It’s an enormous pressure facing the uncertainty of what will happen next with your job and any hints to assist you with the unhealthy stress are welcome. One of the things you need to keep in mind is that although the temptation to borrow from your 401K plan might seem attractive, don’t do it.
Since the recession started getting deadly serious, there has been a dramatic increase in people taking money out of their plans. Statistics indicate virtually 20% of companies have seen their workers access their plans for loans. This makes sense because people are desperate for cash on hand, and other alternatives, such as home equity lines of credit, are more difficult to obtain.
Why is accessing your 401K plan not such a good idea? Well, if you leave that company — and that seems to be happening frequently these days — you will need to repay the balance within 60 to 90 days. If you don’t, the money you owe is classified as a distribution and you will be required to pay income taxes on the balance. That’s not all. You will also be tagged with paying a 10% early-withdrawal penalty if you are younger than 55 years old.
Worried about health insurance as well? Many people are and there is something you may do to be proactive. This works if your company is offering open enrollment. Sign up for the lowest priced health insurance plan they have. If you do get laid off, your cost of continuing some kind of health coverage is significantly reduced. Keep this in mind in case you are employed at a company with more than 20 workers.
In larger workplaces, COBRA must remain in place for up to 18 months for those who are laid off. This would give you time to consider and investigate other options, and perhaps even find a job. Just remember, in this case you would be responsible for paying the total premium and all the administrative fees associated with it. You are also required to remain with the plan you signed up for while working.
Some companies have been known to let their employees have a plan with a lower premium, but with a higher deductible. This might not really suit your circumstances, but if your job happens to be in jeopardy, one of the alternative plans might look much better than COBRA. Take the time to examine all the available options and find the one that works to reduce your health insurance expenses, but still provides you with some coverage.
Bradley Palmer is with Grouphealthflorida.com offering Florida Group Health Insurance. To learn more about group health insurance, visit http://www.grouphealthflorida.com.
Article Source: The Poor Job Market and Your Group Health Insurance
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