Learn how to choose the workplace benefits that are best for you during open enrollment.
How do I choose the best workplace benefits for me?
If you’re an employee, it’s likely that your employer offers benefits to employees. These benefits can include health insurance; flexible savings accounts; disability and retirement benefits; and more.
As we approach the end of the year, check on the timing of “open enrollment” at your employer. Open enrollment is when all employees get to change or update the benefits they receive. When you’ve just started a job, you get a chance to enroll in employer benefits. You get a chance to change your benefits when you have a “qualifying event” – like getting married or divorced, or having a child. But every employee gets a chance to change their benefits election at open enrollment, which often occurs around October or November.
If you’d like to revisit your participation in the benefits offered by your employer, but don’t know where to start, here are some basics!
First, ask the HR team at your company when open benefits enrollment is, and confirm whether you are qualified to receive benefits.
Research available benefits offered by your employer
Usually employers have a portal that lists all the available benefits. Take some time to review all the available benefits and whether the employer pays a portion of the benefit for you.
Here are examples of common benefits. This is not a comprehensive list – check with your employer to learn what benefits are offered with them.
Retirement Savings Plans
A retirement plan sponsored by your employer, these plans permit you and/or your employer to save now, for your retirement later. These plans are commonly called a 401k or 403b. There are options such as pretax or after tax, and you can set a percentage of your pay to automatically contribute with each pay period. Read more here.
A very important employer-sponsored benefit is health insurance. Your employer may partially fund the cost of your monthly premium but even if they don’t, group health insurance is often less expensive than comparable plans offered individually. Consider who in your family you want health insurance for, then consider how you typically use your health insurance – Do you only go to the doctor for an emergency or regular checkups? Do you see a therapist weekly? Do you have a big health event planned, such as childbirth or a hip replacement? What insurance do your current providers accept?
Don’t forget about your teeth and eyes! Employers also offer dental and vision insurance too – there are often only one or two plan choices (compared to health insurance, whether there are PPOs, HMOs, and more to choose from) so this is a simpler choice. Make a note of what coverage you receive, and USE IT! 6 month dental cleanings are typically included free with insurance. Improving oral health can lengthen survival in older age. With vision insurance, you can often get discounts on glasses or contact lenses.
Other Forms of Insurance
In addition to health insurance, many employers offer other types of insurance.
Disability insurance provides partial income replacement if you were to become disabled. Coverage is typically paid by employer.
AD&D insurance provides a financial benefit in the event of accidental death or dismemberment. Coverage is typically paid by employer.
Group life insurance provides a benefit in the event of your death. The employer often pays premiums for a death benefit of $50,000. You may have the option to buy additional “supplemental” life insurance coverage. Group life insurance typically doesn’t require health screening or underwriting, and often has lower premiums than an individual term life insurance policy.
Pet insurance provides insurance for your furry friends. Pet insurance coverage can be especially valuable for older pets. Check your available plan options; sometimes pet insurance covers preventative care and medicine, other times it only provides protection for emergencies. Do the math on how much you typically spend in a year on veterinary expenses, and compare that to what you would pay in premiums to decide if this coverage is worthwhile for you.
Flexible Spending Accounts and Health Savings Accounts
Flex Spending Accounts (FSAs) allow you to put a portion of your pretax earnings into a spending account to pay current year expenses for health or a separate account for childcare. These accounts operate on a use-it-or-lose-it status; you lose access to the money if it’s not spent annually. The IRS sets limits to the amount you can contribute to FSAs in a given year.
Health Savings Accounts (HSAs) are only available for those who participate in a high deductible health insurance plan. You put a portion of your pretax earnings into this account and can use the money for health expenses. If you don’t use the money, you can often invest it to let it grow, potentially tax free. There are potential tax benefits to HSAs if you contribute to them and don’t use them until retirement. There are limits to the amount you can contribute to HSAs in a given year.
Legal Plan Benefits
For a relatively low per-payroll fee, you may be able to enroll in legal benefits through third-party providers like MetLife Legal Plan Benefits. In my experience, this is one of the most commonly overlooked benefits. Legal plans give you access to attorneys who can do all sorts of legal-related tasks for no additional cost. Estate planning (wills and trusts), real estate transactions, and family law like divorce or adoption are examples of often available legal transactions for no additional cost. A real estate closing requires an attorney, and creating a will and trust for your family is best done with an attorney who knows your local jurisdiction’s laws. If you complete just one of these transactions through a legal plan benefit, this can save you hundreds or even thousands of dollars. Be sure to un-enroll next year if you no longer need the plan.
Employer Stock Programs
If your employer offers an employee stock purchase program, like an ESPP or ESOP, open enrollment is typically the time to review your participation. These plans can be complicated, but essentially they offer the ability to buy employer stock at a discount, with potential tax benefits too. There are restrictions regarding when you can sell the stock, so this is not an ideal benefit for everyone.
These are just a few of the most common types of benefits. Check with your employer to learn what your benefits are. It’s easy to consider only your salary when thinking about your compensation. But benefits can make up 40% of your total compensation package, with the other 60% being your salary. If you don’t participate in these benefits, you could be leaving money on the table.