Benefits are a great tool for a company to attract candidates and retain employees but did you know that the majority of employees don’t actually understand their benefits? In fact, up to 80% of companies report that their employees do not open or read benefit materials. So, how can we help? Below we will discuss three tips to help you make the most out of your employee benefits.
3 Tips for Making the Most of Your Employee Benefits
1. Health Insurance
First, let’s talk about health insurance. There are a number of health plan options. Without digging into all the terminology, one of the easiest ways to use your medical plan is with tools like a Healthcare Flexible Spending Account (FSA) or a Health Savings Account (HSA). Both of these options have pre-taxed savings which stretch your money further when paying for medical, dental, or vision expenses.
Benefits of FSAs
With a Healthcare FSA, money is front-loaded like an advance payment and paid back throughout the year to make up for it. Think about if you had a child who needed braces. A typical dental plan won’t cover the extent of the costs associated with braces so the FSA acts like a payment plan making it a little easier with payments spread out. One thing to remember is that an FSA is a “use it or lose it” account. If you don’t spend it, you will lose it.
Benefits of HSAs
If you have an opportunity to contribute to an HSA account, this money is always yours and is triple tax-free. This means it goes in tax-free, grows tax-free and comes out tax-free. This account is a nice way to save for medical expenses that you could incur throughout the year, to save in case of a future large medical expense, or you can even save the money for retirement.
There are many benefits to both of these plans and they can help make healthcare costs easier to manage.
2. Retirement & Your 401(k)
Thinking more about retirement, how are you saving for it? Employer contributions to your 401(k) retirement fund are a great benefit; make sure you’re getting the maximum employer contribution. These matching funds are free money! The more money you can put away between yourself and your employer the more money there is to grow over the years before retirement.
Check in on your retirement goals each year. Start with setting a goal for how much you want to have in retirement. Use a financial tool to help you determine how much you need to save each year to reach that goal. Talk to a financial professional about retirement options as they can provide more in-depth knowledge about how to save and can help you deal with the ups and downs of the market along the way.
Remember, the more money you can save earlier on in your career the more money there is to grow each year. You may not think that contributing a few more dollars each year would make a difference but you might be surprised how just a few dollars can grow over a number of years. Plus, if you start saving early you will have less stress as you get closer to retirement time.
3. Open Enrollment
If there is one time a year to pay attention to your benefits, it is during open enrollment. Employers often make changes to their benefit plans because of things like government regulations, new tools that can help you save money, a carrier change with a better experience or a better benefit, etc.
Because of these changes, it is important to know what benefits are active. You need to enroll in them (even if you had them previously) in order to have them for the following year. Unless you have a life event, such as a marriage or a birth of a child, you are stuck with the benefits you elect each year. If you miss enrolling in something that you wanted or needed for the following year, you are out of luck until the next open enrollment. Think about it like this, if you have a big surgery coming up but you forgot to enroll in your HSA or FSA to get some of the benefits we talked about earlier, you are going to incur a sudden financial burden all at once.
On the flip side, there could be opportunities you are missing out on. If a company changes carriers, they may have a one-time benefit for the first year with the company. For example, if there is a new carrier for life insurance, they may provide a one-time opportunity for life insurance up to a certain amount without having to go through additional questions or exams. This could be a great opportunity for someone with a pre-existing condition who was previously denied with their last carrier.
The fact is benefits are constantly changing so the best thing to do during open enrollment is know what is active so you can either re-enroll or enroll in a plan for the first time. And if your company is highlighting a new benefit, it would be wise to get an idea of what potential offerings might be most beneficial for you. At a minimum, always review your elections for the next year so you have exactly what you want or need.
Hopefully these three tips will help you to make the most of your employee benefits. Remember that employee benefits are a crucial part of your total compensation package. Don’t rush through the process of reviewing them.
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