As we move into fall, open enrollment season is starting. For those of you that are employees, you may have already received information from your employers outlining the benefits available to you. Some benefits may be offered on a pre-tax basis. Most often health insurance is offered in this manner. Here are four do’s to get you through this season’s open enrollment.
1. Do the reading!
While many folks simply peruse the information provided, benefits and tax savings are often left on the table. Understanding your benefit package is an important part of your overall financial health….as well as your physical health! Don’t rely on your co-workers for information. It’s your responsibility, so, if you don’t understand what is being offered to you, simply ask a human resource representative. This is part of their job!
2. Do the Math!
Does it make sense to use a FSA(Flexible Spending Account)? Do you usually incur a large amount of out of pocket medical expenses? If so, the medical portion of a FSA could be a home run for you! Don’t forget dependent care benefits care be big tax savers as well. The combination of medical and dependent care FSAs can save hundreds and possibly thousands of tax dollars. If you have to pay for these expenses anyway, why not make them tax-free and save money? Remember that FSAs are use it or lose it monies, so you may want to underestimate your first year FSA contributions. The bottom line is that FSAs do require your attention throughout the year, so make sure the savings generated are worth the time you spend administrating your account.
Also, when doing the math, compare the cost of benefits provided to you by your employer to those you can acquire on the open market. Most of the time the economies of scale work in favor of the employee provided benefit, but not always. So, do the math and compare!
3. Do the right thing!
Many plans offer additional benefits to spouses and children, such as group life insurance. If a spouse has an underlying medical condition that would impede their ability to acquire life insurance at an individual level, group life insurance offered as an employee paid benefit is a simple way to add some protection. Obviously, it’s important to understand how much insurance is really needed, and the amount of insurance offered as a benefit may not be enough……but, that’s a topic for another day!
Another wonderful benefit that is often offered and is a real value is disability coverage. Often the most valuable asset a person owns is their ability to earn an income. Disability coverage can offer protection of that asset. The ole insurance axiom of “don’t risk a lot for a little” applies here. Most disability policies offered through employee benefit packages are affordable, so do the right thing!
4. Do Enroll!
After you do the research and determine what options are the right fit for you and your family, make sure you actually enroll. With our busy lives, it’s quite easy to miss the due date. This can be a costly mistake. Mark your calendar, set a reminder in your outlook, mail yourself a letter, or whatever it takes to complete the task.
Open enrollment is the time to understand and take advantage of the benefits your employer offers to you. Many of these benefits are just that: benefits! They are offered as a perk for your employment, so don’t miss out!
Photo by: Tharrin