You’ve likely seen your finances affected by the COVID-19 epidemic, like many Americans. Perhaps you or your partner were among the 40 million plus people who became unemployed or furloughed. You might have been sick, taking care of someone you love or unable to work due to a lack of child care. Perhaps you are one of the many Americans who have been able to work from home and saved money by not having to commute, go out for lunch, or pay dry cleaning bills.
Your “new normal” situation should be reflected in your selection process for benefits as you look forward to your employer’s fall enrollment season. Many aspects of your life could have changed. This includes household income, expenses, and medical needs. Any member of your family who loses their job could be unable to access workplace benefits, and may become more dependent on you.
These are just three suggestions:
Avoid letting unexpected medical expenses ruin your financial security
Millions of Americans were directly affected by a COVID-19 diagnosis. Millions more had to defer basic medical care and shelter at home. This could lead to higher than average medical costs in 2021. It is important to choose medical and dental insurance that suits your unique circumstances. If you are not employed, consider adding coverage for your spouse, partner, or child below 26 years old. You can also enroll in a tax-advantaged savings account or flexible spending account to help save for out-of pocket medical expenses. HSAs are better than FSAs if you’re eligible. They also offer greater tax benefits and can be rolled forward for future expenses.
Consider reducing your coverage gaps by purchasing critical illness, accident, and hospital indemnity insurance to reduce out-of-pocket costs. Consider also cost-effective telemedicine options and education programs that your employer might offer.
Find ways to manage your caregiving costs and protect your income.
The latest Financial Wellness CensusTM by Prudential shows that 26 percent of Americans experienced income disruptions due to the COVID-19 pandemic. However, 74% lived paycheck to paycheck prior to it. To protect your income and manage ongoing expenses, consider the following benefits:
- Income protection for disabled people protects your most important asset, your ability to earn an income and work. This insurance provides a predetermined income level in the event that you are unable to work because of illness or injury.
- In the event of your death, life insurance may provide income for your family members. Check with your employer to see if they offer life insurance coverage for your spouse. This may not make sense for you. This is an eye-opening stat: The median age of COVID-19 patients in America, 48.
- If you have children who will be home more frequently due to remote schooling or canceled sports camps, or limited access for babysitting, flexible spending accounts for dependent care could be beneficial. Similar services and programs for elder care can be helpful in managing the care of aging loved ones.
Open enrollment: Financial wellness should be considered holistically
Many benefits offered by your workplace are often overlooked due to the fact that they are not included in the open enrollment process. This year’s open enrollment period is a great opportunity to reflect on all benefits offered by your workplace, and to consider how they could improve or protect your financial health. Take, for example:
You should reevaluate the amount you are contributing to your 401 (k) plan. You may be contributing at the same level as years ago. Perform a financial audit and decide if you should increase your contribution. This may not be as difficult as you think. Americans who work from home can expect to save $2,500-$4,000 on their expenses because of lower commuter and work-related costs. Some may have received temporary debt relief and stimulus checks. You might consider putting any extra savings towards your 401(k), at least enough to get any employer matching contributions.
Roth contributions to your retirement plan (if available) can help you pay some of your income taxes in advance. This is especially important if your tax rates are expected to rise over the next few years. If possible, contribute additional funds to important intermediate goals such as funding an HSA and a 529 plan for your child’s education.
Participate in an emergency savings program for your workplace. You need emergency savings to help you navigate an unexpected job loss, slowdown, or unpaid family leave. Recent research found that was the most significant financial regret associated with the pandemic. Employers offer an emergency savings plan that can be “baked” into your 401(k), and which allows you to save money after taxes through payroll deductions.
If your employer does not offer an emergency savings plan, you can ask that a percentage of your salary be deducted automatically from your paycheck to be placed in a high-yield savings account or checking account that is designated for emergencies.
Participate in your workplace’s financial wellness program. The program may include customized financial planning, budgeting, and financial advice. This will help you deal with any changes in your financial situation. Check your employer’s student loans assistance program to determine your repayment period.
Open enrollment may be different this year, particularly if you work remotely. For example, it may not be possible to meet with benefit counselors on-site. Your employer might offer digital alternatives such as chatbots or remote Q&A sessions in place of them. You may also find new or improved benefits offered by your employer that you should consider in light of your new circumstances.
More than half (51%) Americans believe their financial situation was adversely affected by the crisis. The fall open enrollment season offers a great opportunity to make sure your benefits meet your needs.
