Position was eliminated. Need help w/ new benefit choices

[Mrs. Dinero]

Hi all,

My position was eliminated.  Thank God I found another job with better pay and hopefully better job satisfaction.  

I'm soon to be 46.  DH is 47.  We have 2 children in college (19 & 21).  We owe $190k on mortgage.  House is worth $305k.

Investments are over $900k. We have zero debt besides mortgage.

New company is small (<200 employees).  I've only worked for huge organizations before and their benefits were better (ex. 2x salary life insurance paid by organization.  We paid minimal for additional).

Funny how the benefits are trickier for me to select now:
Medical & Dental (DH handles this - his federal plan beats any other)
Short & long term disability  
Life insurance

Should I be looking outside this new company for short term? Can't I use SS if I need long term?

How much life insurance?  Again, should I look at outside vendors?

We thankfully have no medical costs so we don't use a HSA.

Any help would be appreciated.  I can provide more info if it's needed.  Thanks in advance.

[Mrs. Dinero]

Do we even need short term or life insurance at this point in our lives?  DH could always pull from savings for immediate needs.  I just don't like that we have 10+ years of wealth building that he'd miss out on if I was to go but on the other hand he wouldn't need as much

[Deleted]

I'm glad you found something already!

You might want term insurance to carry the kids through college years and maybe replace what you would have put into the retirement savings. I realized at one pint that with DS on his own and the retirement funds we'd built up, I no longer needed life insurance because the investments and DH's SS were enough for his modest needs. The amount you get should depend on what DH a=makes and how much more he'd need to live on.

You might want to use the HSA anyway. First of all, Stuff Happens. Second, there are few vehicles with the double tax advantages- what you put in isn't taxed and what you take out for allowable expenses isn't taxed. Mine is up to $45,000 and I don't use it but I can always tap it for Medicare premiums if nothing else.

Do you have a 401(k) to roll over? I've always done that rather than leave it at an employer. Two had really crappy plans, anyway. I moved them to Fidelity.

I never bought disability and probably should have. My impression is that SS disability is hard to get approved and doesn't replace much of your income.

[thyme4change]

If you like your car insurance company, you can call them and see what a 5 year term policy would cost for life and if they have an LTD policy or rider. You can also go to one of those websites that will be a broker and shop around for you.

My and my husband's term life insurance is set to run out when my son has 1 year left in college. I was not going to re-up. If I die or if my husband dies, the remaining spouse will have to live off their own salary and our savings/investments. If we both die, the kids will split a frickin' windfall for a couple of 20-somethings. I don't think life insurance needs to be held by people as their financial obligations diminish. Especially if they have been responsible with their money - which you have.

[pulmonarymd]

SSD is very difficult to get. You need to be disabled for 2 years before you qualify for Medicare. SSD looks at if you can do ANY work. So, if I, as a physician, could do anything, I wouldn't be disabled, even if I could not be a physician anymore. That is why, for physicians, having our own disability insurance with own occupation coverage is like gold. I forget the number, bu tthe chance of having a temporary disability is quite high, and something that should be taken into account in these decisions. Care for a disabled spouse can become quite expensive. Having additional income gives you more options when it comes to care.

You are more likely to use disability insurance than to have your spouse collect your life insurance. Imagine if you had severe covid and lost your ability to work for 6-12 months, all while fighting SS to get disability.

[Mrs. Dinero]

Thank you all. Great example pulmonarymd.  I'll be signing up for short term.  Almost all short term plans cover up to 2 years.  Minimal amount of money for piece of mind.

I think I'll also sign up for life insurance for a few more years.  Also, minimal amount of money.

[minnesotapaintlady]

Are you sure the STD goes for 2 years? Most are just a few months.

[Mrs. Dinero]

Sept 28, 2021 12:53:00 GMT -5 minnesotapaintlady said:

Are you sure the STD goes for 2 years? Most are just a few months.

"You’ll typically find that short-term disability insurance covers a period of around three months to two years, depending on the provider and policy chosen." just from doing a quick google search.  I'm in infantile stages of researching so I may be way off.

[pulmonarymd]

You need to be real sure about your short term policy. Mine covers 6 months at a certain percentage. Depends on the company. This link gives you some numbers on the risk of having a long term disability. It is not negligible. If you can self insure for that risk, great. But otherwise, skimping on long term disability does entail some risk. And as I said, if you are ill, having assets gives you more options for your care


affordableinsuranceprotection.com/odds_of_disability

[minnesotapaintlady]

Ours is 3 months at 60% income. Then it transitions to LTD.

[raeoflyte]

I think anything over 3 months on std is the exception not the rule.

[Mrs. Dinero]

Sept 28, 2021 13:28:58 GMT -5 minnesotapaintlady said:

Ours is 3 months at 60% income. Then it transitions to LTD.

   says plan's maximum benefit period is described in 'certificate of insurance/summary plan description'

Good to know.  Mine is most likely 3 months as well.

