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Rowling & Associates Blog

Smart Choices for your Employee Benefits

by Steve Doster

Open enrollment for employee benefits is happening right now at most companies. Before tossing aside the large package of materials, take the time to understand and choose your employee benefits wisely. Many employers offer nice benefits that can save money and help protect your future. However, understanding all those options can be very confusing!

That’s why our team at Rowling & Associates created A Simple, No-Nonsense Guide to Employee Benefits.

This guide is available as a free download and will provide a quick overview of your benefits in simple-to-understand language. Ideally, you’ll discover something about your employee benefits that will improve your progress towards retirement or provide your family additional protection.

Our guide has more details, but this article will provide an overview of the most common employee benefits to consider this year.

Health Insurance

This benefit is hopefully something you get automatically at work. If not, go to www.CoveredCA.com to sign up for health insurance. Even perfectly healthy people can get sick, break an arm, or smash a finger. It’s a personal choice between selecting a PPO or a less expensive HMO plan. Regardless of which you choose, we generally recommend that you consider a high-deductible plan for employees. This will allow you to open a Health Savings Account where you can contribute pre-tax money to pay for medical expenses. For self-employed people, however, a low-deductible plan might be more beneficial because the premiums are 50% deductible above-the-line, which means you are not required to itemize deductions to get this health insurance premium deduction.

Retirement Savings

Most larger companies will match part or all of your contribution to a retirement savings account like a 401(k), 403(b), or TSP. The most common employer match is a 50% match on the first 6% of wages you contribute. That is a 3% bonus every year. Don’t pass up free money! Always contribute at least as much as you need to get the full match from your employer savings plan – whether a 401(k), 403(b), or TSP.

Short-Term Disability Insurance

Short-term disabilities are typically covered by sick pay or state disability programs. There is no need to buy additional coverage. It’s expensive and you should already have emergency cash set aside to cover 3 to 6 months of pay. Instead of getting this insurance, we recommend saving what you would have paid in premiums into an emergency fund.

Long-Term Disability Insurance

You need this coverage! It protects future earnings if you become disabled for more than 3 to 6 months. A policy through work is usually cheaper than getting an individual policy. If you are self-employed, look for a large professional organization that offers long-term disability coverage as a membership benefit. For example, a financial planner can join the National Association of Personal Financial Advisors and get long-term disability insurance through the organization. Almost every occupation has a national association and many of these organizations offer long-term disability insurance at affordable rates.

Life Insurance

Many large employers offer some free life insurance as a benefit. Typically, the benefit is one or two times your salary. In general, you don’t need life insurance if you don’t have dependents, but if it’s free through your employer, take it. There might also be an option to get additional coverage for a monthly cost. This can be a great option if you need the insurance. However, you might want to consider an individual term life policy to ensure you have coverage if you change jobs.

Group Legal

Legal insurance isn’t offered everywhere. If your employer offers it, consider signing up if you haven’t done your estate documents. You’ll save several hundred dollars on estate documents by using a group legal benefit.

Dependent Care Flex Spending Account

Use this account to pay for childcare costs (or any dependent) using pre-tax money. It will save you money if you understand the rules. Be careful of the “use-it-lose-it” provisions. The account needs to be fully spent each year – otherwise you forfeit any unused balance.

These are the primary employee benefits offered by most companies.

Be sure to download our Simple, No-Nonsense Guide to Employee Benefits. Use it to help sign up during open enrollment this year. And if you have questions, please call Rowling & Associates for help. Choose your employee benefits wisely!