Reviewing Employer Benefits

Your employer benefits can play a big role in your overall financial situation. Some common benefits offered by employers are insurance coverage (health, disability, and life), retirement plans, group legal services, and wellness programs.

Insurance coverage that is typically offered is:

• Medical insurance
• Dental insurance
• Vision insurance

Things that are important to consider when selecting your coverage in these areas are:

• Deductibles
• Co-pays and coinsurance
• Exclusions for pre-existing conditions

Other programs that may be offered are Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs).

What Is a Flexible Spending Account (FSA)?

A flexible spending account (FSA) is a type of savings account that provides the account holder with specific tax advantages. An FSA, sometimes called a "flexible" spending arrangement,” is set up by an employer for an employee. The account allows you to contribute a portion of your regular earnings to pay for qualified expenses related to medical and dental costs.

Another type of FSA is a dependent-care flexible spending account,which is used to pay for childcare expenses for children ages 12 and under andcan also be used to pay for the care of qualifying adults, including a spouse,who cannot care for themselves and meet specific Internal Revenue Service (IRS)guidelines.

A dependent-care FSA has different maximum contribution rules thana medical-related flexible spending account.

What Is a Health Savings Account?

A Health Savings Account (HSA) is a tax-advantaged account created for individuals who are covered under high-deductible health plans (HDHPs) to save for qualified medical expenses that are over and above an HDHPs coverage limits and/or exclusions. Contributions are made into the account by the individual or the individual's employer and are limited to a maximum amount each year. The contributions are invested over time and can be used to pay for qualified medical expenses, such as medical, dental and vision care, as well as prescription drugs. With the CARES act enacted into law in response to the Coronavirus pandemic, HSA funds can now be used for over-the-counter medications without a prescription, as well as certain other health-related products. If in doubt about whether something is an eligible expense, check with your local pharmacist or HSA plan administrator.

Disability Insurance

Disability income insurance pays benefits when you are unable to earn a living due to illness or injury. Disability insurance is designed to cover against uncertainty and protect a portion of your paycheck when you are unable to work. Policies can replace about 50%-60%of your income when you can’t work.

Group Term Life Insurance

Most employers provide a base amount of coverage at no cost. This could be a specific dollar amount or multiple of your base salary (ex: 1x or 2xpay). Supplemental coverage for spouses and children may be offered as well.

Retirement Plans

The most common type of retirement plan offered via an employer isa 401(k) plan. With a 401(k) you are able to make elective deferrals into theplan based off a percentage of your income. In a traditional 401(k) plan,contributions are made with pre-tax dollars & in Roth 401(k)s,contributions are made with after-tax dollars. The elective deferral limits for401(k) plans in 2022 is $20,500. Those ages 50 and over are allowed a catch-upamount of $6,500. Employers may also match contributions under a specific formula (ex: $0.50 on the $1 up to the first 6%).

Group Legal Service

Group legal plans are designed to make legal services more affordable. It resembles group health insurance from the aspect that it provides general coverage to employees for a fee. This could be a more cost-effective way to complete estate planning documents and get legal advice that would be more expensive otherwise.

Wellness Programs

Wellness programs are a way to help employees focus on their overall well-being. These could be methods to improve physical, mental, social, and financial health. Wellness programs in these areas could be reimbursement for gym memberships, health coaching, sessions focused on ways to improve emotional health, and educational financial seminars.

These benefits can help provide key protection from an insurance standpoint and valuable retirement savings. Don’t hesitate to contact your advisor for assistance with reviewing these items to ensure you are making the proper elections that align with your financial plan.