Cafeteria benefits through work: what do you recommend?

I’d consider cancer, accident and critical illness insurance as borderline scams. Ordinary health insurance already covers those. Do you see a need to buy fire insurance for your house even if you already have homeowners insurance that will cover a loss due to fire?

Agreed. They aren’t scams, but they better be cheap. Personally I would rather bundle a critical illness policy into my term life insurance. There are a lot of companies out there that will do that for you now. The major exception to this is if you have a strong family history of cancer and it’s an inexpensive lump sum cancer policy. You medical insurance will pay for the treatment, but a lot of other expenses come into play with cancer.

Disability insurance is very important though. Short term maybe not so much, but if you become permanently disabled it can take up to two years on average for you to get state disability and then it’s only going to be may 60% of what you made when you were working. You will go through savings fast that way. Make sure you look to see that it’s an own occupation plan. Many employer plans are any occupation meaning you have to not be able to do ANY job in order to collect. Own occupation plans allow you to work at a job in a different field if you become physically incapable of working in your own.

Be aware, though, that most private LTD plans deduct whatever SSDI pays from the plan’s payments.

No LTD plans will ever (knowingly) allow anyone to get more than 100% of their former income from all disability plans combined, and even 100% of former income is viewed negatively (which results in higher rates). Too encouraging of malingering.

emphasis added. I assume you meant to say “don’t require” instead of “allow”.

When I was diagnosed with cancer I would have been in - well, not a world, but at least a county of hurt had it not been for my cancer insurance. Sure, my health insurance covered most of the medical costs, but it doesn’t cover a lot of other costs. I couldn’t work for a full month after my diagnosis and surgery. Used up all my paid time off in a heartbeat. Then for the next 6 months I had to be gone unpaid at least two days every two weeks for chemo. And I was fortunate enough to be able to keep working through most of it. Filing was a hassle - required a huge stack of bills from the hospital and clinic and EOBs from BCBS to be mailed in - but the check they sent me made up for a lot of scrimping to keep the bills paid.

I ended up out of work when I was in my early 30’s due to illness, (7+ months). At the time, my job paid for my LTD and I had enough vacation/sick/comp time to cover until my LTD kicked in. I was single, but I still had a car payment, rent, utilities etc. While my savings may have covered most of my bills while I was out, the LTD definitely left me in a better position once I was back to work. I didn’t have any time off to take, but I still had my savings. When my job decided they were no longer going to cover LTD, I started paying for it and have never regretted it.

But there are a lot of different medical causes which could create the same financial situation for you. So you need a solution which covers all the different causes.

Federal employee here. Our long-term care option would cost me, at age 50, a minimum of about $1000/year, which would get me $109,500 in coverage, which pays out at a maximum benefit rate of $150/day (i.e. two years of coverage at the maximum payout rate). The largest tier of coverage will pay $200/day up to $365,000 (five years), and that would cost me about $2700/year.

Look here, under The Disability Income Plan of North Carolina (DIPNC) benefits handbook.

Personally I signed me and my husband up for the critical benefits plan since we are older and it covers the major illnesses like heart attack, stroke and cancer. It would help cover a lot of the out-of-pocket expenses that are left behind by the state health plan (deductibles, co-pays, etc.)

A note on tax treatment of disability benefits. You may have the opportunity to pay disability insurance premiums with pre-tax dollars. If so, and you end up making a claim, the benefits are taxable.

But if you pay the premium with after tax dollars the benefits are income tax free, at least on the federal level. Not sure about the states but I presume the same.

I talked with them today. Long term disability–a year to five years–is $25 a month. Short term–immediately to three months–is $62 a month. (The state covers 3 months to a year).

I think I have enough sick leave and savings built up that I could survive three months, so I think I’m opting only for the long term. $62 a month starts looking like real money to me.

Yeah, that’s a lot for 3 months of disability. RI has a state program but I’m employed in MA, luckily my employer carries shirt term insurance for all employees. But I do have to give up all vacation and sick days before it kicks in. If you can save up paid time off that should be a better deal for you. And the state covering 9 more months is a very good deal, better than most states I think.

Of course it’s best if you never need the coverage but that’s true for all insurance (or should be).

In the US. (not here, I pay tax)

For those who determine that a particular category isn’t worth the premium (like the short term with the relatively high premium), I suggest pretending that you’ve taken it up and add that premium amount to your savings (ie build up your own "short term disability fund). If you just set up direct debits (either to an insurer for the premium for any policies you’ve taken up, or into your own savings account), you don’t miss the money.

Sound advice for work cafeteria plans: always get short term disability coverage before trying the meatloaf.