Tuesday, October 23, 2007

I noticed this article about Health Savings Accounts on The Consumerist today and it reminded me that today begins open enrollment for my company’s benefits. I went ahead and took care of everything and noted the following:

1. My health care costs are going to go up.
My dental costs used to run me $2.86 per check and now will be $3.06 (a 7% increase, a little lower than the forecast of 8.7%). However, I used to pay $21.13 per paycheck for medical care and I will now be paying $28.05 (an increase of about 33%!). In addition, my maximum out of pocket costs will be increased to $1,000 from $750. As a concession of sorts, I guess, my company made a deal with the Mayo Clinic that if I took a health risk assessment, I would get 10% off my contributions. Still, the end result is that my medical costs will be about 20% higher even if there is no change in my frequency of doctor visits and my prescription costs do not go up.

2. My health care reimbursement account is about the most wonderful thing since sliced bread.
I have $10 a week put into an HCRA to lower my taxable income and get reimbursed for copays, deductibles, and some over-the-counter medicines. I debated about raising this for next year, but even though I’ve had about three times as many appointments as normal this year (thanks to a suspicious looking mole and a crown), I’m also still working through funds leftover from 2006* so I think leaving it at $240 per year works just fine. If your company offers and HCRA or you qualify for an HSA, you should definitely look into it—I’m all about lowering my tax liability and this is a very legitimate way to do so.

3. I am probably over-insured without even paying a penny.
Disability, accidental death and dismemberment, and basic life insurance are all company-paid to a certain baseline, and I choose not to pay extra to purchase more insurance. This is only because I am single and have no dependents. I have enough in savings to cover the costs of a funeral, god forbid, and I have no debt. If the total worst happened, my parents could afford to handle the costs. But if I were married or had a kid, I would completely change my tune and inspect all of this a lot closer. YMMV.

4. I will continue, for now, at my current rate of retirement contributions.
I’m contributing 9% of my measly paycheck to my 401k with a 6% company match. My goal is to contribute a full 15% on my own as Dave Ramsey recommends, so that the match is just pure gravy, but I’m not quite there yet. I won’t make any changes until I have my year-end review (and hopefully at least a small raise!), at which time I’ll see how much I can afford to sock away before I notice it (probably another 1-2% depending on how big the raise is).

5. I need to revisit my will.
Another perk my company offers is online will and estate-planning help, which I took advantage of when I started. I get a free review each year, and enough has changed in my life with moving and acquiring new things that I might want to make sure things are still all up to date. As I said, I have no dependents, so I’ve chosen two family members I’m very close to as my inheritors of what little I’ve got.

And that about sums up my position on life and money right now. Medical costs are going up but ultimately I probably won’t even notice the amount as it’s pretax. Death and dismemberment suck and I hope they don’t happen to me any time soon. I do not have enough money to do everything, so I’ve got to be smart about putting to work what I DO have.

*This is an extremely rare situation—federal law states that any funds not used by March of the following year are lost. However, when I started my job in mid-November of last year, some ambiguous paperwork caused an entire $240 to be drafted into my 2006 HCRA out of one paycheck, and I went scrambling throughout January and February to buy enough OTC stuff to use it up. I succeeded, but their formal review for those funds lasts until the end of SEPTEMBER, so I am just NOW getting to use the money that was taken out of my first paycheck here a year ago.

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