Employee benefits can be a crucial part of your overall compensation package, enhancing your financial well-being and overall quality of life. However, many employees overlook or underutilize these benefits, potentially leaving valuable resources on the table.
Whether it’s healthcare, retirement plans, or educational opportunities, employee benefits can support your lifestyle and financial goals in a variety of ways. But to fully unlock their value, it’s crucial to have a comprehensive understanding of your options and how they can benefit you today and over the long run.
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Tip #1: Understand Your Options
Your employee benefits package may include a variety of perks, from discounted insurance and tax-advantaged savings plans to educational resources and wellness programs. To fully capitalize on these resources, it’s important to thoroughly understand your options.
Whether you’re evaluating a job offer or preparing for open enrollment, be sure to research each benefit available to you. You can often find descriptions of your benefits package in your employee handbook, or you can consult your human resources department for additional information and guidance.
Tip #2: Take Advantage of Employer Matching Programs
Many employers commit to matching a certain percentage or dollar amount of their employee’s contributions to tax-advantaged savings accounts like retirement plans and HSAs. This is essentially a form of “free money” that employers provide to incentivize employees to save for the future.
To maximize this benefit, be sure to contribute at least the minimum amount to receive the match. For example, if your employer offers to match your 401(k) contributions up to 6% of your salary and you make $200,000 annually, you’ll need to contribute at least $12,000 for your employer to match it.
Over the course of your career, missing out on employer matches can amount to meaningful lost savings, especially when factoring in compound growth. Failing to capitalize on this benefit means you may need to work longer or supplement your savings in other ways to reach your retirement goals.
Tip #3: Leverage HSAs and FSAs
Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) can be valuable benefits that allow you to set aside pre-tax dollars for eligible healthcare expenses. These accounts are particularly advantageous if you have a high-deductible health plan.
Funds from HSAs and FSAs can cover a range of medical costs that traditional health insurance may not, such as dental care, eyewear, and physical therapy. Moreover, they can also provide meaningful tax benefits:
- HSAs: These accounts offer a triple tax advantage—contributions are tax-deductible, the account balance grows tax-free, and withdrawals for qualified expenses are also tax-free.
- FSAs: Contributions to an FSA are pre-tax, lowering your taxable income. However, these accounts often have a “use it or lose it” rule, meaning you should plan to use the funds within the specified plan year to avoid losing this benefit.
The tax advantages these accounts offer make them attractive tools for many employees to supplement their savings. If your employer contributes to an HSA and/or FSA on your behalf, these options can be an incredibly valuable component of your employee benefits package.
Tip #4: Consider the Role of Disability Insurance in Your Financial Plan
As your earnings climb, it’s natural to upgrade your lifestyle accordingly. Unfortunately, meeting these financial obligations can be difficult if you’re unable to earn a paycheck due to a sudden injury or illness.
Many employers offer disability insurance as a benefit to help employees offset this risk. According to a survey by the International Foundation of Employee Benefit Plans, 78% of employers in the U.S. offer short-term benefits, and 63% offer long-term disability benefits.
Keep in mind if your employer pays the premiums, you may owe taxes on any benefits you receive. Nevertheless, disability insurance can be a helpful safety net if you’re temporarily unable to fulfill your job responsibilities.
In addition, employer-provided disability insurance typically covers just the basics. You might also want to consider supplementing your coverage with an individual policy that aligns more closely with your needs.
Tip #5: Assess Your Life Insurance Needs
Many employee benefits packages include life insurance. Indeed, having employer-sponsored life insurance is often a convenient and cost-effective way to protect your family’s financial well-being.
However, these policies may not provide the level of coverage you need. Furthermore, employer-sponsored plans aren’t always portable, meaning you’re likely to lose your coverage if you change jobs.
Therefore, while taking advantage of this benefit is often a good idea, you may need to purchase a supplemental life insurance policy to ensure proper coverage.
Tip #6: Don’t Neglect Lifestyle and Wellness Benefits
As employees place a greater emphasis on work-life balance, many companies have started to offer a variety of lifestyle and wellness benefits. Such perks may include gym membership reimbursement, financial education programs, and sabbatical leave.
Taking advantage of these benefits can help improve your quality of life and even lead to greater job satisfaction over time. Be sure to review your employee benefits options regularly to stay informed of any lifestyle and wellness perks available to you and your family.
Tip #7: Be Aware of Your Employee Benefits’ Portability
It’s common for individuals to change jobs multiple times over the course of a career. Understanding which employee benefits are portable can help you avoid losing valuable resources if you leave your current employer.
For instance, if you have a 401(k) plan or equity compensation, be sure to check your vesting schedule before changing employers. Leaving before reaching full vesting could mean losing some, or even all, of your benefits, which can be costly in some cases.
If you have an HSA through your employer, you can generally take it with you if you leave. FSAs, on the other hand, typically aren’t portable, so you’ll want to use any remaining funds before your employment ends to avoid forfeiting them.
Tip #8: Review Your Employee Benefits Package Annually
Employers periodically update their benefits packages, and your needs may evolve as you progress through your career. To ensure you’re making the most of your employee benefits, make it a habit to review your options at least annually.
Open enrollment season typically takes place in November and lasts for two to four weeks. This can be an ideal time to update or adjust your benefit selections. Consult your HR department for exact dates to avoid missing this important window.
Work with Milestone Asset Management Group to Maximize Your Employee Benefits
Over time, taking advantage of your employee benefits can help you maximize your total compensation, improve your quality of life, and achieve greater work-life balance. While these tips provide a useful starting point for making the most of your benefits, the value of professional advice can be immeasurable when it comes to maximizing your financial and overall well-being.
Milestone Asset Management Group can help you evaluate your benefits, ensuring your selections align with your financial objectives. Schedule an introductory phone call to discover how we can help you achieve your financial goals.
