It’s open enrollment season, but if you are like most people, you will probably default to what you did last year. That’s a shame, because spending some time with your options can help you save money. Health Insurance: For the 151 million Americans, who participate in employer-sponsored health insurance plans, there is some good news: the pace of premium increases is slowing down. A recent Kaiser Family Foundation survey found that in 2017, the average family premium increased 3 percent to $18,764, up 3 percent from last year, with workers on average paying $5,714 towards the cost of their coverage. Unfortunately, workers’ average contribution to family premiums has increased more rapidly than the employer’s share since 2012.
To help defray costs, participants need to compare plans and choose wisely. If your employer offers a High Deductible Health Plan or “HDHP” [To qualify as an HDHP in 2018, the deductible must be at least $1,350 for singles and $2,700 for a family], consider a Health Savings Account (HSA), which can help pay for the higher deductibles with great tax advantages.
HSA contributions are either pre-tax or tax-deductible; you control how the contributions are invested; earnings and interest are tax-free; withdrawals for qualified medical expenses are tax-free; and you can rollover your contributions year after year, regardless of where you are working. Once you reach age 65, all nonmedical withdrawals are taxed at your current tax rate. In 2018, you can save as much as $3,450 for an individual or $6,900 for a family in an HSA. There is also a catch up contribution of $1,000 available for those over age 55.
If you don’t have the ability to use an HSA, Flexible Spending Accounts (FSAs) can be a good option. Individuals can set aside $2,650 in pre-tax dollars to cover out-of-pocket expenses. Check if your employer allows you to carry over $500 from one plan year to the next; if not, FSA money is use-it-or-lose-it for the plan year.
Medicare: The annual open enrollment period has started and runs through December 7th and while the best way to control health care costs it to choose coverage carefully, only about 10 percent of people voluntarily change plans. You can switch from original Medicare into Medicare Advantage, the managed-care alternative to fee-for-service coverage, but if you do, make sure that your doctors are in the network; understand the deductible and out of pocket limits; and the prescription drug choices.
For the Part D medication plan, check out Medicare.gov/findaplan to compare coverage options. The tool allows you to input your drugs, search for plans in your area and allow you to compare total annual costs, including premiums, deductibles and drug co-pays. If you don’t request a change, your coverage will be automatically renewed.
Retirement: For the first time in three years, workers can stash away MORE money in their retirement plans. The IRS announced participants in 401(k)s, 403(b)s, 457 plans and the federal government Thrift Savings Plan can make a maximum contribution of $18,500 — up $500 from this year. Catch-up contributions for employees ages 50 and over are still $6,000. These amounts do not include employer matches. If your plan provider allows for automatic escalation, choose it! By doing so, you can put make sure that you are increasing your contribution level each year.
For those who use IRAs and Roth IRAs, the news was not as good: the contribution limits remained flat at $5,500, with catch-up contributions of $1,000. BUT, for those who use IRAs in addition to workplace plans, the income ranges for deductibility increased slightly, as did the income range for use of a Roth.