It’s almost that time again … Open enrollment for health insurance and fringe benefits. The easiest option is to select exactly what you selected last year. However, this is an ideal, once-a-year opportunity to review your current elections to make sure they’re still the best option for you and your goals. We’ve summarized a few of the common benefits we help our Procter & Gamble clients with:
Preferred Provider Organization (PPO) or High- Deductible Health Plan (HDHP)
Is your health insurance plan adequate for you? You should consider your health status, expected medical needs and overall financial situation to determine the best election for you and/or your family. The PPO plan may be better for those with frequent medical needs such as doctor visits or prescriptions, while the HDHP might be better for those who are healthy or have very few expected medical needs.
If you elect the HDHP, you are eligible to contribute to a health savings account (HSA). An HSA allows you to contribute $4,300 for self-coverage and $8,550 for family coverage, plus an additional catch-up contribution of $1,000 for those who are 55 and older in 2025 (202 4 limits are $4,150 for self-coverage and $8,300 for family coverage). HSAs offer a triple-tax advantage: contributions are tax deductible or pre-tax if made directly from pay (lowers your taxable income); earnings and growth in the HSA are tax free; and distributions from the HSA for qualified medical expenses are tax free. HSAs are a powerful “bucket” to fill and use for medical expenses in retirement.
Savings Plan
Are you maximizing your contributions? Should you be contributing to a pre-tax or after-tax (Roth) plan? You should consider your taxable income, as higher-income earners might be better off making pre-tax contributions (deferring income into retirement). The 2024 contribution limit is $23,000, and employees age 50 or older are eligible for an additional catch-up contribution of $7,500 (highly compensated employees may be subject to lower contribution limits).
The IRS has not released the 2025 contribution limits yet, but we expect there will be a slight increase. This is also a great opportunity to review your 401(k) savings plan and profit sharing trust (PST) investments. As of July 1, 2 024, employees age 45 or older are eligible to diversify their P&G investments in the PST down to 40%. We generally do not recommend rebalancing any of the preferred shares within the PST due to a unique tax savings opportunity at retirement known as the net unrealized appreciation (NUA) distribution.
Life & Disability Insurance
Should you purchase additional life or disability insurance through P&G? You should consider your overall financial situation, health and dependents. If you have life insurance outside of P&G, you may not need additional coverage.
ARAG Legal Estate Plan
Do you have an estate plan in place or does your estate plan need to be updated? You should consider your financial situation, age of beneficiaries and long-term goals. The essential estate planning documents are summarized in this article: The Essential Estate Planning Documents. This fringe benefit is a cost-effective method to help ensure your estate plan is adequate for you and your family.
Work With Your Financial Advisor
We strongly recommend that you work with your financial advisor to help assess your benefit elections. Please give us a call if you have any questions or would like to discuss your options in more detail. As always, we want to help you make the best elections for you and your family to meet your goals!