule of thumb is to save 10% of your income while you’re in your 20’s & 30’s, 15% while you’re 40-50, and as much as you can while you are in your 50’s.

Also, beware of fees. While it’s great that your employer offers you the benefit of a retirement plan, fees on retirement accounts can hinder growth. After all, that’s why one saves and invests into a retirement account, for growth. In my opinion, anything above 1% without getting advice from a person is too much to pay for just investing. Be sure to talk to your spouse about how much each of you can sock away into retirement. There will always be competing goals, you just have to stay consistent and adjust as your lives do.

 

MyLife Financial is a fee-only financial advisory firm providing objective and independent advice virtually. Our clients are busy professionals that face daunting questions of how today's financial decisions will affect their long-term financial success. Everything written is strictly for informational use only. Please seek the advice of your CPA, Attorney, or financial professional before implementing any strategies.


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