Using Time Wisely

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Tax-Favored Programs: Pre-Tax Group Insurance Premium

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What a special day! Palm Sunday and April Fools’ Day! Just know that if someone throws you a curve, be ready for an April fools’ joke. Since playing pranks is not a typical activity in our household, this day usually occurs without incident. However, I never know what a day may bring. 😉

Last week, we began the next category in organizing our important documents. I began the tax-favored programs’ category with Health Savings Account (HSA) documents. Having had an HSA in the past, I kept those documents within this sixth file opening. Today, I will continue with this category focusing on the documents within this file slot now.

Summary Page

At the beginning of each category, I include a summary page with details on these accounts. Since I no longer have HSA documents, I place this summary page first which is before the pre-tax group insurance premium documents.

Pre-Tax Group Insurance Premium

Defined

Our pre-tax group insurance premium allows us to pay our health, dental, vision, and life insurance premiums with pretax dollars. When enrolled, our insurance premiums get paid first. Then the tax calculation runs the remaining paycheck amount before deducting the proper tax amount.

By paying our insurance premiums with pre-tax dollars, we get the tax benefit immediately. No forms or calculations need to be kept for tax preparation. What a great benefit!

Cost

With Paul’s current employer, we have the choice of accepting or rejecting this option. Since I cannot imagine rejecting this option, we accept it at a cost of $.12 per month or $1.44 annually, deducted before taxes. For us, the cost is minimal compared to the hundreds of dollars we save each year.

Our pre-tax group insurance premium provider offers the pre-tax option and the spending accounts: medical and dependent care. Though the one insurance company provides all three types, we can choose to enroll in  none, one, two, or all three of these benefits.

At Paul’s previous employer, the pre-tax group insurance premium was an automatic benefit to us at no cost. Each business operates differently. If you are not sure if you have this option, you can contact the benefits’ administrator through the issuing employer for answers.

Documents

In my file, I have these following items housed behind our summary page:

1. Confirmation Notice of enrollment in the pre-tax group insurance premium feature

2. Brochure detailing the insurance premium feature

3. Privacy practices of issuing insurance company

Keeping these documents together and housed in the same file opening as the spending accounts, I can quickly find the information if a problem arises.

In using time wisely, I researched the pre-tax group insurance premium option and discovered that the benefit was worth the annual $1.44 cost for our family. As you organize your important documents, consider reviewing your options. You might be missing benefits that will save you hundreds of dollars. Happy organizing!

Question: Do you have access to a pre-tax group insurance premium?

Tax-Favored Programs: Health Savings Account

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In organizing our important documents, we completed Box 1 and continue working on Box 2.

Having finished the first three categories in our insurance file, we begin category 4: tax-favored programs.

If you have multiple types of tax-favored programs and need more than one file slot, then adjust this system to work for you.

My single file opening houses the following types of documents:

Tax-Favored Programs

  • Health Savings Account
  • Pre-Tax Group Insurance Premium
  • Spending Accounts
    • Medical Spending Account
    • Dependent Care Spending Account

Health Savings Account

Defined

A Health Savings Account (HSA) is a tax-free account used to pay health care expenses. Though Paul and I do not now hold a health savings account, we once did.

We opened our account through Paul’s employer. The designated amount we chose to contribute to this account was automatically deposited during each pay period. We owned the account, and the funds, including interest, accumulated tax-free.

Note: With a HSA, the funds do not have to be spent in the plan year. This means that you can contribute up to the maximum each year and continue accruing interest for years.

After contributing to our HSA and then changing plans, we continued to use the remaining funds in our HSA for our qualified medical expenses. When we exhausted the funds, we closed our account.

Eligibility

To contribute to a HSA, you

    • Must be covered by a high-deductible health plan,
    • Cannot be covered by any other health plan, including Medicare, and
    • Cannot be claimed as a dependent on another person’s tax return.

Documents

When we held our HSA, I kept the following documents in this file opening:

    1. Enrollment paperwork
    2. Annual payroll contribution records
    3. Monthly statements from our financial institution
    4. Copies of the front and back of our Visa debit cards
    5. Correspondence from Paul’s employer and from the financial institution

These documents were paper clipped together and housed in this file opening.

To get another perspective, Jim Wang of bargaineering.com offers a HSA vs. HMO Analysis from the experiences of one of his loyal readers. Jim will be guest posting on Using Time Wisely this Wednesday, March 28, so come back for more valuable information on ways to using your time wisely.

As you continue gathering and filing your important insurance documents, you are using time wisely. Enjoy looking back to admire your progress because you are doing great. Happy organizing!

Question: Do you prefer a HSA, HMO, or PPO? 

Major Medical: Benefits Guide

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If you are just starting to organize your important documents, you may want to start at the beginning. This series began with Box 1, and today’s post completes category 3 of Box 2.

