November is open registration season. This could be for your employer, Medicare, or the Affordable Care Act Exchange. But it’s not just health insurance you need to consider. Employees may also have life and disability insurance options as well as pension plan contributions.
There’s a lot to consider when planning for the next full year. It helps to have your financial plan in order so you know how to budget for premium costs, what types of insurance you need, and how you track your retirement goals.
Health insurance is usually the first thing we tackle when signing up for benefits. Your employer may also offer a Health Savings Account or HSA. You’ll want to know more about using pre-tax money to help fund future medical expenses. This is always associated with a high deductible insurance plan. Consider what you expect from your out-of-pocket medical expenses for the year to determine if it’s better than a lower-deductible major medical plan.
Major medical plans may also be offered through some provider networks. You need to determine how many specialists you might need and whether you will be using services that are considered out-of-network. In this case, the coinsurance is smaller and the deductible may be higher.
Disability insurance premiums can be offered before or after tax. It’s fine to get the premium paid with pre-tax dollars, but keep in mind that the benefits will then be taxable.
Life insurance usually comes with a basic plan, maybe $15,000 can be included with your medical coverage. Then you might have the option to pay extra for additional life insurance for yourself, your spouse, and your children. Consider that this insurance stays with the employer when you leave, but also may not require underwriting or insurability. It is generally less expensive because it is group insurance rather than individual. Consult your financial plan to determine the amount of permanent insurance you need and get your own policy for that amount. Consider using the employer’s plan for short-term needs.
Retirement savings are also crucial in planning for 2023. Limits will increase in 2023 to $22,500 for most qualified employer-sponsored plans, such as 401(k). The catch-up provision for people over 50 will be $7,500. Therefore, you can increase your 401(k) contribution to get the maximum allowed. The annual limit for IRA plans has increased to $6,500, but the catch-up remains at $1,000.
The income phase-out range for taxpayers who make IRA contributions to a deductible IRA or a Roth has also increased. Consult your advisor or IRS.gov to plan your 2023 tax strategies. Couples earning less than $73,000 may qualify for the credit for retirement savings contributions.
Anyone changing jobs or planning to retire next year can benefit from a Roth conversion. This type of advance planning could significantly improve your retirement income in the future. It’s important to take the time to learn about your options to make sure you’re signing up for what’s best for you and your family.
Patricia Kummer has been a Certified Financial Planner and Trustee for over 35 years and is Managing Director of Mariner Wealth Advisors.