Real Money: How I've handled career transitions and insurance options
Career transitions are difficult and expensive, but they also provide you with a unique opportunity: a chance to reflect. My previous job offered excellent benefits (including FSA and HSA options), great coworkers and a supportive boss. But here's the deal—I knew I wanted to switch careers.
At the time, I was working in digital marketing and writing. It was fun work, but I realized that I wanted to move from sitting behind a desk to standing in front of a classroom. I wanted to be a teacher.
After a grueling year of graduate school and student teaching, I made the switch. A lot will change as a transition into my new career, and one of those changes will be my health insurance options.
As we approach open enrollment for 2020 (no, it's not too early to think about that already), here's what I'm considering about FSAs and HSAs as I plan for my new health insurance reality. But more importantly, here's everything I've learned along the way and how you can avoid my mistakes.
Learn the lingo (even when it's hard)
Here's a confession: I didn't know what the terms "FSA" or "HSA" meant during my first full-time job after college. I'm embarrassed to admit it, but I remember sitting in orientation and zoning out during the explanation. It sounded complicated and I already felt overwhelmed by options.
But even beyond that, I had no idea that I just entered a new tax bracket (up until that point I had only worked part-time jobs). If I had understand the potential tax savings offered by a HSA or FSA, I like to think I would have signed up for one, but the truth is that I didn't, and as result, I missed out on upwards of $5,000 of savings during my time at that job.
Whether it seems complicated or not, it's worth it to listen during orientation and read your benefits packet once you're home. After all, you could save thousands of dollars. It's a lesson I had to learn the hard way, but that doesn't mean you have to.
Plan for the future
Throughout my year in graduate school, I missed out on a bunch of employer benefits — retirement accounts, health insurance, life insurance, and access to a FSA or a HSA. But I also promised myself that I would never again intentionally opt out of employer benefits.
So, while I was in school, I made a point of learning about different accounts and the benefits of each: health savings accounts, flexible spending accounts, dependent care flexible spending accounts, limited purpose flexible spending accounts and more.
Here's a quick refresher of the eligibility requirements for each account:
- HSA: In order to utilize a HSA, you must be enrolled in a qualified high-deductible health plan (HDHP) and have no other disqualifying coverage.
- FSA: As long as your employer provides an FSA and you meet the requirements that they offer for you to enroll (such as being a full-time employee or enrolling in a health plan, for example), you are qualified.
- Limited Purpose FSA: These accounts are often only for people who have a HSA and are used to cover dental and vision expenses. However you may be offered a "limited" FSA in other situations as well.
- Dependent Care FSA: This account is used to pay for child care or after school care for children up to 13 years old, and to pay for care for qualifying adults. If you meet the requirements of your employer, have a qualifying child under the age of 13 and you and your spouse are either gainfully employed, seeking gainful employment or go to school full-time, you will qualify to participate
Each of these accounts serves a specific purpose and the maximum contributions vary, but enrolling in one of the accounts is not complicated, and could save you a ton of money over time.
(And to be completely honest, as a teacher, I will take every possible opportunity to maximize my funds.)
Read the fine print
Once I was employed again, it was time to put my hard won knowledge to the test. I spent about 30 minutes reading through my new benefits package and familiarizing myself with the different options. Here's the truth—I still felt the urge to just simply select a health insurance plan and ignore the other accounts, but I resisted the urge and read the fine print.
Not wanting to deal with something doesn't make you lazy. All you can do is acknowledge the feeling and then do it anyways. As for me, I'm excited to save money on my medical expenses this year.
Whether you budget week-to-week, or plan to use your FSA for bigger things, our weekly Real Money column will help you maximize your flex spending dollars. Look for it every Tuesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.