Health insurance in five words
The premium is what leaves each paycheck whether or not you see a doctor. The deductible is what you pay in a year before the plan starts sharing costs. A copay is a flat fee per visit, and coinsurance is your percentage of a bill after the deductible is met. The out-of-pocket maximum is the most you can pay in a year for covered, in-network care, and it is the number that matters in a bad year. A young, healthy person often does well with a high-deductible plan, provided the deductible could be paid from savings.
The accounts attached to it
A high-deductible plan usually qualifies you for a health savings account. Money goes in before tax, grows untaxed, comes out untaxed for medical costs, rolls over forever and leaves with you when you change jobs. A flexible spending account is also pre-tax but is mostly use-it-or-lose-it within the plan year, so fund it only with what you are sure to spend. The IRS adjusts the limits on both most years, and your enrollment materials will list the current figures.
The retirement match
A typical formula reads "50 percent of the first 6 percent," which means that if you contribute 6 percent of pay, the employer adds 3 percent. Contribute at least enough to collect the full match, because nothing else returns 50 percent on day one. Then read the vesting schedule. Your own contributions are always yours, but the employer's share may vest all at once after up to three years or gradually over as many as six. Leaving a month before a vesting date is an expensive mistake.
Time off and equity
Find out whether paid time off is granted in a lump or accrues each pay period, how much carries over, and whether unused days are paid out when you leave, which varies by state. Restricted stock units are shares delivered on a schedule and taxed as ordinary income when they vest. Stock options are only the right to buy at a set price and may be worth nothing. Four-year vesting with a one-year cliff is common.
Deadlines
New hires usually have about 30 days to enroll. Miss the window and you wait for annual open enrollment unless you have a qualifying life event such as marriage, a birth or losing other coverage. If you are under 26, compare the employer's plan against staying on a parent's plan.
Tip Look past the headline items. Employer-paid disability insurance, a commuter benefit or tuition assistance can be worth thousands a year, and most go unclaimed.
