If you’re like most people, choosing your employee benefits isn’t something you pay much attention to. You click open the email from HR, blink twice at the dizzying list of options, and decide to tackle it later. On the day of the deadline, you open the email again and muddle through the list. It feels random—like picking numbers for the lottery—so you opt for the simplest route: you choose what you chose last year… and the year before that… and the year before that. When you finally hit the ‘submit’ button, you’re happy to check it off your to-do list—until next year.
But do you really know what you chose—or why?
Probably not. And yet, with many companies offering better, more far-reaching benefits than ever, what you probably have done is missed out on some fantastic opportunities to improve your finances, protect your family, and even improve your health and wellbeing. That’s precisely why our team at MSWMA has added open enrollment support to our wealth management process for every one of our clients. And it seems that every time we dive into a client’s benefits package, we uncover opportunities they didn’t even know existed. Even better, the cost for these benefits is often remarkably low.
It’s great that companies are continuously improving their benefits offerings to attract and retain great talent (like you!). Unfortunately, HR departments rarely do a great job of communicating those benefits to their employees. What you get is a rather nasty looking electronic spreadsheet with a simple list of basic options. The details behind each option are typically in a less-than-reader-friendly, 100+ page PDF that sometimes is hard to track down at all!
That’s where we come in. Our team wades through the details to identify the options that make the most sense within your overall plan. Because we deal with benefits day in and day out, we know what to look for, we understand which options add value and which don’t, and we know the appropriate price points to be sure you’re getting the most bang for your buck. We can even fill out your online checklist so all you have to do is hit ‘submit’—this time without feeling like you’re playing the lottery.
While every plan is different and every client has their own needs, here are just a few of the places where we tend to see the greatest opportunity for change:
Healthcare is one of the most important benefits available, and yet 9 times out of 10, people choose the default option of a PPO so they can pick their own providers. Sure, PPOs have a higher price tag than HMOs, but the flexibility is worth the price. And yet, if we were to run the numbers, I would bet that there is probably a much better option for your financial health that offers you almost identical flexibility, plus incredible tax benefits that can help you save on healthcare now and in the most costly time of your medical life: retirement. What is this ideal healthcare option? The High Deductible Health Plan. Surprised? While the idea of a high deductible sends most people running back to their beloved PPO, a High Deductible Health Plan offers amazing benefits. First, the cost is lower than even an HMO, but like with a PPO, you can choose among a wide network of providers. Second, these plans go hand-in-hand with The King of All Savings Accounts: the HSA—which offers triple tax benefits, complete portability, and investment options that can transform your healthcare dollars from a basic healthcare fund into powerful fuel for your retirement income. Plus, it puts you 100% in control of how you spend your healthcare dollars. In comparison, especially if you’re younger and in good health, a PPO is often the worst choice you can make—and the most costly. Every High Deductible Health Plan has its own DNA, so it’s important to understand the details of the plan, but the majority of the time, it’s the best possible choice you can make.
Everyone knows about the power of the 401(k). If you have access to one, I trust that you are already maxing out your contributions to take full advantage of your plan. But if you can afford to set aside even more income, don’t stop there! Another option offered by many employers that is a valuable option for more highly compensated employees is the Non-Qualified Deferred Compensation Plan. What’s wonderful about these plans is that they enable you to set aside money pre-tax to lower your tax bill today, and all earnings in the plan accumulate tax-deferred. Any income received at retirement is taxed as ordinary income. If you have access to this type of plan and can afford to contribute, it’s a great tool that saves taxes while giving your retirement income a boost.
This is the fun stuff! When we dig into the details of almost any large corporate plan, we’re thrilled to find benefits that are hidden in the small print—often not appearing at all on the dreaded benefits checklist. I can’t tell you how many times I’ve heard clients say, “I’m sure I can’t get that. I’ve never heard of anyone at my company using it.” And yet—surprise!—they can. And with our help, they do! A few of the lesser-known benefits we’ve uncovered include:
Of course, there are lots of standard benefits that require some decision-making as well. Life and disability insurance is a no-brainer, and since the group rates are typically so low, we recommend taking the maximum coverage of both (though we almost always suggest supplementing with private insurance to fill the coverage gaps). Dependent Care accounts allow you to set aside up to $5,000 in pre-tax dollars for childcare costs (which you can send straight into your child’s 529 account when you receive your reimbursement check, giving you even more savings down the road!). If you give to charity, corporate matching programs can give your gifts a valuable boost. And more employers are now offering family and life resources, including free or discounted mental health services and even on-site counseling programs.
If you’re feeling overwhelmed by the whole idea, know that our team is here to help. With our research and guidance, we can almost guarantee you’ll get more out of your benefits this year—and for many years to come.
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