The New Demographics

Advising Couples Who Each Own Life Insurance

How couples who both work can choose insurance and other employer benefits

A recent blog from The Guardian looks at the challenges of advising couples with separate insurance. Read more here.

If you and your partner are both employed, chances are you’ll each bring home different company benefit plans from which to choose. However, it’s likely that each company plan offers a different range of choices and features. So how do you pick which benefits to use?

To start, you’ll want to gather all the information on each benefit and conduct a side-by-side comparison, ultimately selecting the best package or combination of packages offered. Here are some tips to consider when comparing plans for each type of benefit:

Medical Insurance

Compare the out-of-pocket costs for each medical plan

  • First, determine if you can add a spouse, partner, or dependent onto each plan and find out the amount of the premium (amount you pay from your paycheck each month).
  • Compare the deductibles and co-pays and review the prescription coverage and pricing offered under each plan.
  • Look at the out-of-pocket limits on each plan. There may be both an individual out-of-pocket limit and a family out-of-pocket limit.
  • Estimate your total annual costs for each plan based on your expected visits to your primary care doctor or any specialists, and any prescriptions.

Understand the network of doctors and providers covered

Find out if your current doctors are in network and — if you prefer to see a doctor that is out of network — look for any additional costs. Determine if referrals are needed by a primary care doctor before seeing a specialist and consider how this might impact your access to care.

Evaluate the services included

Consider your current and future health situation. If one or both of you anticipates regular doctor visits for a medical issue or a future circumstance, like a pregnancy, review the services that are covered under each plan to see what will best meet your needs.

Look for additional medical coverage

Check to see if your employers offer supplemental health insurance, like critical illness or accident insurance, which can offset the cost of your deductible and cover things your medical insurance may not.

Dental and Vision Plans

Compare costs

Find out if you can add your spouse or any dependents to your dental or vision plans. It may be more efficient for you to both keep individual dental insurance plans if you each have one, rather than go on a joint plan. Plans usually have a maximum limit that you can claim each year. After you reach that limit, you’ll have to pay out-of-pocket.

Look for extra value in the plans and factor those into your decision.

Understand what’s covered

Compare the services included in each dental and vision plan. Look out for small differences. For example, some vision plans allow for new lenses and frames every 12 months, but some plans allow only lenses every 12 months and frames every 24 months, and some dental plans have restrictions on extractions.

Additional Benefits

Flexible Spending Accounts (FSA) or Health Savings Accounts (HSA)

Your employer may offer an FSA or an HSA, which can help pay for health care expenses in a way that reduces your taxable income. If one of you is offered a FSA, determine whether there’s an annual maximum you’re allowed to put in. Get clarity on what types of deductibles, co-pays, and services can be paid from the fund.

If there’s a permanent life insurance option that you can take with you after you leave your job, this can help to establish a long-term coverage plan for the entire family in the event of an untimely death...

An HSA, like an FSA, can be used to help pay for health care expenses and may be funded in part by your employer. HSAs carry balances over from year to year, while an FSA may expire at the end of each year and you might lose any unused funds. Also, keep in mind, with an FSA you may have to submit a claim and proof of the medical expenses.

Compare the caps and usability of each option offered to you and your spouse and elect the plan that best meets your needs. If you foresee expensive health events in the future, consider adding more money to the account with the higher limit.

Employer-sponsored disability insurance

Disability insurance can help protect your income if you’re too sick or injured to work. You will not be able to add your spouse to your plan, so you should each elect it independently to ensure that your family will have enough income replaced if either one of you is unable to work.

Find out if your coverage at work includes short-term disability, which is likely to cover 40-60 percent of your income for a certain amount of time.

If the coverage offered is not enough to meet your true expenses, consider obtaining supplemental disability insurance policies, which are plans to increase your coverage, outside of your employer plan.

Some employers will offer employee assistance programs (EAPs) to help you get back to work after an injury or accident.

Employer-sponsored life insurance

Understand how well — and for how long — a life insurance policy would cover your family’s real expenses if you or your partner were to pass away. Couples should weigh each policy, both as a couple and as two individuals. If there’s a permanent life insurance option that you can take with you after you leave your job, this can help to establish a long-term coverage plan for the entire family in the event of an untimely death.

Retirement Plans

A retirement plan will let you set aside money from each paycheck, to accumulate interest and grow a significant asset. If either of you have an “employer matching” program, where your employer adds a matching sum of money to your own contributions, take advantage of the benefit by contributing at least as much as the match.

Review any “vesting” requirements, where you will need to contribute for a set amount of time to fully own all funds in your retirement plan, including employer contributions. You always own what you contribute, but some plans require additional time to claim employer-added funds. If one person’s plan will lead to a contribution from the employer after reaching a benchmark such as five years, consider adding more money to that account. It’s also a good idea to make sure you’re both named as beneficiaries of your accounts.

Employer benefits contribute to your overall financial, physical, and emotional well-being. Review all your benefits carefully and look for components such as 401(k) plans, transportation subsidies, and other incentives such as stock options. Ask for details from your HR departments and go over the policies closely and talk to your employer if you need further guidance.

Consider consulting a financial professional that can help you figure out the real costs and practicality of the services and protection offered. By considering all the components of the benefit packages from both a short and long-term perspective, you and your partner can protect and plan for your future happiness together.