Contributed by: Nick Defenthaler, CFP®
As summer winds down and we quickly approach the holiday season, many employees will soon be updating their benefit options at work during open enrollment (click here to check out our webinar from last year on this topic). It’s extremely easy to procrastinate and set that employer benefit booklet off to the side and put it off until you receive the e-mail from HR reminding you it’s due in a few days. You scramble to complete the forms and more than likely, not spend as much time as you should on electing the benefits that will impact you for the next 365 days. We’ve all been there, but it’s important to carve out a few hours several weeks before your benefit elections are due to ensure you put in enough time to thoroughly review your options.
If offered by your employer, below are some benefits that you should have on your radar:
- 401k Contributions
- Are you maximizing your account? ($18,000 or $24,000 if you’re over 50 in 2017)
- Traditional vs. Roth – click here to learn more about which option could make sense for you
HMO vs. PPO - Click here to learn more about how these plans differ from a cost and functionality standpoint
- Flex Spending Accounts (FSA)
- “Use it or lose it” – click here to learn more
- Medical FSA maximum annual contribution 2017 is $2,550
- Dependent care FSA maximum annual contribution for 2017 is $5,000
Health Savings Accounts (HSA)
- Can only be used if covered under a high-deductible health care plan
- Click here to learn more about the basics of utilizing a HSA
- $3,400 maximum annual contribution in 2017 if single ($4,400 if over 50)
- $6,750 maximum annual contribution in 2017 for a family ($7,750 if over 50)
- Most employers will offer a standard level of coverage that does not carry a cost to you as the employee (example – 1X earnings)
- If you’re in your 20s, 30s and 40s, in most cases, the base level of coverage is not sufficient, therefore, it’s important to consult with your advisor on the on appropriate amount of coverage given your own unique situation
As with anything related to financial planning, every situation is different. The benefits you choose for you and your family more than likely will not make the most sense for your lunch buddy co-worker. We encourage all clients to loop us in when reviewing their benefit options during open enrollment – don’t hesitate to pass along any questions you might have to ensure you’re making the proper elections that align with your own personal financial goals.
Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.
This information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete.