I’ve written a lot about employee benefits over the past couple of months and I wanted to compile some thoughts on what you should consider into one post. Open enrollment is right around the corner for many and this should help you to be more intentional in choosing your benefits rather than going into it and guessing or hoping that you made the right choice.
Of course, not all of these benefits are available to everyone and I haven’t included things such as life insurance because almost everyone signs up for it. Below, I’ve listed benefits that I often see people not taking advantage of when they really should be.
High Deductible Health Plan (HDHP) Paired with a Health Savings Account (HSA)
Although HDHPs may seem scary on the surface, they can provide great benefits to those who are healthy, especially when combined with an HSA. Not only can HDHPs save you money through lower premiums if you don’t visit the doctor often, but many HDHPs that are offered as an employee benefit are HSA-eligible.
HSAs are currently the most tax-advantaged accounts out there. They can be used as a means to save for and pay for any qualified medical expenses in a tax-free manner or you can strategize to use them as the only tax-free savings vehicle available to you. Additionally, if an HSA is available to you, then your employer likely offers to contribute to it on your behalf which ultimately lowers the cost of heath care for you even further.
Pre-Tax Dependent Care Benefits Through Dependent Care Flexible Spending Account (FSA)
If you’re paying for dependent care, then this is a no-brainer. You’re already paying for daycare, it’s really expensive, and you’re paying for it with after-tax dollars. If your employer offers a dependent care FSA, then you can contribute up to $5,000 to the account pre-tax for those married and filing jointly, or $2,500 for single taxpayers and those married filing separately, and then reimburse yourself tax-free.
If you are a married filing jointly taxpayer in the 24% tax bracket and you contribute $5,000 to a dependent care FSA, then you could save $1,200 on your taxes. There’s no reason not to take advantage of this if it’s available to you.
Long-Term Disability Insurance
According to the Social Security Administration, 1 in 4 of today’s 20-year-olds will become disabled before they retire. Many people don’t have disability insurance in place simply because they don’t know what it is, or they think they’ll never need it, but it could be disastrous if you end up needing it and you don’t have coverage in place. If you become disabled due to a freak accident, a disease, or mental health condition and can’t work, then how will you earn money, put food on the table, or provide for your family until you reach Social Security age? This is exactly what disability insurance protects against.
Not all disability insurance policies are written the same, and the devil is in the details when it comes to the policies, so it’s worth exploring private policies as well.
Vacation
As a whole, American companies offer fewer vacation days than many other nations. Yet, Americans still leave many of these days on the table. In fact, over half of Americans report having unused vacation days left over at the end of the year. Why? Even if you’re not going on vacation take that time to spend time with your family, enjoy your hobbies, or just relax.
The way I see it is that if your boss values you less for taking all of your vacation days than someone who doesn’t take all of their days, then you need to find a new boss.
Be a little more intentional when making your employee benefits elections. If there’s no one there to help you and answer your questions, then reach out to someone you trust who has knowledge about the benefits being offered to you and can accurately answer your questions.
