PepsiCo Employer Open Enrollment: Make Benefit Choices That Work for You

All age groups can benefit from this essay, but those who are about to retire will find the material very significant. Employers make modifications to their benefit offerings for the next plan year during the open enrollment period. This is your yearly opportunity, if you work at PepsiCo, to make significant decisions that will impact your financial situation and health care options.

Even if you are satisfied with your current health plan, it may no longer be the most cost-effective option. Before you make any benefit elections, take plenty of time to review the information provided by PepsiCo. In addition, you want to think about the past year's changes in your life as well as any future ambitions or advancements.

Decipher Your Health Plan Options

When choosing an appropriate health plan, the details count. One of your choices might be more suitable for you and your family, and it might even lower your overall medical expenses. However, you will need to consider more than just the monthly fees. Lower premium plans typically feature more limitations or more out-of-pocket expenses (deductibles, copays, and coinsurance) when you do need medical attention.

To help you weigh the tradeoffs, here is a comparison of the five main types of health plans. It should also help demystify some of the terminology and acronyms used so often across the health insurance landscape.

Organization for health maintenance (HMO). Except in cases of emergency, coverage is restricted to services rendered by doctors, other healthcare professionals, and facilities that are part of the HMO network. Any request for a referral to a specialist will be approved or denied by your primary care physician (PCP).

Point of service (POS) plan. Although it is possible, the cost of out-of-network care is higher than that of in-network treatments. To see a specialist, much like with an HMO, a PCP recommendation is required. In general, POS premiums are marginally more expensive than HMO premiums.

Organization of exclusive providers (EPO). Referrals are not required in order to see a specialist; nevertheless, services are only covered if you use hospitals and medical providers within the plan's network. Generally, premiums are less than those of a PPO but more than those of an HMO.

Preferred provider organization (PPO). You have the freedom to see any health providers you choose without a referral, but there are financial incentives to seek care from PPO physicians and hospitals (a larger percentage of the cost will be covered by the plan). A PPO usually has a higher premium than an HMO, EPO, or POS plan and often has a deductible.

The amount you have to pay as a deductible prior to receiving insurance benefits. Generally, preventive care—which includes yearly checkups and suggested screenings—is paid for at no cost, even if the deductible hasn't been reached.

Health plan with a high deductible (HDHP). You'll spend more out of pocket for medical services up until the yearly deductible in exchange for noticeably reduced rates. In 2022, the individual and family HDHP deductible amounts will be $1,400 and $2,800, respectively. However, they may go much higher. Using providers in the plan's network will save costs associated with care, and the insurer's negotiated rate may lower your upfront costs.

An HDHP is designed to be paired with a health savings account (HSA), to which your employer may contribute funds toward the deductible. You can also elect to contribute to your HSA through pre-tax payroll deductions or make tax-deductible contributions directly to the HSA provider, up to the annual limit ($3,650 for an individual or $7,300 for family coverage in 2022, plus $1,000 for those 55+).

If HSA funds are used for approved medical expenses, they can be withdrawn without incurring fines or federal income tax. This also applies to any returns from the account, should one choose to invest. (A few states deviate from the federal tax laws regarding HSAs.) If you are not enrolled in an HDHP, any unused amounts can be kept in the account indefinitely and applied to future medical costs. The money can be transferred to a new HSA in the event that you retire or move jobs.

Three Steps to a Sound Decision

Based on last year's usage, start by totaling up all of your costs (premiums, copays, coinsurance, and deductibles) under each PepsiCo plan. An online calculator that lets you compare plans by accounting for things like your regular medications and chronic health conditions may be included in PepsiCo's benefit brochures.

You might have to arrange for two different sets of occupational benefits if you're married. Examine the advantages and disadvantages of having both of you on the same plan as opposed to getting individual coverage from each company. Many employers impose a surcharge to entice a worker's spouse to utilize other available coverage. Compare the costs of having your children covered by each spouse's plan if you have any.

Verify whether your favorite healthcare providers are part of the network before signing up for a plan.

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Tame Taxes with a Flexible Spending Account

If you elect to open a PepsiCo-provided health and/or dependent-care flexible spending account (FSA), the money you contribute via payroll deduction is not subject to federal income and Social Security taxes (nor generally to state and local income taxes). Using these tax-free dollars to pay for health-care costs not covered by insurance or for dependent-care expenses could save you about 30% or more, depending on your tax bracket.

The $2,750 federal contribution cap for health Flexible spending accounts (FSAs) in 2021 should hold true in 2022. Certain employers impose lesser restrictions. (The IRS has not yet disclosed the official cap). The money can be applied to a variety of approved dental, medical, and vision costs.

You can set aside up to $5,000 annually (per household) using a dependent-care FSA to pay for qualified child care expenses for children who are 12 years of age or younger. If the services are employed to allow you or your spouse to work, the tax savings may assist defray some of the costs associated with hiring a nanny, babysitter, day care center, preschool, or day camp.

A disadvantage of health and dependent-care flexible spending accounts (FSAs) is that they usually come with a use-it-or-lose-it clause, meaning you have to use all the money in your account by the end of the year or risk losing it. Some employers offer a grace period of up to two and a half months, or they allow specified sums (up to $550) to be carried over to the following plan year. Nevertheless, you have to project your costs ahead of time, and your estimates may prove to be wildly inaccurate.

If the employer agrees to this temporary modification, workers may carry over any unused FSA funds from 2021 into 2022 thanks to legislation passed during the epidemic. When choosing your contribution election for 2022, you should take your account balance and PepsiCo's carryover policies into consideration if you have any remaining funds in an FSA.

Take Advantage of Valuable Perks

Employers can now provide student debt relief as a tax-free benefit to their employees through 2025 according to a change in the tax rules that was implemented at the end of 2020. This has encouraged more businesses to include it in their benefits offerings. According to a 2021 survey, 31% of businesses intend to provide student debt aid in the future, while 17% of employers now do so. Although $100 a month may not seem like much, it adds up when it comes to student debt help benefits, which are the goal of many companies.1. An employee with $31,000 in student loans, for instance, who pays them off over ten years at a 6% interest rate would pay off debt in two and a half years less time and save around $3,000 in interest.

Access to optional benefits like life, long-term care, disability, dental, and vision insurance is made possible by many businesses. Payroll deduction may make it easier for you to pay premiums even if PepsiCo does not contribute to their cost. PepsiCo may also provide specials on health-related goods and services, such gym memberships or exercise gear, in addition to wellness incentives like cash payouts for finishing health assessments.

1) CNBC, September 28, 2021