STD:    $320/yr for $6k in potential benefits.  
LTD:    $500/yr for 60% of salary
Life:     $366/yr for $100k


What do you think? $99/month to have some piece of mind?

[minnesotapaintlady]

Sept 28, 2021 13:49:36 GMT -5 Mrs. Dinero said:

Sept 28, 2021 13:28:58 GMT -5 minnesotapaintlady said:

Ours is 3 months at 60% income. Then it transitions to LTD.

   says plan's maximum benefit period is described in 'certificate of insurance/summary plan description'

Good to know.  Mine is most likely 3 months as well.

STD:    $320/yr for $6k in potential benefits.  
LTD:    $500/yr for 60% of salary
Life:     $366/yr for $100k


What do you think? $99/month to have some piece of mind?

Our disability insurance is provided free of charge so I don't know how the prices you were quoted compare, but the life insurance is spend. I pay less than that for 500K of term insurance. It might be worth it if its without a medical exam and you have health problems that would raise your rates, otherwise I'd get a policy outside of work instead if you think you need life insurance.

[Mrs. Dinero]

All of it seems high to me.

[pulmonarymd]

In regards to LTD, there is some you get what you pay for. $500 a year is not a lot for LTD. How long does it pay for? If I am permanently disabled, mine pays until 65, and I am considered disabled if I cannot be a Pulmonologist. So, if I could not be a Pulmonologist, I would not have to work as a PCP. But it is not cheap.

[CCL]

Sept 28, 2021 13:49:36 GMT -5 Mrs. Dinero said:

Sept 28, 2021 13:28:58 GMT -5 minnesotapaintlady said:

Ours is 3 months at 60% income. Then it transitions to LTD.

   says plan's maximum benefit period is described in 'certificate of insurance/summary plan description'

Good to know.  Mine is most likely 3 months as well.

STD:    $320/yr for $6k in potential benefits.  
LTD:    $500/yr for 60% of salary
Life:     $366/yr for $100k


What do you think? $99/month to have some piece of mind?

I'd sign up for them. I'd also check around for better rates and maybe even term life insurance outside of work.

We originally had term life to cover us til the kids were grown.

Then as time went by, our siblings started dying. I signed us up for more life insurance, mostly to help me out if I were to lose hubby. Pension and Social Security would both be reduced. We tend to think we will be in good health til we reach old age but it doesn't always work out that way. Insurance is usually much cheaper when you are younger. I know when hubby turned 50 the life insurance rate tripled.

[raeoflyte]

I have policies outside of work so that I'm not scrambling for coverage if I lose my job.

[Lizard Queen]

We're almost at a level that one of us could retire. If one of us were to die, our kids would get SS, but they're old enough not to need daycare so much. Our expenses are at a level that one of us could cover them. So, we're not doing extra insurance. I think we both get STD and LTD through work, plus a small LI amount. I think it really depends on what you need to cover, and the likelihood of needing to do so. Actually, I did take a class on insurance, and I learned how to calculate life insurance needs. (STD/LTD are a different story.)

What do you need to cover if something happens to you?

[The Walk of the Penguin Mich]

Just be aware that if your employer pays for your LTD, there are some things you need to know.

1.  Many employers provide LTD as part of the employment package.  IME, it kicks in at 6 months (or it did for me).  I chose to self insure, so did not need/use STD.  I had sufficient sick time to cover me for almost 6 months.

2.  If your employer covers your LTD insurance, it may be offset by SSDI.  That means that you will be required to apply for SSDI and your employer's policy will fill the difference between what you receive from SSDI and your LTD benefits.  So in my case, my employer covered 60% of my salary for LTD.  My SSDI is about $2000 and I received an additional $1200 from a second source to make up the 60%.  If I did not receive SSDI, my employers had lawyers who would deal with it - but in my case I received it about 5 weeks after I applied. 

3.  I chose to pick up a second policy that I paid for that would cover me for an additional 20%.  That meant I got another $1000/mo from a third source. 

4.  SSDI and my employer paid policy were considered taxed income.  The policy I paid for was tax free, I did not have to pay taxes on it.

5.  Someone else determines if you are sufficient to return to work, and if you are considered well enough to return to work, it does not matter if you cannot do your job, you are expected to do ANY job.  

6.  If you are covering heath insurance for your family, realize that your employer may you from your insurance rolls.  COBRA is still available though but you pay OOP for that.  If you receive SSDI, Medicare will kick in for you 2 years after you have been considered disabled so you need to plan accordingly.  I was lucky in that one of my benefits included my employer continuing to pay their portion of my health insurance premium until Medicare kicked in for me.  My employer also continued to pay into my 403b for 5 years after I became disabled. 

7.  The corollary to this is that if you wind up disabled, it can and does become an issue if you need to pay your OOP max for your insurance for multiple consecutive years.  I wound up needing to pay my OOP max for 3 consecutive years, 2 of which were while I was on disability.  I had a couple of advantages here in that my OOP max was not horrible and I was able to cash flow it.  I paid more because I chose specialists that were not in my network, so my normal OOP max wound up being $6000/year rather than $1500.  My out of network specialist was my orthopedic surgeon, who put Humpty Dumpty back together, so it was very worth it to me.   

