It’s Enrollment Time: You Need a Benefits Tune-Up
By Allison Kade
Are you getting the most out of your employee benefits?
Benefits are increasingly important to potential hires these days, and some companies go above and beyond to attract great talent. Some of the more enviable perks? Free gym memberships, pet insurance, concierge service, on-site daycare and laundry services.
Even if you don’t happen to work for one of the Googles of the world, it can be easy to put off understanding the nuances of your employee benefits when you start working somewhere new. Meanwhile, if you’ve been at your post for a long time, things change. Get married or have a baby? You’ll want to revisit your health insurance plan. Get a promotion? Maybe it’s time to start saving a little more in your 401(k).
Whether you’ve been at your job for two weeks or two years, here’s how to give your benefits a tune-up:
Depending on the size of your company, you probably got a basic rundown of the benefits when you signed on. Many firms contract out their benefit plans and have a hotline you can call with questions. The first step is to know all the perks at your disposal.
Tune-up: Most employer-sponsored health plans will let you make changes to your benefits just once a year or for a limited window after a life change like having a baby. In the course of discovering your company’s offerings, learn when your annual enrollment period is and make sure to submit any changes during that time.
These are one of the most important benefits. With a plan like a 401(k) or 403(b), you can contribute a percentage of each paycheck to a tax-deferred retirement account. For example, say you make $50,000 a year and contribute $5,000. This year, you’d only be taxed as though you earned $45,000, giving you a tax break in the short term. Plus, your investment returns will grow tax-free until the time comes to start taking money out of that account.
Even better, some companies offer an employer match up to a certain percentage, so, up until that limit, your money could be matched dollar for dollar. That’s basically free money.
Tune-up: Adjust your investment allocation depending on your age and preferred risk levels. At least once a year, check to make sure your mix of investments like stocks and bonds is appropriate for your investing timelines. The best time to contribute to retirement is when you’re young, because your money has the most time to grow. Take this opportunity to consider upping your contribution percentage – especially if your employer offers a match.
Company health plans vary widely. Some pay for health insurance outright; some will take a premium out of each paycheck. Some insurances require high deductibles upfront, while others have varying copay amounts.
Tune-up: Has anything changed in your life since the last time you updated your health insurance elections? This is the time to assess whether you’d rather be on your own health plan or your spouse’s, or to add a dependent to your coverage. Do you need dental or vision coverage?
An FSA allows you to set aside pre-tax funds for qualified expenses like medical costs, childcare or transportation. You can use a medical FSA for medical expenses not covered by insurance, like elective care and things like eyeglasses or crutches. Similarly, you can set up an account especially for childcare.
Tune-up: There’s no point in contributing so much to your FSA that you don’t use it up, but there’s also no point in letting the opportunity to save on these expenses go to waste. Think about what you’ll really use. Before the Affordable Care Act, if you didn’t use your FSA funds within a calendar year, you’d lose them; now, account holders can carry over up to $500 in funds to the next year.
In addition to an annually allotted number of vacation days, most companies offer sick and/or personal days. Although some office cultures may discourage workers from using all of their rightful time off, studies have shown that employees who take vacation are actually more productive at work.
Tune-up: Keep track of the time you have taken off. It may be worth checking if your employer offers compensation at the end of the year for any unused time off. Also check whether your vacation days roll over; if not, it may be time to start planning a little year-end travel.