Like most Americans, you’re probably weighing options in the open enrollment period for insurance and other workplace benefits. Like most people, you will probably default to what you did last year. That’s a shame, because spending some time with your various plan options can help you save money and take advantage of your company’s buying power.
For the 150 million Americans who participate in employer-sponsored health insurance plans, there is some good news. A recent Kaiser Family Foundation survey found that average family premium costs increased by just 3 percent from 2015, to $18,412, continuing a trend of the past 15 years.
Unfortunately, however, employees are shouldering a larger part of overall health care expenses, due to sizable increases in deductibles, which have soared by 49 percent since 2011 to an average $1,478. Some of that big jump is due to the use of high-deductible health insurance plans, which can help families decrease their monthly premium payments.
With out-of-pocket expenses moving higher, not enough people are using health savings accounts, known as HSAs, which allow you to pay for those unreimbursed costs with Uncle Sam’s assistance. HSA contributions are either pretax or tax-deductible; you control how the contributions are invested; earnings and interest are tax-free; and withdrawals for qualified medical expenses are tax-free. And unlike flexible savings accounts, HSAs have no “use it or lose it” clauses, so you can roll over your contributions year after year, regardless of where you are working. Plus, once you reach age 65, all nonmedical withdrawals are taxed at your current tax rate.
Many companies offer affordable group rates for life, disability and long-term care insurance, so you should explore these options. This is a case where the buying power of a big group can help you find coverage that may not be available in the open market, especially when it comes to disability and long-term care insurance, both of which are notoriously expensive in the private market. The most important thing to determine is whether the coverage is portable, i.e., that you can take the policy with you if you leave the company.
As for retirement plan options, more than half of large employers offer Roth 401(k)s to plan participants, yet only about 10 percent of employees are using them. With a Roth, workers make contributions using after-tax dollars and then are able to take tax-free withdrawals at retirement. Roth 401(k)s are great for those who expect their taxable income to rise to a higher bracket in the future. Higher-income employees will like that Roth 401(k) assets are not subject to minimum distribution requirements after age 70 1/2, as long as they are rolled over to a Roth IRA.
Miscellaneous benefits are often worth a look. Only about 5 percent of employees use stress and mental health counseling services known as employee assistance programs or EAPs. Some workers steer clear because they don’t think EAPs are confidential, even though they have robust privacy protections under federal law. Others feel there is a stigma associated with reaching out for help, or they erroneously think they have to ask permission from the company. Many, of course, don’t know the services exist.
Another valuable benefit that is going unused is company-based reimbursement for continuing education expenses for undergraduate, graduate and certificate classes. The time commitment necessary for extra coursework, as well as the requirement that workers earn at least a B to qualify for reimbursement from many companies, scares off a slew of would-be academic part-timers.
Finally, you should look for corporate discounts and partnerships that can help you save on cellphone contracts, computers and even tickets to local events.
Jill Schlesinger, a certified financial planner, is a CBS News financial analyst. She welcomes emailed comments and questions.