Maximizing your financial potential shouldn't only be about careful budgeting and investing. A vital piece of the puzzle is often overlooked: how to fully utilize your company-provided benefits. For many folks, open enrollment is just around the corner this fall, so let’s delve into how you can leverage these benefits to help you reach your financial goals faster and more effectively.
Understand Open Enrollment
Open enrollment is a window of time when you can review, change, or enroll in your employer’s benefit plans. This usually happens once a year, often in the fall, and typically lasts 2 to 4 weeks. During open enrollment, you can evaluate your current benefits, compare options, and choose the coverage that best fits your needs. It’s more than a paperwork exercise – it’s an essential element of your financial game plan. Everyone should proactively engage in this process and make informed decisions to meet their economic and healthcare needs, empowering you to take control of your financial well-being.
Know Your Company’s Benefits Plan
It's crucial to start by thoroughly reading and understanding your company’s benefit plan. This plan often includes health, dental, and vision insurance, life and disability insurance; flexible spending accounts and health savings accounts, retirement savings plans; wellness programs; and various other benefits such as pet insurance, gym memberships, identity theft protection, prepaid legal plans, and supplemental medical plans.
While reviewing your company’s benefits, note which options you are currently enrolled in, how much you’ve utilized them in the past year, and the current cost vs. cost for the following year. Do you know about a significant upcoming medical or dental procedure you need in the next year? Consider how a flexible savings account might help pay for the procedure with pre-tax dollars.
Choosing the Right Health Insurance
Health insurance is a major and complex item to review for open enrollment, but choosing the right health insurance plan for yourself and your family is crucial. Factors such as cost, coverage, and a network of health providers should be carefully considered and contrasted with your age, existing conditions, and family health history.
Are you enrolled in a costly “Cadillac” health insurance plan but are young and do not use your health insurance very often? Consider a health savings account, “HSA,” a high-deductible health insurance plan you can couple with the triple tax-preferred HSA account. HSAs are rare financial vehicles where you can put savings aside pre-tax, grow them tax-deferred (e.g., invest the funds in the market), and take them out tax-free for healthcare purposes. Or perhaps you are planning on expanding your family in the next year. Consider what benefits, including short-term disability, may help financially during a leave of absence.
Various Retirement Savings & Incentive Plans
Retirement savings plans can go by many names: 401(a), 401(k), 403(b), 457(b), 457(f) for example, less common are defined benefit pensions, cash balance pensions, money purchase pension plans and target benefit pension plans. For high earners, they may be offered unique non-qualified deferred compensation plans. Sometimes, employer matching programs are straightforward; other times, one must watch the amounts and timing of employee contributions to receive the entire match.
Other savings and incentive offerings may include employee stock purchase plans, employee stock ownership plans, stock option grants, or restricted stock grants. Consideration should be given to whether a plan is qualified (covered by ERISA) or non-qualified; additionally, each may have different tax consequences that may impact your financial plan.
Other Employee Benefits
It’s common to find gems of unutilized or underutilized benefits companies offer. These could include student loan assistance, tuition reimbursement, fertility assistance, adoption assistance, pet insurance, workplace wellness programs, childcare assistance, and mental health support. I’ve seen some neat but underutilized benefits, including reimbursement for financial planning, weekly group fitness training, unlimited PTO, and periodic sabbaticals.
Conclusion
Remember, maximizing your employee benefits is not a one-time move—it’s an annual exercise. Personal circumstances change, and for many benefits, such as health, dental, vision, and various flex spending accounts, you can typically only make changes to them once a year (unless otherwise allowed by the plan for birth, death, or divorce, for example). So don’t hesitate to invest some time into maximizing your employee benefits!
WHWM is here to guide you in identifying your priorities, developing a plan, and making adjustments along the way. By choosing WHWM, you're partnering with our Founder and President, Stephen Bodwell. As a CPA and CFP® professional, Stephen is committed to helping you achieve your financial goals and aspirations. Don't hesitate to take the next step toward realizing your dreams. Schedule your complimentary, no-obligation 30-minute consultation with Stephen.
Walnut Hill Wealth Management, LLC (“WHWM”) is a registered investment advisor offering advisory services in the State of Texas and in other jurisdictions where exempt. The information provided is as of the date indicated and is subject to change.
Comments