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When Life Events Affect Your Benefits

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Ellie Stubbs. Courtesy photo.
Getting married or divorced, having or adopting a child, and retiring are significant milestones in life. These “qualified life events,” as they are commonly referred to in the insurance industry, may permit you to make adjustments to the benefits you receive through your employer or other provider. If you’ve recently experienced a life event, review your benefits and determine if you need to make new or different elections to ensure the desired coverage for you and your family. Keep the following items in mind as you complete your review. 

Act promptly

Be aware of deadlines to make your new benefits elections. Generally speaking, providers offer special enrollment for a limited time frame during which you can update your new status or make changes in your covered dependents. If you miss the window, you may face a waiting period. In some cases, a missed deadline means you’re out of luck until the next open enrollment period or the first of the year, whichever applies to your situation. 

Change health insurance coverage

Do you have enough insurance? Too much? If you’re newly married, compare the benefits offered to you and your spouse through your respective employers to see where you can get the most value. A higher deductible plan may make sense if you have two incomes, are both young and healthy, and don’t anticipate significant medical expenses. If you add children to your family, you’ll want to make sure they are included in your health insurance as dependents. If you’re retiring before you are eligible for Medicare, evaluate COBRA benefits (continued coverage under your employer’s plan), insurance through a still-employed spouse, or your options through the healthcare marketplace.

Evaluate life and disability insurance

Marriage, divorce, and the addition of children are all reasons to evaluate your life and disability insurance coverage. If your coverage is insufficient, make it a priority to obtain additional insurance. Unfortunately, many policyholders forget to remove a former spouse as a beneficiary to their policies following divorce and remarriage, which can complicate legal matters should your health be unexpectedly jeopardized. When reviewing your coverage, take time to verify that your beneficiary designations are correct.

Adjust your Health Savings Account (HSA) contributions

If you have a health savings account (HSA) and experienced a family event this year, the amount you’re allowed to contribute annually may have changed. If you added to your family through marriage or children, you can set aside more money in a HSA. If you experienced a divorce, you can split savings accumulated in an HSA or assign the benefits to your former spouse as part of a divorce agreement. Check with your healthcare provider to learn how much you can contribute based on your situation. 

Consider legal and financial advice

Some life events, such as divorce or adoption, may involve benefits decisions that have legal implications. Consider meeting with an attorney to discuss your situation and get advice on next steps. Additionally, these events may trigger numerous changes to your budget, investments, or other financial affairs. Think about meeting with a financial advisor who can help you evaluate your benefits within the broader financial picture of your life goals and retirement plans.

Ellie Tobin Stubbs, AWMA ®, BFATM is a financial advisor with Ameriprise Financial Services, Inc. in Barre, Vt. She specializes in fee-based financial planning and asset management strategies and has been in practice for 20 years. To contact her, email ameripriseadvisors.com/ellie.stubbs or call 802-622-8060.