If you are new to your job and choosing benefits for the first time or just want a refresher for open enrollment, be sure to read your packet fully and ask questions. Sometimes your company will even have an info session you can attend.
Here is my quick breakdown of what companies offer and what you should look out for. This is in no way a comprehensive list, read up on your own benefits and see what else you might have, it’s worth it!
**Disclaimer: I am not an HR or financial expert just a regular employee that loves taking advantage of work perks and enjoys reading benefits manuals. **
Getting health care through your employer is one of the biggest benefits to full-time employment. It’s crazy expensive when you are buying it on your own and incredibly important to have not just because you might need it for health costs but also because there is actually a penalty if you are not covered and most people get dinged at tax time if you don’t have it. (FYI – this does not apply to people that belong to a health care sharing ministry, are in prison, have been living abroad for 1 year +, etc).
Most health care plans offer a few options and of course, there are tons of pros/cons for the different plans and it really depends on your situation as to what’s the best choice. Most HR reps don’t want to suggest specific things (in the same way that it’s hard to get financial advice from anyone, no one wants to lead you the wrong way). I highly recommend talking to friends/coworkers that have similar situations and are in similar life places to see what they do and what works for them. Take everything with a grain of salt and do your own research too. Remember the great thing about open enrollment is that each year you can change it if you are not happy.
Here are a few basics to get you started and things to look out for:
HMO vs PPO
Most plans fall into one of two categories, HMO or PPO. The biggest difference is that HMO is “in-network” meaning that you have access to doctors and hospitals that are within a network that has been determined by the insurance company. PPOs are usually a bit more flexible. If you are really interested in the differences, check out this article.
Things to Know About a Health Savings Account
Health Savings Accounts are a really cool offering to take advantage of especially if you are a fairly healthy person and definitely something to consider if your employer contributes money on your behalf. You have a high deductible but you can add money to your health savings account tax-free! That money has to be used for health-related expenses. Check your plan for details but sometimes in addition to dentist/doctor’s visits this can even include some basic things you wouldn’t think of like hearing aids, a first aid kit for your car, sunscreen, etc. Just be careful to not put money into the account that you would need for non-health related-expenses and be wary of account fees.
Basics Regarding Costs
Usually, your employer will cover part of the healthcare cost for you. A lot of the time the amount you pay depends on your salary range, so if you make more money then it costs a bit more to opt into the plan and it gives a break on the cost to those that make less.
Vision & Dental
Dental plans usually cover two cleanings a year and discounts on the more major things you’d need.
Vision plans vary but some will even cover a new pair of glasses each year or up to a certain amount spent on contacts. Be sure to check the specifics.
With both of these, sometimes your employer will cover 100% of the cost but you have to opt-in. Even if you have 20/20 vision, I strongly suggest that you still elect to get vision insurance if your employer covers it, you never know when you might need it!
One of the best parts of working for a company with benefits is that they can get group discounts on different types of insurance. Typical offerings include disability, life and/or accident insurance. But some employers even offer discounts on car insurance or pet insurance (yes, it’s a thing!).
For life insurance, you might get a little coverage automatically but be sure to also look out for low-cost additions. Many employers will add thousands of dollars (or maybe even your salary amount) to your life insurance and only charge you about a dollar per month. Look out for things like that when you sign up and during open enrollment.
For disability insurance, look out for “waiting periods.” This is the time that you would need to wait after you go on disability before you start getting paid from that insurance. Important note: in many places, pregnancy is considered short-term disability so pay extra attention to this one if you are planning to get pregnant within the next year (or next few, sometimes the opportunity to change what you’ve opted for does not pop up during open enrollment!).
So this one is a biggie and usually one that young people put off thinking about. Don’t make that mistake! Even just contributing a little bit early on can make a huge difference as you get older. Have you heard of Ben vs Arthur?
The number one thing you should do when you are looking at retirement benefits is to check and see if your company does a 401k match. If they do, take advantage of it right away. It is free money. You might have to wait a bit to be “vested” before they start doing the match, this could be a few months or even a few years, just depends on your company’s policy.
401k Without a Match
If you have a company 401k but don’t have a company match, it is still good to contribute. The money goes in before they take taxes out of your paycheck so you earn interest on the money you would have paid to Uncle Sam. When you do retire, you do have to pay taxes on the money so just be mindful of that as you save.
Roth IRA vs Traditional IRA
There are two main types of IRAs. The biggest difference is that one is pre-tax and the other is post-tax. I like Nerd Wallet’s article that really dives in deep about the nitty gritty when it comes to these two types.
When you are just starting out with your retirement benefits it can feel crazy to think you need to pay attention to maximums, but once you start seeing your money grow and looking forward to retirement, you’ll want to put in as much as you can. The current max you can contribute to for a 401k is $18,000/yr and for an IRA is $5,500/yr.
What if I don’t have Retirement Benefits?
You can set up a Roth IRA even without doing it through your company. My husband does not have retirement benefits through his current job so we set him up with a Roth IRA through Wealthfront which is a robo-advisor, we like that it is totally hands off investing and he can just set up an auto-payment and they take care of investing in the right places. I like Nerd Wallet for comparing companies and getting reviews for where to set up your accounts.
Once you have your retirement accounts set up, don’t forget that what is in those accounts counts so be sure you have the money invested vs. just sitting as cash. If you are not sure, just give the bank a call and they will walk you through it.
This is an offer from the company that gives employees the option to buy shares of stock in the company. This has never been an option for me so I have not done a ton of research, but you can read more here. It’s a really interesting benefit and something you should look into if its something you have the option to take advantage of. It’s something that you’ll see often in startups (get in early before we become the next Facebook/Google/Apple/etc) but also at huge companies (my sister, who works at Victoria’s Secret, can buy stock!).
Some big companies offer a legal plan. This might seem very unnecessary but think about your upcoming life events before you write it off. I opted in for the first time this year so that my husband and I could create a living will. It is also helpful if you are buying a house or adopting a child. This type of benefit can also be great to have if you get a traffic ticket or are in an accident that sends you to court.
This part isn’t really relevant to open enrollment, but I wanted to include it because it is a great time to check in with what you are eligible for and know your perks! Sometimes you can get a company discount on your cell phone plan (even if you don’t have a company phone), in store if you work in retail or for a brand, or even on car rentals when you are not traveling for work. So be sure you check your company’s benefits section to get details on discounts you can take advantage of.
Stay tuned for next week, I be posting a part 3 for this series about what to do if you don’t have a benefits plan. And be sure to go back and see Part 1: Open Enrollment.