Does your partner have a “real job”? You need to coordinate your benefits with what you do with your home business.
It’s a blessed day. My husband has a “real” full-time job at a place that recognizes what an awesome professor he is. This also marks a point at which he is offered benefits. This changes the entire game when it comes to our household benefits. My home business benefits package is getting an overhaul, and I like it.
Do You Need Co-Insurance?
First of all, you need to take a look at the health insurance you have as a result of your self-employed status. For years, I’ve had to pay for self-employed health insurance. It’s nice that I get a tax deduction for it because it’s considered a home business cost, but I love the employer health plan my husband has at Penn State.
In some cases, you are better off separating your health insurance benefits. You might keep your self-employed plan for you, and then have your partner sign up through work for coverage. Then, you run the numbers to see which plan your kids (if you have them) should be on. In my case, this isn’t even a consideration. The family high-deductible plan will save us more than $300 a month in premiums, over our current high-deductible plan.
*Steps back. Looks at the numbers. Realizes that this right here is one of the reasons why so many people don’t want to take the risks associated with self-employment.*
Yeah. So we are ditching the plan we’ve had for close to 10 years in favor of this much better employer-subsidized plan.
But this isn’t the case for everyone. Run the numbers, consider your situation, and determine if some sort of co-insurance situation makes sense for your household, now that your partner has great benefits.
Health Savings Account
Signing up for the high deductible plan at my husband’s awesome new workplace means that he is also having some of his paycheck go toward a Health Savings Account. It is no secret that I love the HSA. It’s so great for my family. However, it does mean that I need to make a bit of an adjustment. Since my husband will be enrolled in the HSA through his work, I need to dial back what I’m contributing to our original HSA in order to avoid going over the yearly contribution limit.
My husband’s fancy new benefits also mean that we need to make sure that our retirement planning remains on track. He’s got a new employer-sponsored defined contribution plan — one that involves an employer contribution on top of his own contribution.
What we need to make sure of, though, is that our asset allocation doesn’t get out of whack, and that we retain the appropriate diversity. I quickly took a look at what Betterment is doing with my Roth IRA, and then compared that to our investment options with Josh’s employer plan. Some overlap is unavoidable, but it’s not completely ruining our diversity, and I think the long-term impact will be minimal.
But it is something you need to take into consideration as you coordinate your partner’s “real job” benefits with your home business decisions. We’ve been doing things one way for so long that it was actually kind of refreshing to review the situation in a new light and make the necessary adjustments.
Other Considerations and Your Home Business
It’s also important to consider other aspects of your partner’s pay situation. We’ve had to make tax withholding adjustments, and make it a point to check into some of the other benefits offered by his employer. We ultimately decided not to get extra life insurance coverage for my husband, since we already have adequate insurance, and the employer offers a minimum amount at no charge.
We did, however, get a basic long-term disability plan, just in case something happens to my husband and he can’t work. It’s true that we have long relied on my home business income, and we could probably weather an extended illness or injury, but the truth is that we are already adjusting to my husband’s higher pay, and I’d rather be prepared. The premium is relatively small, so it’s worth the cost.
A lot of things change when your partner’s work situation changes. Financially, we are in an interesting place of transition. We’re coordinating our benefits in a way that we haven’t had to before, and, ultimately, I think it’s going to be a big “win” for our family.