Re-electing last year’s workplace benefits can be tempting. With the holiday season right around the corner, spending time deciphering your company’s new offerings is probably the last thing on your priority list. But if you don’t do your due diligence, you could end up missing out on opportunities to offset health care costs or ways to increase earning potential for your retirement funds.
If you’re not sure where to start (or if your company’s benefits offerings haven’t changed in decades), don’t worry – we’ve done the work for you. Here’s a look at the top ways to maximize your employee benefits in 2020.
1. Don’t overlook the high-deductible health plan
When weighing your options between the high and low deductible health plans offered at your company, evaluate whether or not a low deductible plan is actually right for your needs. “While on first impression many people think a low deductible is preferable, there are many demographics where an HDHP could make sense,” explains Shobin Uralil, COO and Co-Founder of Lively, Inc. “For young working Americans, who for example, rarely go to the doctor, why pay high premiums for a service you may not use?”
2. Take advantage of an HSA
If you do opt for a high-deductible plan (aka your deductible is more than $1,300 for individuals and $2,600 for families and your plan qualifies), the government offers a tax-advantaged way to pay for qualified health expenses. “That means your root canal, your allergy shots, and your monthly prescriptions, can all be paid for with pre-tax dollars,” explains Eryn Schultz, co-founder of pHERsonal Finance day. And here’s a pro tip: you can also use an HSA to contribute toward retirement. “An underutilized way to use an HSA is as a supplement to your retirement since, unlike a Flexible Spending Account, the money does not expire each year,” she says.
3. Consider bringing your old 401K to your new job
If you have a 401k from a past job that you haven't thought about since you gave notice, it’s an ideal time to roll that into your current plan. “If your new company has a great 401K plan, it may make sense to roll your 401K over to your current job,” says Schultz. “This has the benefit of making your money easier to track and potentially reducing the total account management fees you’re paying.”
4. Sign up for short-term disability
It’s not something anyone likes to think about, but having a plan in place in the event you become unable to work is important for protecting your financial future. If your company offers it, take it – and look into other options that will add to it. “Some states – notably California, New Jersey, New York, and DC – have state insurance programs that will supplement your short- term disability,” says Schultz.
5. Make retirement contributions a priority
“Retirement may seem a long way off for some, but the cost of healthcare in retirement is increasing,” explains Uralil. “The recent estimate is $369,000 for couples – on top of Medicare. That’s why it is so imperative that we prioritize retirement costs when selecting 2020 benefits.” Even if you’re decades away from retirement, contributing the full amount you need for your employer match now can add up later. “Financial professionals usually recommend saving at least 10% of your income per year,” says Schultz, so you may want to elect to contribute more than the company offers this year – something you can set up during enrollment. “Another way to prioritize retirement is to automate your contributions so you are maximizing your savings (and never forget),” she explains. “It also helps you build a budget around this automated retirement savings.”