One is far more likely to become disabled than die, and it confounds me that more stress isn't put on this.  Losing your ability to do your livelihood is a life altering event in more ways than one.  I wound up being very lucky in that all of my disabilities are very well documented so I have had very few issues myself.  

[Lizard Queen]

Interesting information. Mrs Dinero's husband carries the benefits, though, and federal plan says gold-plated to me.

[lurkyloo]

Sept 29, 2021 13:59:29 GMT -5 Lizard Queen said:

Interesting information. Mrs Dinero's husband carries the benefits, though, and federal plan says gold-plated to me.

I’m not actually sure this is true?  I was looking into it, for reasons, and the premiums for self and family don’t look exactly cheap even for hdhp options (plans are alphabetical by state at the link).

www.opm.gov/healthcare-insurance/healthcare/plan-information/plans/premiums/2022/hmo/premium-rates

Timely thread since we are also going through a benefits shakeup at work.  I am annoyed to have landed with voya as a 401k provider but the new health insurance looks pretty good-hdhp family coverage would be free, the premium PPO plan it’s only $1500/year for me to add DH.  

We basically self-insure as far as LTD/STD-we take whatever the work option is but would be okay without it.

I would actually rethink starting an HSA if you have the cash to save.  HSAs are great, you can invest the money indefinitely and use it tax free for qualified expenses (I want to say once you hit a certain age there are other qualified expenses beyond healthcare but it’s been a while and I don’t remember specifics).  We max our 401ks and do the backdoor roth conversion when we remember to, but our 401k RMDs are going to put us in a high tax bracket in retirement too.  Nice to diversify the tax strategy a bit.

[wvugurl26]

Yeah I have excellent coverage but it's not cheap. I'm paying $336/month just to cover myself. It has more than doubled since I started in 2010 and the coverage has been chipped away at every year and gotten worse.

They discontinued my plan a couple years ago and shoved those participants in the cheaper plan and kept the old plan's rates. I was expecting a big reduction in premiums and instead just got an ever increasing rate.

I do shop and compare coverage but to keep my doctors the other alternatives would be significantly more out of pocket at the pharmacy and I don't believe the overall net to me would be any better. The premium might be cut in half but then I'm paying 20% for scripts.

[minnesotapaintlady]

Sept 29, 2021 22:38:36 GMT -5 lurkyloo said:

I would actually rethink starting an HSA if you have the cash to save.  HSAs are great, you can invest the money indefinitely and use it tax free for qualified expenses (I want to say once you hit a certain age there are other qualified expenses beyond healthcare but it’s been a while and I don’t remember specifics).

Once you hit 65 you can use it for anything penalty free.  You just pay taxes on the withdrawals, so it essentially becomes extra 401K space.  Of course, if you use it for qualified medical, it's penalty and tax free. 

Assuming OP has a HDHP and can use an HSA I would max that before the 401K just because it has the potential for triple tax benefit (no tax going in, tax free growth, no tax coming out).  It can be used to pay medicare supplement premiums in retirement too.

[TheOtherMe]

This federal retiree is paying about $250 a month for self only coverage.  Since I have Medicare Part B, the only out of pocket cost is prescriptions co-pays.

[Rukh O'Rorke]

Sept 28, 2021 14:07:29 GMT -5 minnesotapaintlady said:

Sept 28, 2021 13:49:36 GMT -5 Mrs. Dinero said:

   says plan's maximum benefit period is described in 'certificate of insurance/summary plan description'

Good to know.  Mine is most likely 3 months as well.

STD:    $320/yr for $6k in potential benefits.  
LTD:    $500/yr for 60% of salary
Life:     $366/yr for $100k


What do you think? $99/month to have some piece of mind?

Our disability insurance is provided free of charge so I don't know how the prices you were quoted compare, but the life insurance is spend. I pay less than that for 500K of term insurance. It might be worth it if its without a medical exam and you have health problems that would raise your rates, otherwise I'd get a policy outside of work instead if you think you need life insurance.

I get 2x salary life insurance free......allegedly.....the inputted premium is considered taxable income and I think I pay the same in taxes as what I could buy on the market myself.

Thinking of cancelling it this year, will see how the stock market is doing during open enrollment. I'll probably keep it. Cuz-if I cancel, you know  You know!!

[Rukh O'Rorke]

oooo - just looked up the life insurance. If I am given less than 24 months to live, I can cash in for 75% benefit. I like that! I think I'll keep it.

[Lizard Queen]

Sept 30, 2021 18:34:13 GMT -5 Rukh O'Rorke said:

oooo - just looked up the life insurance. If I am given less than 24 months to live, I can cash in for 75% benefit. I like that! I think I'll keep it.

 

(sorry,  that tickled my funnybone!)