How to Maximize Your Employee Benefits

By May 15, 2019 Blog No Comments

Working in the tech world is all about the perks. However, while most employees focus on the fun and whimsy of offices where you can relax as much as you work, many of them neglect the real benefits available to them.

Whether it’s access to legal assistance or insurance to cover your family if something should happen to you, these benefits can be a substantial help to you both now and in the future. Thus, it’s imperative that you’re able to maximize their potential so that you don’t wind up with money (or anything else) on the table.

So, with that in mind, let’s look at a few ways that you can get the most out of your benefits package.

Understand What’s Available

For many professionals, they don’t realize that their company offers so much more than the occasional perk. In many situations, you may have access to a wide range of voluntary benefits that can help you get more financial stability from your job. However, if you don’t ask about them or do your research, how are you going to know they exist?

The first thing you should do to maximize your employee benefits is to see which ones are available. Look for voluntary benefits, which are offered by the employer and paid for by the employee. While you may not be able to utilize all of them, you should still be able to take advantage of a few that will provide peace of mind to you and your family.

When looking at these benefits, you have to realize that not all of them will offer financial incentives. While getting extra money is nice, you have to think about the value of certain options. For example, gaining access to a legal team at a discounted rate can help you save a lot of fees when trying to draft items like your will. Considering how much a lawyer can cost, it’s worth it to utilize any that are available through your company instead.

Save Money for Matching Programs

With many tech companies, you can get free money from your employer when it comes to saving for retirement. If you have a 401(k), your company may match your contributions up to a certain percentage of your salary (usually 1-3%). However, if you’re making those contributions, you won’t be able to take advantage.

I understand that budgeting with your salary can be a challenge, mainly if you’re living in a high-cost area with a family. However, considering that this is free money coming in, you have to try and get as much of it as possible. Even if you can’t max out your benefits each month, save at least a little bit so that your employer will match. Over time, these contributions will add up and enable you to get more out of your retirement fund.

According to recent research, up to 75% of employees are not taking advantage of employer matching programs. Don’t be one of those people.

Utilize Health Savings Accounts (HSAs)

To help cut down on costs, many employers are switching to plans that have a high deductible. That means that you have to pay more money out of pocket when you go to the doctor. Although you can’t always switch to a better plan, you can utilize health savings accounts instead.

The primary benefit of these accounts is that they grow money tax-free. The funds have to be utilized for medical expenses while the money is in there, but if you don’t need it for your health, you can withdraw the funds later on with the tax-free earnings.

Other options include health reimbursement arrangements (HRAs) and flexible spending accounts (FSAs). There are benefits and drawbacks to each plan, so you’ll want to do some research first to understand the differences so that you make the right choice. In some cases, you may be able to take advantage of multiple account options, so feel free to do that if it’s going to help lower your overall medical expenses.

The other thing to consider is that if you’ve hit your deductible for the year, you can get subsidized healthcare until it resets at the beginning of the new cycle. Thus, if you know that you’re close to hitting your deductible (or you’ve hit it already), you can maximize your benefits by scheduling doctor’s visits in the meantime. Getting free health services is always beneficial, so why not take advantage while you can?

Look for Preventative Health Benefits

These days, health insurance packages are starting to reward people who do more to stay healthy and lead active lifestyles. In some cases, all it takes to get additional benefits is to join a gym or participate in a weight loss challenge. If you’re doing these things already, then why not get some extra incentives out of it at the same time? If you aren’t, then consider how they can impact your health and well-being as well as your wallet.

Enroll in Disability Insurance

If you’re still young and in shape, then there’s a tendency to feel invincible. However, you never know what can happen, which is why you want to have as much insurance as possible. Disability insurance offered by your employer can help recover up to 70% of your salary if you’re knocked out of commission because of an injury that prevents you from working. Without this insurance, you’ll have to rely solely on your savings, so consider how long that will last.

When looking at these plans, see what options are available for both short and long-term coverage. If you’re out of action for a while (i.e., several years), you can’t trust that your savings will hold out for that long.

One thing to consider is if you can pay your premiums pre or post-tax. If you can pay for them with your net income, then the benefits will be tax-free if they ever kick in. If you don’t do this, then you’ll have to pay taxes on your insurance earnings, which can be a substantial hit for your bottom line. If your employer covers the costs, then you don’t have a choice, but it’s still better to have it than not.

Look for Group Legal Plans

As a tech professional, there are several legal documents that you should take care of whenever you get a chance. You should draft your will, powers of attorney, and an advanced health care directive (which indicates who will make medical decisions on your behalf if you can’t).

Since these documents require a lawyer, you should see if you can take advantage of group legal plans. More and more companies are starting to offer this service, which can help you save a lot of money in legal fees. Getting these documents drafted as soon as possible is always a good idea, so utilize these services whenever you can.

Get Life Insurance

As with disability insurance, many young tech professionals don’t see the need of having a plan in place. However, you could be putting your family in a financial bind if the worst should happen and you’re not prepared.

One thing to remember about life insurance policies is that they can be more beneficial the sooner you enroll. If you get permanent insurance, you can usually save money that can either be used for retirement or passed on to your children after you die. Thus, the earlier you can start contributing to it, the more money you can earn. In many cases, this will be tax-free income.

The primary benefit of getting this type of insurance through your company is that you can usually save a lot of money in premiums over the long term. However, plan options may be limited, so be sure to shop around as well to make sure that you’re getting the coverage you want.

See Which Benefits Can Roll Over

It’s not unusual for tech professionals to switch to another company at several points in their career, which is part of the reason why so many of them choose not to enroll in benefits packages. After all, if I’m only planning on being here for a couple of years at most, why should I spend more of my paycheck on benefits I may or may not be able to use?

However, this mentality can wind up costing you in the long run. Not only is it beneficial to have these perks in place just in case something happens while you’re at the company, but you may be able to take some of them with you. For example, rolling over your retirement funds to a different company ensures that your contributions stay in place.

Thus, when looking through your employee benefits packages, you want to be sure that you understand which options you can keep if and when you move to another position. If anything can roll over (such as life insurance), then there’s no reason not to take advantage as soon as possible.

Bottom Line

The vast majority of employees don’t use their benefits, which means that they are missing out. I’ve seen it happen far too many times, and the stats back it up. Don’t be one of the ones who makes this mistake and kicks themselves later on for not taking action. They’re your benefits – use them.

About Woven Capital

Aaron Hatch is a Certified Financial Planner and co-founder of Woven Capital, a fee-only financial planning and investment management firm that specializes in helping people balance life, work, and community. Aaron has been quoted in various publications, including The Chicago Tribune, US News and World Report, and the Huffington Post among others. Aaron can be reached at aaron@wovencapital.net