You’re fresh out of college, and about to start your first job in your chosen field. This may very well be the beginning of the career you dreamed about when you first enrolled in college. While this can be a very exciting time, it can also be filled with a lot of uncertainty, and questions you still need mom or dad to help you answer. Questions regarding which insurance plan to pick based on your health and medical needs. For the first time you may have the option of enrolling in long term plans that offer life insurance, flexible benefits, and retirement planning. You’re 22, 23, maybe 24 years old, and these are big decisions you may not have any clue how to address.
When many of us start out in our careers, we purchase life insurance policies and select retirement plans without really having a firm understanding of either. These plans and policies feel like abstract concepts that don’t really affect us right now. However, because this is the only time many of us have to fill out the requisite paperwork, our choices today can have a significant impact on us 10, 20, or even 30 years into a career. Before you start new hire orientation, sign the benefits documents, and submit the paperwork to your benefits coordinator, be sure to consult a professional in the industry to help you navigate through your benefits options.
Prior to now, you’ve probably been on one or both of your parent’s health insurance plans. When necessary, you’ve gone to a primary care provider for a yearly check-up, and maybe seen an urgent care provider when illness has struck outside of your primary care physician’s office hours. In your lifetime, you may have seen a variety of specialists from time to time, and possibly been admitted to a hospital for an emergency, or a scheduled procedure. Regardless of your particular medical history, you likely have never had to deal with much more than a co-pay and minor prescription costs. Now that you will be the primary insured person responsible for billing, there are a few things to consider:
- Do you need insurance for you alone, or will you be providing insurance for a family? Some insurance plans offer individual or group plans for a single employee, employee + one child, employee + spouse, or employee + family. Each of these options has a different monthly cost and minimum deductibles.
- Types of plans: Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), Exclusive Provider Organizations (EPO), Point of Service (POS), Open Access Plus (OAP), or High Deductible Health Plans (HDHP’s) which may be linked to Health Savings Accounts (HSA’s). Depending on your monthly budget AND health care needs, you’ll want to consider which of these plans most adequately suits you based on your previous health care usage, and your future goals.
- Are you considering starting, or expanding your family within the next enrollment year? Some plans such as a POS, may provide pregnancy related benefits that differ significantly from an OAP or HDHP plan. While the monthly cost may be more for a POS plan, it may be more practical given the costs associated with pregnancy and delivery.
- Previous health care usage. If you have preexisting conditions, have been frequently hospitalized with a specific illness, regularly see specialists, or require certain prescription drugs consistently, you will need to carefully analyze your level of health care requirements before you select a plan.
A financial planner with certifications in health insurance can help you analyze the health insurance plans made available to you through your employer, and then select a plan that best meets your needs.
Even though the thought of planning for your death probably doesn’t sound appealing to you right now, it is very necessary. Life insurance is not for you in a literal sense; it’s meant to provide for your loved ones after you’re gone. Providing financially in the event of your passing can range anywhere from simply accounting for funeral arrangements, to paying down debt, to establishing trusts for future financial goals. There are a few key considerations before you get started:
How much life insurance will you need to purchase in order to provide for your loved ones?
- If you are single without any children, you may chose a plan that only covers the cost of your funeral arrangements. But do you know what that cost is? The average cost of a funeral ranges from a few thousand dollars to tens of thousands of dollars. Unless you want your friends and family to have to setup a Go Fund Me account, you may want to discuss your options with your financial planner.
- Are you a homeowner, or hoping to be one soon? You may want to factor in your mortgage payment or the balance on your mortgage to the discussion.
- Do you have children, or are you planning to have children someday? The day-to-day costs of raising children can be overwhelming if the financial burden falls squarely on your spouse’s shoulders.
- If you have children, have you started saving for college? If you are planning to pay for your children to attend college based on years of saving potential, you may want to account for the considerable cost of their educational future.
- Who will you name as the beneficiary of the policy you select? It goes without saying that you will need to name someone who you can trust to execute your wishes according to your planning and policy.
At the end of the day, you may not know what your future holds, but careful planning now can make all the difference once you do.
Unless you plan on working forever, you may want to take a quick peek at what your employer offers regarding retirement plans.
- How much will you contribute per paycheck to the retirement plan you select?
- Does your employer match contributions, or is there a flat rate your employer contributes?
- How will your monthly contribution affect your monthly budget? Do the payroll deductions occur pre or post tax?
- Does your employer offer a variety of retirement plans like 401(k)s? Or are the plans related to local or federal government, such as the Virginia Retirement Service (VRS)?
- Can you make withdrawals at any point from your retirement account to pay for unexpected financial obligations? If so, are there tax penalties or fees related to withdrawals?
These are all questions that can affect your decision today when selecting your benefits plans, AND later as your life changes and evolves. One of the biggest reasons it is important to think of these things now is because once the papers are signed and filed, many individuals fail to go back and revisit their initial choices. Life gets away from us. However, you don’t want to be staring down the face of a tragedy or a health crisis before you realize your life insurance, health insurance, or retirement plans are not adequate. Careful planning today can help to ensure a prosperous tomorrow.