Open Enrollment — Additional Workplace Benefits Worth Considering
While selecting benefits this open enrollment season, look beyond health insurance and retirement plan selections to make sure you are taking advantage of all of the benefits your employer has to offer. Many popular programs offered by employers include flexible spending accounts, dependent care and education benefits, to name a few. While these may sometimes feel too small to make a difference, particularly when compared with the large deductions representing health and retirement, a collection of a few small things can often be worth a big thing.
According to a recent employer survey by SHRM (the Society for Human Research Management), many workplace benefits are on the rise. Companies are increasingly competing for talent with programs beyond base salary and bonuses. Wellness programs, in particular, are up over 25% from the prior year.
Which workplace benefit programs should you consider this open enrollment season?
1. Flexible Spending Accounts for Medical expenses. While most people are familiar with Flexible Spending Accounts (FSA’s) at this point, many fail to use them to their fullest extent. FSA providers recognize the limitations of the “use or lose” rule, which has the effect of diminishing the attractiveness of the plans. Simply, “use or lose” means contributions must be spent during the plan year, otherwise the amounts are forfeited. The rules were relaxed somewhat and now $500 can be rolled over from year to year. Further, the convenience of debit cards and reimbursement claiming make the FSA much more user friendly than it once was.
2. Limited Purpose Flexible Spending Accounts. Employees participating in a High Deductible Health Plan (HDHP) may still be eligible to contribute to a Limited Purpose Flexible Spending Account (LPFSA). LPFSA’s can be used for dental and orthodontia care, so things like fillings, x-rays and braces, as well as for vision care, including eye glasses, contact lenses and LASIK surgery. Not all employers offer this additional layer of savings with LPFSA’s, but if yours does it provides an opportunity to save even more for medical expenses in pre-tax savings accounts.
3. Flexible Spending Accounts for Transportation. Your employer may also offer transportation fringe benefit plans. Often referred to as “Transit and Parking” accounts, you may be eligible to save pre-tax dollars for mass transit and parking expenses. For 2015 these limits are $130 per month and $250 per month, respectively, meaning a participant in these programs could save almost $1,000 a year on transportation expenses. A simple example here — $250 per month X 12 months X tax rate (say, 25% federal tax rate + 7.65% Social Security/Medicare tax).
4. Flexible Spending Accounts for Dependent Care Expenses. In addition to medical expenses, you can also contribute pre-tax dollars to pay for dependent care expenses, which includes not only children but also adult and elderly dependents. These programs cover a range of expenses, such as day care, baby sitters, nursery school, adult care facilities, after school programs, even summer camp. The maximum amount allowed per IRS guidelines is $5,000 per year, though your employer may set a different amount. Similar to other Flexible Spending Accounts, dollars contributed are pre-income tax and pre-payroll tax, meaning the tax savings for these programs can be well in excess of $1,000 per year.
5. Employer sponsored Education Assistance Programs. Just as the name sounds, under the tax code employers can provide education reimbursement and you can exclude up to $5,250 in tuition and education related expenses from your income. Like other program benefits mentioned here, this means you can save money on federal income tax and payroll tax. Your employer will have additional details and related program restrictions, but if you are considered taking courses next year you should consider what your employer may offer.
Making changes outside of open enrollment
While the above is not intended to be an exhaustive list, it does represent some of the more common employer sponsored benefit programs that offer meaningful savings to employees. However, like many other programs, participants must decide for themselves whether these programs solve a current or future need. Also keep in mind you can change your benefits elections outside of open enrollment with a qualifying life event. Other programs have few restrictions and may simply be a matter of company policy. Check with your human resource department to confirm.
By planning in advance you are much more likely to use these benefits and receive the most benefit for your pre-tax dollar. Invest some time this open enrollment season and make participation commitments that will fit your life, as well as your schedule. Finally, like all other expenses, these must ultimately work within your budget. If you need help with budgeting or planning your financial future, be sure to check out the increasing range of literature on the web or see a financial planner who can tailor the guidance to your specific situation. Happy savings this open enrollment season.
Download the free HSA Coach app to manage your HSA and watch your wealth grow. Available on iOS and Android.
Below are a few other posts on open enrollment:
· “Open Enrollment — Five Tips in Selecting Your Health Insurance Plan”
· “Open Enrollment — Six Tips in Making Benefit Selections”
· “Open Enrollment — How to Use Your New (and Old) Health Insurance Plan”
Below are a few other posts on health:
· “The Future of Healthcare is Now: My Teladoc Story”
· “Why I Questioned My Surgeon’s Advice. And Glad I Did”
· “Healthcare’s New Model: Pandora, Digital Ads, and Consumerism?”
And here are my reviews of popular book titles in the health space:
· Dr. Eric Topol’s “The Patient Will See You Now: The Future of Medicine is in Your Hands” here.
· Steven Brill’s “America’s Bitter Pill: Money, Politics, Backroom Deals and the Fight to Fix Our Broken Healthcare System” here.
· Athenahealth Co-Founder and CEO, Jonathan Bush, “Where Does It Hurt: An Entrepreneur’s Guide to Fixing Health Care” here.
· Dr. Marty Makary’s “Unaccountable: What Hospitals Won’t Tell You and How Transparency Can Revolutionize Healthcare” here.
I’ve also written about nutrition, money, behavior and other (mostly) related topics. On LinkedIn and Medium.
