Changes To Benefits For 2009

It’s that time of year where it’s time for open enrollment for medical and other employer sponsored benefits.

My company sold a 51% stake in themselves to a private equity firm, so we changed insurance providers, though they kept benefit offerings along the same line as they did with the old company. Hopefully that carries past 2009 because it seemed to work out well.
Some changes I made in our benefits for next year:

  • Changed to a no-deductible PPO – This past year, our PPO had a deductible of $150 per person for in-network charges. This year I switched to a no-deductible PPO. The zero deductible applies to in-network providers, with the trade off being that the out-of-network provider deductible is significantly higher, as well as the annual ‘out of pocket’ cost have a higher cap. I went through all of our medical bills for 2008 and confirmed that all of our doctors are in-network, and also spent time talking to the hospital that will be doing our delivery to make sure that all aspects of our expected childbirth is covered. They are and were very helpful in answering questions. I think this will be a good trade-off.
  • Added extra life insurance – My employer offers life insurance up to 10-times my salary, and also offers a policy for my wife. With a newborn on the way, this is something I wanted to address. I contacted our normal insurance provider to see what a comparable policy would be, and it was almost three times as expensive, so I’m sticking with the policy from work. The downside, of course, is that the employer policy would go away in the event that something would happen to my job, but I figure that if something were to happen, I would address that when the time came, but will enjoy the savings for now.
  • Contributed to an Health Savings Account – I have never contributed to this, but I wanted to this year since there will be some bills coming with the delivery of our baby as well as costs that are incurred for a newborn. The benefits of this are that it allows us to contribute throughout the year, and also is tax deductible, which reduces the overall cost. The downside is that you have to use all of it in 2009, so if you over-contribute, you could potentially use it. However, I’ve found that there is pretty good flexibility in how you can spend this, in that drugstores will allow you to spend it on many items, including humidifiers, first aid care, off-the-shelf medicines. In other words, the chances are pretty low that this will go to waste, especially in the first year of having a newborn.

The costs aren’t too bad. If I hadn’t added the extra life insurance, the cost per paycheck would actually be about the same as 2008. The extra life insurance will raise it slightly, and of course the HSA contributions will deduct as well, but this will be offset by less recurring monthly expense in money that I personally earmark for medical related expenses. I also calculated what the contributions will be once we have the baby and move to family insurance. This will add an extra $50 or so per paycheck once Baby Beagle comes to the world. I’m going to just start setting that money aside now to ensure that the effects won’t be noticeable once we have to sign up for that coverage.

Luckily, I just got my annual raise so the ‘bottom line’ won’t result in less take home after the contributions. That’s good to know.

Also, I wanted to give a special thanks to ShtinkyKat, a fellow personal finance blogger. She read my earlier post in which I was unsure about the possible out-of-pocket costs for childbirth. She asked a friend who had recently gone through it, and provided some very helpful information which led me to come up with a more firm number for my HSA contributions. Part of the fun of blogging and motivation is building a rapport with fellow bloggers and readers, and it’s nice to know that there are people reading and willing to help. Thanks again!

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