Under the category of Major Medical, our summary page and identification card information resides in the fifth file opening of an accordion filing system.

The other items housed in this file slot are the benefits guide and correspondence.

Note: My filing system will look different from your system because our lives, policies, and documents are not the same. I share my organizational structure with you as a guide to organizing your documents. Please adjust this system to meet your needs.

Benefits Guide

This booklet (250+ pages) includes explanation of benefits, premium amounts, contact information, and an overview of the health plans and other benefits offered through my husband’s employer. When I question our benefits, I consult this guide for the answer or the contact number for the department to ask.

Correspondence

If we receive any notices or changes to our major medical policy, I would add them to this file. At this time, I keep in this file our COBRA Initial Notification Memo. Should we ever lose our health insurance, this memo proves that our family is eligible for COBRA insurance.

In adding our Insurance Benefits Guide and correspondence to our file, our major medical category in Box 2 of our important insurance documents is complete. Keeping similar documents together with staples or paper clips makes retrieval quick and easy.

In using time wisely, I paper clip our documents and label the categories. Find a system that works for you, and stay consistent throughout your files. You’ll be glad you did. Happy organizing!

Major Medical: Identification Cards

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After taking a break last week to request our credit reports, it is time to begin another category in our document organization.

Working through our insurance paperwork in Box 2, we have completed the first two categories: Personal Insurance Documents and Life Insurance.

The third category housed in one file opening is major medical insurance. Located within this file slot of my box are the following documents:

  • Summary page
  • Identification cards
  • Benefits Guide
  • Correspondence

Summary Page

Like every other file opening in my insurance box, I keep a copy of the summary page at the front of this file. This page holds the contact information, account numbers, and instructions for filing claims.

Identification Cards

After the summary page, I keep these documents paper clipped together:

    • Copies of the front and back of our major medical identification cards
    • Paperwork sent with the identification cards
    • Website information with my username and passwords

I carry my insurance card with me, but the copies stay in this file. Should my purse get stolen or lost, I will get this  information and contact the insurance company to report the problem and ask for new cards.

If you carry major medical insurance or discount medical cards, then consider putting these documents in a safe place. You never know when you might need to contact the company or request new cards. Happy organizing!

Question: Does your insurance company still use your social security number as identification? 

Life Insurance: Children’s Policy

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Though I would not normally invest in a life insurance policy for our children, Paul and I do have one life insurance policy that covers all three of our children.

For us, the purpose of life insurance is to cover our family expenses after our deaths. Our children would not leave any debts or responsibilities, so we choose not to carry policies for each of our children.

The one policy we carry is a group policy through Paul’s employer. The cost is less than $3 per month and holds coverage for $15,000. For the inexpensive price of this coverage, we have chosen to carry this insurance for our children.

Housed in the fourth file opening of Box 2 of our important documents, the life insurance documentation for our children’s policy includes the summary page and information page.

Summary Page

This summary page has the contact information for the benefits administrator, benefits identification number, and employee number. Click here for more details about this summary page that I keep at the front of each file opening to make access quick and efficient.

Information Page

To make a claim, we must contact the benefits administrator at my husband’s office. The benefits administrator works with the provider directly. Therefore, we do not hold a paper copy of this policy.

In setting up this file, I contacted the benefits administrator and requested a detailed explanation of where, when, and how to send a claim. I typed that information creating an information page. In the awful event that we need to file a claim, Paul or I will get this document and follow the steps.

Tracy’s Tip: Waiting until tragedy strikes to get this information will add anxiety and stress during your time of grief. Researching now and writing down the instructions will save you time, energy, and stress in the future.

The information page includes:

    • How to Make a Claim
    • How the Payment is Dispersed

These two documents complete the fourth file opening and the second category – life insurance. As my children grow, we may decide to carry policies for each of them. If and when that time comes, I will place those policies in this file opening.

You may need more file openings for your insurance documents. If you carry policies for your children or parents, then you may need a file slot for each person. Keeping your file organized by either insurance type (term, long-term, accidental, etc.) or by person (Dad, Mom, Child #1, etc.) will help you in using time wisely to reach those documents.

This process is a marathon. I worked for 3-4 months exclusively on these files when I set them up. At that point, I was a stay-at-home wife and had the time to invest in organizing and researching the information. If I were setting up my file now, then it might take a few years. With three little ones, spending time training them is a top priority.

If you struggle with organizing your paperwork, then consider your schedule. I pay/schedule bills twice a month. During this time, I am near my important documents and spend 15 minutes filing, organizing, and updating my files. Find a time when you are already near those documents. Planning to organize is one step closer to executing your goal. Happy organizing!

Question:  When are near your important documents, what are you doing?