Reviewing your benefit choices will maximize your employment benefits
Open enrollment for employee benefits kicks off this month. While you plan your Thanksgiving menu, review your benefit choices. Even if little changed in your life this past year, maximize what your employer offers.
Here are some pointers.
Even if you carry the same plan as in past years, spend a few minutes evaluating which one is best for you and your family when you choose – especially high-deductible health plans and traditional plans.
Switching from the traditional plan to a high-deductible option might save money if you don’t visit the doctor frequently. It could also make you eligible to contribute to a Health Savings Account (HSA). Perhaps too, your spouse’s company now offers a better plan and you can switch the family coverage to the better alternative.
Improved employer plan descriptions lay out plans’ differences and costs, and do that much better this year. Take advantage of their free help, online or in person.
Often you receive only one choice for dental coverage, but you may be surprised at how many people decline to pay the relatively small premium for this coverage. Even if young and cavity-free, take care of your teeth now to potentially prevent large dental bills in retirement.
If nothing else, insurance provides a dental cleaning twice a year.
This benefit works great if you wear glasses or contacts and need regular eye exams. Those with perfect vision may decide to opt out of this coverage.
Most employers offer some basic life insurance, with the coverage typically being a multiple of your salary. If you are married, own a home or have kids, this basic coverage could fall short.
Before you elect and pay for any coverage, be sure you know how much insurance your situation calls for. This is just another way a fee-only financial advisor can be helpful. At Patriot, we evaluate your actual need for life insurance as part of your overall financial plan.
If need be, pay extra, if possible, to increase life coverage through your employer. If that’s not an option, consider supplementing this minimal coverage with a term policy from an independent provider.
These policies come with set duration limits on coverage and you decide whether to renew once the policy expires.
While Patriot does not sell life insurance, we can help put you in touch with reputable third-party vendors who work primarily with fee-only advisors to help give their clients transparent options for their insurance needs.
Also, remember that whatever life coverage your employer pays for in your benefits package vanishes if you leave that company.
Standard coverage in this category usually pays 60% to 66% of your compensation if you become disabled and unable to work.
As this coverage often comes with a cap, if you are highly compensated, this insurance might also fall short to sustain your standard of living. Estimate your minimum to live on if you become unable to work and, if that number scares you, purchase a supplemental policy.
Evaluating your need for long-term disability insurance within the confines of a comprehensive plan is another good idea. Just as with life insurance, it’s important to know how much coverage you either need or would be comfortable with.
Flexible Spending Account
This savings account reduces your taxable income and funds medical co-pays, orthodontist appointments and prescription drug orders, among other expenses.
Figure your out-of-pocket medical costs and sign up to set aside that amount, up to $2,750 for 2020, pre-tax in an FSA. Each working spouse can do one. Remember that if you participate in a high-deductible health plan (HDHP), you maintain a related health savings account and can only take advantage of a limited FSA.
Either way, you can pay for most of your out-of-pocket medical costs with pre-tax dollars.
Dependent Care Flexible Spending Account
If you pay for day care, after-school programs or summer day camps for children under age 13 or for elder care for a dependent parent, this is one of the more tangible benefits you can enroll in. DCAs help you offset that cost with pre-tax dollars. Again, a working couple can set aside up to $5,000 from paychecks.
If your company offers this and pays in whole or in part for public transportation passes, ride-sharing or other options, reconsider your routes to work.
Advisors see this wide-ranging employee benefit more and more, from simple mental-health hotlines to complete menus of services.
For instance, if you lack a will, many companies now offer reduced-rate or even complimentary legal services to establish your basic estate planning documents. Others offer financial planning and weight-loss programs – sometimes even gym memberships.
If you have questions about your benefits, the first step would be to talk to someone in Human Resources. Once you have all the information, a Patriot Financial Advisor can help you put it all in the context of your overall financial position.
At Patriot, maximizing your employee benefits is an important part of ensuring we are always providing advice that is in your best interest. Contact us if you are in need of a financial advisor who puts you first.