Should You Coordinate Benefits With Your Spouse?

The short answer to that question is yes.  As long as it’s in your best financial interest as a couple you should definitely coordinate benefits with your spouse.  Having health, dental and life insurance through your employer is part of a total benefits package that also includes your salary, paid vacation time and retirement savings plan options.  Employer benefits are a way to save money on the costs of healthcare for you and your spouse.

When you coordinate benefits with your spouse you use your employee insurance options to cover your spouse.  This is beneficial because it gives your spouse access to insurance – that they may otherwise not have – at a lower cost because you’re buying the coverage through a group plan.  Benefits coordination is extremely helpful if your spouse stays at home, is currently unemployed or doesn’t have health insurance coverage options through their own employer.

Although the ability to coordinate benefits with your spouse is extremely beneficial for you and your family, it’s very costly for employers.  For this reason, benefit coordination is on the decline in group insurance plans.

“By 2018, more than half of employers are planning to “significantly” cut what they chip in for insuring spouses and dependents, according to a survey by human resources consulting firm Towers Watson.” Says Bankrate.

Here’s how to coordinate employer benefits with your spouse:

Purchase life insurance

If your spouse doesn’t have the option to purchase life insurance through their employer, you may have the option to purchase it through your group benefits plan.  It’s a good idea to purchase life insurance on both spouses to help pay for final costs and loss of income in case of an unforeseen event.

Choose the best health and dental plans

Your spouse may have the option to purchase health and dental insurance through their own employer, but you may have better coverage or lower rates.  This is where coordination of benefits with your spouse becomes part of your financial plan.

Review the coverage from each plan and choose the cheaper option with the best coverage.  Of course overpaying for insurance coverage that you don’t need is a waste of money.  So make sure you buy what you need, but be careful not to double up on coverage.

Contribute to retirement savings

Many employers offer retirement savings accounts such as a 401(k) as part of their total benefits package.  Through a 401(k) an individual can defer paying taxes on contributions up to $18,000 (2016).  Therefore, a couple can defer paying taxes on up to $36,000 if you each have a retirement savings plan with your employer.

It’s also a good idea to check if your employer offers matching contributions, i.e. your employer contributes $1 for every $2 you contribute to your 401(k).  You and your spouse should maximize contributions on the employer savings plan that offers the highest matching option.

In addition to 401(k) employer savings plans, workers can also contribute up to $5,500 into an Individual Retirement Account (IRA). If you don’t work, i.e. have no income, you aren’t allowed to contribute to an IRA.  The exception to the rule is unless your spouse has income.  If one spouse works and the other doesn’t you can open a spousal IRA and contribute on their behalf.  It’s a great way to coordinate benefits with your spouse.

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4 thoughts on “Should You Coordinate Benefits With Your Spouse?

  • My insurance through work charges $50 per pay period (every other week) if we want to put our spouse on our plan with us (if he/she has the option to enroll through his/her employer). We have always just done the math and it is still cheaper to have us on the same plan, even with the extra $50 per pay period. So I suppose this is one way insurance companies are dealing with spouses. This $50 thing just started a few years ago for us, but I have heard about more and more companies doing it.

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