Best Practices for Getting the Most out of Your Employee Benefits
|By: Melanie R. Ross, CFP®, AAMS®, CLTC*|
Senior Financial Advisor
Many employers like to offer an enticing benefits package to retain employees, as well as attract new ones. The most popular employee benefit options include medical, life, disability and retirement. Unfortunately, most employees don’t fully understand what they are entitled to. So, how can you make the most out of your employee benefits? Let’s take a look.
MEDICAL INSURANCE: Most employers offer their employees several health plan options -- it’s a must-have these days. Does your employer also offer either a Healthcare Flexible Spending Account (FSA) or a Health Savings Account (HSA)? If the answer is yes, start participating in it today. Both these options offer pre-taxed savings, which can really help stretch your money when paying for things like prescriptions, co-pays, dental procedures and eye care.
LIFE INSURANCE: Group life insurance is another common benefit offered by employers, and it is typically free to you -- all you need to do is sign up. Life insurance benefits are usually equal to your annual salary, with average coverage amounts ranging from $25,000 to $50,000. If the amount your employer is providing isn’t enough to take care of your family should you pass away, more life insurance can (in most cases) be purchased through your employer’s insurance company for an additional cost with no medical exam needed -- a true “win-win.”
DISABILITY: Depending on the type of employment, disability benefits for employees can account for one-half to two-thirds of the employee’s pre-disability income. If you ever become disabled and are unable to work, this employee benefit will be invaluable to you and your family.
Employers may offer either short-term disability insurance or long-term disability insurance to their employees. With short-term disability, a percentage of an employee’s salary is paid temporarily, while long-term disability can last up to 10 years or until retirement age. However, just like with life insurance, if the coverage amount from your employer isn’t enough, you may need to look into additional options to supplement it in order to protect you and your family.
RETIREMENT: Retirement benefits are funds that are set aside to provide employees with an income when they retire. The two main types of retirement plans are defined benefit plans (also known as pension plans), or defined contribution plans (most commonly known as 401(k) plans). Regardless of the retirement plan type, the more money you can put away between yourself and your employer, the more growth there is during the years before retirement. Save as much as you can for as long you can. An employer-sponsored retirement plan is a great place to do it.
Employee benefits are wonderful, and they exist so that you can actually use them, so learn all you can about yours.
Melanie R. Ross, CFP®, AAMS®, CLTC*
Senior Financial Advisor
Featured in the Crain's Cleveland: 7.17.2021