As we approach the holiday season, it’s also time to focus on another important season: employee benefit selection. Many companies hold open enrollment in November, usually for two weeks, so it’s the perfect opportunity to review and maximize your benefits. Remember, benefits can make up a significant part of your compensation package. Taking time to carefully select the best options for you and your family can make a lasting difference in your financial life over the next year.
When reviewing health insurance, consider whether an HMO or PPO plan best suits your needs. Generally, HMOs have lower costs but require in-network care, while PPOs offer broader flexibility for out-of-network providers at a higher premium. Remember, choosing a plan with a high deductible might be more economical for those who rarely need healthcare, while a lower deductible plan could benefit those who anticipate regular medical visits. If you don't want a referral to go see specialists you may want to consider a PPO plan. If you elect a High Deductible Health plan this can also save you additional money in monthly premium, but you do not have co-pays. When you go to a medical visit you will pay the full amount of the visit until your deductible is met. HDHP are usually best suited for individuals with little medical needs or high medical needs.
HSA vs. FSA Accounts
Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) both offer tax advantages, but they work differently.
HSAs, are available only with high-deductible plans, allow unused funds to roll over annually, potentially growing into a long-term healthcare fund. HSA offer you a triple tax advantage. Money you but into an HSA is tax-deductible, if you invest the money it grows tax free, and the money can be withdrawn for medical purchases tax free. If you have or opt for a HDHP, considering funding your HSA each paycheck. Many times an employer will also make additional HSA contributions on your behalf. In contrast, FSAs generally work on a “use it or lose it” basis, though some plans allow limited rollover amounts. Deciding which one aligns with your needs can enhance your financial strategy over time.
Dental, Vision, and Disability Coverage
If you anticipate regular visits for dental or vision care, these plans can help offset costs. Also, don’t overlook disability insurance, as this coverage can be a safeguard for your income should you encounter an unexpected injury or illness. Often, employers offer basic disability insurance at little to no cost, and it can be a valuable addition to your financial security.
Most employers provide a base amount of life insurance, typically 1-2 times your salary. While this is a helpful start, you might consider additional coverage outside of work, especially if you have dependents. Remember, company-sponsored life insurance usually doesn’t travel with you when you leave the job, so an external policy can provide continuity. Term life insurance is often inexpensive and can help mitigate the risk of a premature or unexpected death and provide financial stability to your family. j
A Dependent Care FSA allows you to allocate pre-tax funds for dependent care expenses, including daycare and after-school programs. It operates similarly to a healthcare FSA, but you must pay upfront and request reimbursement. Estimating your yearly dependent care costs can help you make the most of this benefit.
If you’re retired and on Medicare, consider using this period to review your Medicare Advantage or Part D prescription drug plans. Many plans change their benefits or premiums from year to year, so an annual check ensures your coverage continues to meet your needs. If your children have started working, encourage them to review their employee benefits, too.
For those who get coverage through the HealthCare.gov marketplace, open enrollment begins in November, giving you a chance to re-shop and compare new plans.
Though retirement plan adjustments can often be made year-round, open enrollment is a great time to check in on your contributions and confirm they align with your long-term goals. Contributing up to your employer match is essential—don’t leave free money on the table! Whether you contribute pre-tax or Roth dollars depends on your income tax strategy, but consistent savings is key to building a secure retirement. If you are looking for additional tax breaks or long-term tax savings; maximizing your 401(k) and 403(b) benefits is a great way to do this.
Lastly, review any additional perks like gym memberships, tuition reimbursement, or legal assistance. These extra benefits can add value and enhance your overall work experience. Many employers also offer some type of EAP's ( employee assistance programs) if you need mental health services.
If you have questions about any of these areas, reach out to our team at Wela. We’re here to help you optimize your employee benefits and ensure they align with your financial goals. We can offer you the advice and analysis of your employee benefits. Employee benefits can be overwhelming and individuals may not fully understand everything their employer has to offer.
Warm regards,
The Wela Financial Advisory Team
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Brent Forrest & Associates, LLC. dba Wela Financial Advisory (Wela) is a registered investment adviser. The information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. This article and images may have been enhanced by utilizing artificial intelligence (AI). Brent Forrest & Associates, LLC dba Wela Financial Advisory (Wela) is a registered investment adviser. The information presented is for educational purposes only and is not intended to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. Wela may discuss and display, charts, graphs, formulas which are not intended to be used by themselves to determine which securities to buy or sell, or when to buy or sell them. Such charts and graphs offer limited information and should not be used on their own to make investment decisions.
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