For most companies, the 4th quarter of the year is an essential time for registering for benefits.  According to the Bureau of Labor Statistics June data, benefits comprise 30% of a civilian employee’s total compensation.  The remaining 70% were wages.  For state and local government workers, benefits represented 38%.  So, when you enroll in your benefits in the 4th quarter, make sure you’re making thoughtful decisions about what you’re selecting and, if appropriate, consult your financial advisor. 

When reviewing your benefits for the upcoming year, consider what benefit options have changed and what have stayed the same.  Contact your company’s benefits team/coordinator if you have questions about the plan.  Just because you chose one benefit option for the current year doesn’t necessarily mean having the same benefit the following year makes sense.  For example, if you have a group legal plan, you may have the option to enroll for one year to have a Will or Trust completed and then unenroll the following year.

Let’s walk through some popular benefits options you will likely have to choose from.

Health Insurance

This is likely the most significant deduction in your benefits (unless you have an employer that covers all employees and their family's medical premiums).  You will want to be sure to evaluate the options carefully.  Some popular plans are a Health Maintenance Organization (HMO) and a PPO (Preferred Provider Organization).  Here’s a site comparing the two. 

At a high level, Health maintenance organizations (HMOs) have a network of doctors, hospitals, and other healthcare providers who provide their services for a specific payment, which allows the HMO to maintain costs for its members. A referral is required.  Cost and choice are the two features that set HMOS apart from other healthcare plans. 

Preferred provider organizations (PPOs) offer a network of healthcare providers for your medical care at a specific rate. Unlike HMO, a PPO allows you to receive care from any healthcare provider—in or out of your network.

Health Savings Accounts (HSA) are available with a high-deductible health plan (HDHP). The linked article written by one of our team members does an excellent job of explaining the basics.

Flexible Spending Accounts (FSA) are a great option if you don’t have an HDHP.  With this type of account, be sure to use the funds:

• by the end of the “grace period,” typically 2.5 months following the end of the plan year or

• spend your account below the annual carryover amount, which is $640 for 2024 and likely to Health Equity offers a vast list of Qualified Medical Expenses (QME) that you can use to ensure you spend any remaining dollars.

Dental Insurance

These plans vary quite a bit by employer.  Below is what a typical plan covers. 

• 100% of routine preventive and diagnostic care such as cleanings and exams.

• 80% of basic procedures, such as fillings, root canals, and tooth extractions.

• 50% of primary services such as crowns, bridges, and implants.

If you need orthodontia/denture work done, asking for a couple of referrals from your dentist is helpful to understand different providers in your area and compare services and prices.  These expenses can be hundreds to thousands of dollars.  For any dental/orthodontia work your plan doesn’t cover, you should discuss with your advisor a plan of how to cover these expenses with your pre-tax Flexible Spending Account (FSA) or Health Savings Account (HSA).

Vision Insurance

If you carry vision insurance and your plan offers a glasses/contacts allowance, ensure you maximize them yearly.  If you don’t need new glasses or contacts, you will want to understand what your vision covers to see if it’s necessary to keep every year.

Short- and Long-Term Disability 

Your employer can sometimes pay for these.  If your company pays for it, great, let your advisor know.  You should also inform your advisor if they don’t pay for it.  We generally don’t recommend short-term disability unless it’s free/very cheap.  Another team member wrote this article about Long Term Disability Insurance and the benefits it can provide you and your family. We also have a Disability Insurance Specialist on our team. If you would like a quote, contact your advisor to discuss how this can fit into your financial plan.

Life Insurance

Life insurance purchased through work is generally Group Term Insurance, similar to Term Insurance you would buy individually.  We recommend purchasing it outside of your employer if you get sick and have to leave your employer, and it’s not transferrable.  Here’s an article that gives further insight into Term Life Insurance.

Dependent Care Flexible Spending Account

Dependent Care Flexible Spending or DCFSA accounts can be an excellent way for employees paying for care for children under 13, a disabled spouse, or an older parent in Eldercare to save on taxes.  If this is you, visit this site here to learn more.

Legal Plan

If your company offers a legal services plan and can have a Will/Trust completed, this could be a great way to set one up for a significant discount. Usually, these would require an estate planning attorney to set them up.  You could enroll for the benefit one year and then not the next.  You should clarify what services the group legal plan covers and if a Will/Trust is part of them.  If you’ve been putting it off like most Americans, talk to your Financial Advisor today about establishing one through one of our partners.

Employer-Sponsored Retirement Plan

Whether you have a 401(k), 403(b), 457(b), or a small business retirement plan, you should have had this discussion on the features of your plan.  It may require your advisor to review your Summary Plan Description (SPD) or call the plan custodian (the company through which the investments are managed) to obtain the SPD to understand the features.  If you need help managing your employer’s retirement plan, you should talk to your advisor because at Whitaker-Myers Wealth Managers, we are uniquely qualified to help you manage your current 401(k) or other employer plan.

You’re generally always able to change the amount contributed to your plan, whether at a $ or % level.  Most employers allow you to choose a separate contribution amount if you receive any bonus compensation. 

You may want to be careful not to max out your 401(k) early because it could cost you the employer match if there’s no true-up provision for the plan.  If you’ve left your employer, you should notify your advisor to discuss your 401(k) options.  All these reasons are why you should consult your retirement contribution strategy with your financial advisor.

Tuition Reimbursement & Professional Development

Many companies offer a benefit to partially or fully pay for you to get further education, whether a degree through a school, a certification program, or just a professional development course.  This could be a better return on investment than any mutual fund could ever return, so be sure you know what benefits your employer offers.

Long Term Care

Long Term Care is not as commonly offered by employers, but the linked article can provide some good considerations for funding options.

Parking/Commuter Benefits

If you have to pay for transportation via public transportation or pay for parking, hopefully, your employer offers commuter benefits.  This is a way to save tax-free up to the IRS 2024 limit of $315 (projected to be $325 for 2025) per month to pay for these expenses. Even if you work primarily from home and only go into the office a few days a week, this is another excellent way to save on taxes.  Here’s a site to check out if you have more questions.

The benefit of talking Benefits with an Advisor

This is not a complete list of benefits employers offer, but it is some of the major ones typically offered.  As you build out your financial plan, you should discuss how to best leverage your company’s benefits with your advisor, given that it’s around a 1/3 of most employee’s total compensation. If you do not have a financial advisor, one of our trusted team members would love to set up a complimentary meeting to discuss things with them and help answer any questions you may have.