Making the Most of Your Employee Benefits
Sorting through an ever-increasing number of alternatives can be complex and difficult. Since many choices can’t be adjusted again for an entire year, it makes sense to take a little extra time to review the options and pick the benefits that are right for your personal situation.
Some important issues to consider before you choose your benefits for the coming year include:
Review of 401k participation & holdings
Most companies allow more than one chance per year to adjust investments and percentage of contribution, but fall is a good time to see if your holdings still fit your age, risk tolerance, and ability to achieve the kind of retirement desired. Make sure you are taking full advantage of any company matching funds, as this is equivalent to a 100% return on your own contributions!
Health plan choices
Make sure you think about all of the health issues you’ve experienced throughout the year, including the possible needs of a spouse, partner or dependent recently added to your coverage. Consider whether to change health plans and if the value received from carrying dental, vision and/or prescription insurance is worth the expense.
Flexible Spending Accounts (FSAs)
You can save a considerable amount on elective procedures, out-of-pocket medical costs and dependent care expense by utilizing an FSA to pay those expenses on a pre-tax basis. Review the list of expenses that are allowed for reimbursement, which include things such as chiropractic, orthodontia and acupuncture. Many plans have been streamlined to make reimbursement easier, but you will still need to do some planning to make sure you don’t contribute more than you’ll spend within the upcoming year (these plans are “use it or lose it”). Some extra coordination is needed if your company also offers a Health Savings Account (HSA).
Open enrollment can offer the opportunity to purchase life insurance (or make increases to current coverage), disability insurance, and long term care insurance without a medical exam. Compare the cost of securing coverage through your employer versus buying on the open market, and also find out if you can take the insurance with you if you should leave the company.
Other benefit options
Become familiar with other benefits that your employer may offer. You may find you could get a break on gym or vacation packages, discounts at certain retailers, matching contributions to certain charities, legal services, or tuition reimbursement. Incentives for improving health, such as quitting smoking or losing weight, are also becoming more common.
While you’re reviewing benefits: Also check to make sure that your beneficiary designations are current on company retirement and insurance plans. If you have had a change of marital or family status since you first enrolled in a benefit, you may need to make adjustments.
Employee benefits are a very important component of a comprehensive financial plan. Talk with your financial planner to see how such choices fit into your overall financial strategy
Written By Kimberly S. Baker, CFP®