What is one of the toughest parts of starting a new job? Is it the new commute to work? Is it the social awkwardness of not knowing whom to sit with at lunch time? No. It’s the sign-up for group benefits.

Two people sitting with computers, pens, and paper
 

Signing up for group benefits is like getting to the end of the test and selecting all {C} so you can just get it over with.

It’s like going to a silent rave and trying to make sure you’re playing the same songs as everyone else so you can dance on rhythm.

That’s what it’s like signing up for group benefits with an employer.

You get disabled and need that disability coverage to help feed your family, but you didn’t check the box on the 93rd page, sub-paragraph D, insert lawyer thingy here § 2.92349.

You get the lesson AFTER signing up and hoping. Below I will explain a few ways to maximize your employer benefits, and tell you what to do if you don’t have them.

 

ASK THESE QUESTIONS OF HR:

What is our disability insurance (DI) Policy? – DI will cover time for lost wages if you can’t do your job. It’s more than workers comp, you don’t have to get hurt on the job, it’s your ability to do your job. For example, depression is one of the top long term disabilities. Other issues like a surgeon hurting his or her hand, a salesperson losing their ability to speak, or a Walmart greeter going blind.

Image of a wheelchair on a sidewalk

Who pays for it? – If your employer pays for it then your benefits are taxable if and when you receive the payout.

What percent of my income is covered? – Most plans I see cover about 50-70% of your Gross (before taxes and deductions) salary. 60% is the most popular. Essentially that gets you back to where you were used to before getting hurt. Don’t forget (A) though! If your employer paid for the benefit it’s taxable and now you’d receive something like 40% of your gross, so maybe 20% less than normal. That could be a lot!

How soon does it start if I get hurt? – 90 days? 180 days? This will help you find a matching plan to fill in any gaps, and to know how much emergency saving should be on hand.

Are bonuses or commissions covered? – Nope. That’s just standard. I have a few clients at a big tech sales company in MN. About half of their compensation is bonus based on performance. If you make $50k salary and $50k bonus and become disabled, you only get 60% of the salary, and that may be taxable!

 

What is our life insurance policy? – Some companies have life insurance for spouses, some don’t. Some allow you to buy up to 7x your salary, some don’t. Some allow you to keep paying for coverage if you terminate employment, and at some employers you lose the coverage the instant you leave.

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Can I buy it up? – A lot of plans will allow you to buy additional coverage for a very low cost. This is effective for some employees, but the coverage may not travel with you upon termination. 1099 contractors may not have any coverage at all. Then they would want to buy something outside.

Can my significant other get coverage? – If you can get coverage on a spouse or loved one through your job do it. There is no downside. A lot of these policies may come in the shape of an Accidental Death and/or Dismemberment Policy. AD&D. Meaning it was a sudden traumatic event. Get the coverage if you can. If you can’t then get some outside.

If I leave, can I take it with me? – This is huge. You may be able to buy up a ton of coverage. Like millions of dollars’ worth for a very great price. But when you terminate employment, even if it’s retirement, that coverage will probably be done. And you may have paid for it for years. Why is this important? As we’re seeing with Health Care issues and pre-existing conditions, insurance companies don’t like to take on risk. If you leave your employer to start your own business in 20 years, you may not be qualified health-wise to get coverage at the latter age. Or an issue may have developed that makes you uninsurable. I recommend to almost everyone, get some coverage outside of work. We can talk term or permanent later.

Is there a reminder to change beneficiaries? – Some companies have you re-signup for life insurance each year and confirm the beneficiary. That is great! Some companies don’t. You sign up day one and that thing sits for eleven years until they pull it out when they need it on an unfortunate day. Check to see if you will get reminded each year, if not, set some reminder up for yourself. Our household likes to do wellness weeks. About every 6 months we get our doctor’s appointments, dental, and vision checkups done. We also update or check all of our financial plans including our legacy plans. It makes for a busy week every six months but cuts down on the chaos for the rest of the year.

 

What is our health insurance policy? - A lot of companies have health insurance, but what are the different types? The pro's and cons? Some companies have amazing details about their plans, some don't… Here are some questions to ask:

Animated individual in an arm cast

What type of coverage is it? - Here are 3 common ones, but your employer could have another one too.

Preferred provider organizations (PPOs) - These plans have a list of providers that are preferred or recommended. They have higher premiums but lower deductibles. So if you know that you will regularly visit a doctor for issues like fertility, ongoing illnesses, or even just sick kids this may be a good plan. You have flexibility to choose clinics without needing a referral.

Health maintenance organizations (HMOs) - HMOs tend to have lower premiums at a restriction of having fewer options. There is a restricted group, and you pay extra to leave that group. It's like downloading an app or video game. You only get access to so many levels, and then you have to pay extra to move up.

High deductible health plans (HDHPs) - HDHP are cheaper each month, but as the name implies, they have a higher deductible when you need to pay for care. To offset these expenses you can save in a Health Savings Account aka H.S.A. I will talk more about H.S.As and HDHP in another post, but they are like a ROTH IRA for Health Expenses. As long as they are used for qualifying expenses under a HDHP they are tax free! Some employers offer the H.S.A through the insurance provider. For example with Cigna you can have a Cigna H.S.A. Some companies may have the HDHP but no access to an H.S.A. Then you will want to go to a bank to set one up.

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Can I, or should I opt out? – If your spouse or even a parent has coverage, you may be able to opt out of your employer's coverage to save a few bucks. If you're on your parent's plan, you {currently} can stay on until you're 26. A spousal or family plan can help you decide which plan you want. {Blue Cross vs. United vs. Cigna} Find out if you can or should opt out. Through coordination of benefits two different employers typically work out a plan to get you the coverage you need. What I'm telling you to do is to compare two separate plans vs one spouse on the other's plan. So you should have 3 total premiums to contrast with different benefits.

 

Dental/Vision? - Do we have Dental and/or vision insurance? It may not seem like a big deal until you need those services! If they don't have those insurances offered, see if you can negotiate another $1000-$2000 per year for your salary to help make up for the difference.

 

What happens when I leave? - Have you ever heard of COBRA? It stands for Consolidated Omnibus Budget Reconciliation Act of 1985. In a very brief nutshell, it allows you to continue your coverage after you leave an employer plan. What you want to know ahead of time is:

Does my disability or life insurance transfer? - Almost none do.

Can I continue my healthcare plan? - At what cost? COBRA will allow you to keep your coverage. But the premiums may double! If you're in a spot with healthcare issues, you may have to continue coverage. The reason I'm bringing this up is if you have to negotiate an exit package. See how long you can stay on the healthcare plan.