Over the past month, we’ve been looking back on posts from 2018 and 2019 that have given you advice on how to think of your benefits, what criteria matters most when comparing your options, and much, much more. The main focus has been those among us that work for—and get our benefits from—others. THE MAN, if you will. In this installment, we’re talking about those who are on their own for benefits, whether self-employed, over 65 or FIRE. Here are some deets on what do get or not get when you’re out there hunting and gathering in the benefits wilderness!(more…)
In parts 1 and 2 of our FI Benefits 2020 Special, we helped you get in the FI mindset when it comes to benefits, especially health insurance options, and then we gave you some strategies to help you figure out how to think about selecting your benefits. In this installment, we give you practical advice for choosing benefits.
We know that you love doing the math, and these posts will give you a good idea of the most crunchable numbers related to your annual choices for health insurance and other benefits. Let’s get started!(more…)
In today’s installment of our 2020 OE special for the FI/FIRE community, we give you some tactical reminders that will help you understand what to think about as open enrollment (OE) approaches. The good news? Benefits are a great thing to have. Health benefits in particular are both great and essential to have.
The bad news? Well, read on for insights and strategies.(more…)
Every year, the vast majority of Americans must “elect” their benefits for the year. In the benefits biz, this occasion is called “open enrollment season” and if refers, as the name implies, the time of year when employees get to select their benefits — primarily health/medical, dental, vision and life insurance options — through their employer for the coming year. Something around 75 percent of employees who get benefits through their employer get them with a January 1 start date, which puts them making their selections some time between October and mid-December.
We at the Benefits of FI aren’t just here to show you how to make the most of open enrollment, we’re here to make the most of your FI goals during open enrollment!
With that in mind, we are running a series of posts over the coming weeks that will get you ready for OE, give you ideas for how to view the various criteria for making benefits elections, and ultimately to help you view OE through a FI/FIRE lens. We will also post some of our favorite posts about benefits across the FI blogging universe, to further give you a leg up in selecting benefits for the year.
First up, a little pre-game — knowing what to prioritize in your mind before OE starts.
If you’re in the FIRE vanguard, retiring in your late 20s to mid-30s, you’re (hopefully) living the dream healthy enough to enjoy your retirement to its fullest. If you’ve planned your housing, transportation and other common living expenses well, they will be quite manageable within your budget until it’s time to shuffle off this mortal coil.
But keeping that coil tightly wrapped gets harder with each passing year. Don’t risk your financial health by compromising on your physical health — get insurance. And not just the cheapest insurance. Make sure it’s good enough that it doesn’t leave you with huge bills if something bad happens. Such decisions and expenses should all be part of your FI plan, even if it means a few extra years of saving to be fully prepared for a long, healthy life of early retirement freedom.
Here are some tips for that early retirement health care party…
It used to be that your employer presented you with a single health plan and you had a simple decision: take it or leave it. Maybe, if you were lucky, you could pick between the wonderful worlds of HMO and PPO, with one promising low costs if you don’t get any bright ideas about having options, the other promising you that you can do whatever you want so long as you pay for it.
These days, we’re in the age of “healthcare consumerism,” which among many other things means that you’re on the hook for more of your healthcare costs. It also likely means that your employer is making a consumer-driven health plan (CDHP) available to you, which is the combination of a high-deductible health plan (HDHP) and a health savings account (HSA). If these are new or confusing terms to you, you’re not alone. Health insurers specialize in actuarial risk, not marketing and communication, so they often think that the best way to get you to understand a confusing phrase is to make it an acronym. Ugh. Calling something a “CDHP” and saying it’s there to help you understand and control your healthcare spend is like promising a better understanding of your personal finances and then handing you an abacus and saying “OK, have fun!”
But, as Bob Marley might say, don’t worry about a thing, ‘coz every little thing’s gonna be alright…once you read through this primer on which health plan is best for you, your family, and your goals of financial independence.
How we think about a topic affects our decisions. When it comes to the benefits that an employer offers us we can step back a bit and get a different perspective that will help us make better decisions and hopefully improve our lives.
First of all let’s acknowledge that the entire insurance and benefits experience is pretty darn frustrating. It is so tangled up and layered with jargon that we often give up before we begin evaluating our options. When you add in the complexities of government rules and programs it gets even more difficult to comprehend.
Here are some suggestions that hopefully will help you think about your benefits in a better way.
Did you know that your employer uses terms like “total rewards” when strategizing about what kinds of benefits they want to offer you? Did you know that those benefits can easily account for 20-35% of the “total compensation” they give you? Did you know that, cumulatively, employer benefits account for hundreds of billions of dollars every year, and that that expense, which rises 4-7% per year, is thought to be at least partially to blame for keeping your salary increases down?
There is much in the financial independence movement on the importance of saving for retirement, especially maxing out your 401(k) contribution and taking advantage of employer matches. There’s less information about the importance of your other benefits, especially health insurance.
Your employer thinks of your benefits, both retirement and health, as compensation. You should think of them as income — not just how selecting and using them wisely will help you reach your FIRE goals but also to ensure that your FIRE dreams aren’t derailed by bad luck and bad choices.