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Mar 02, 2021

Making the Most of Your Company’s Benefits

Social Security

Whether you are a recent college graduate or changing companies in the course of a long career, every new job comes with a new set of benefits.  While you are concerned with mapping out your commute, determining where to park, and greeting your new colleagues in the office, HR will promptly deliver you a benefits guide with all of the options you have as a new employee.

This benefits guide will contain everything you need to know about health insurance, prescription benefits, dental insurance, vision insurance, life insurance, 401(k) information, as well as additional paid and voluntary benefits.  Bottom line: It’s a lot of information to digest.

Every company is different, but the following list can help you prioritize what benefits you will want to consider when starting a new job:

          1. Saving for Retirement

When it comes to saving for retirement, keep it simple. The 401(k) is your primary vehicle to build a strong retirement portfolio. If you are just starting out in your career, student loans and expensive childcare costs can make contributing to your 401(k) seem like something you can postpone. But if you do, you may be leaving free money on the table.

If your company offers 401(k) matching, strongly consider a budget that allows you to make an annual contribution that receives the full match from your company.  If you can contribute more, do so. But at a minimum, read the benefits guide to determine the maximum amount your company will match, and plan on contributing that amount each year. If not, you will be leaving free money on the table - and will more than likely regret it once you start nearing retirement.

          1. Understand Health Insurance

Nothing in your benefits guide is more confusing than your company's medical and prescription plans. Baird Retirement Management has written a piece on this exact topic, helping you understand the most commonly used terms when evaluating health insurance plans. You can read that article HERE.

One tip is to understand the relationship between monthly premiums and deductibles. Do not automatically assume that a lower monthly premium will save you money. The amount you save on healthcare costs depends on your annual demand for healthcare services. If you or a family member have a chronic illness that requires consistent use of healthcare services and prescriptions, you may want to consider the higher monthly premium that will lower your annual deductible and maximum out-of-pocket limits.

          1. Open a Health Savings Account

Another important thing to consider is opening a Health Savings Account (HSA) if available. An HSA is a personal savings account that allows you to set aside pre-tax money to help save for health care expenses. If your company offers a high-deductible plan and you are not enrolled in Medicare, you will be able to open an HSA. Review the terms of your employer’s benefits guide regarding the HSA because if you meet certain criteria throughout the year, your employer may contribute money to your HSA. To learn more about HSAs, see Baird Retirement Management’s previous article HERE.

          1. Understand Your Employer’s Wellness Program

Many companies are now offering programs that encourage employees to be active and healthy. These programs are often holistic in nature and provide competitions and incentives to maintain a healthy diet, engage in mindfulness training, exercise, or even financial planning.

Your employer may even provide a financial incentive to help you maintain a healthy lifestyle.  For example, your employer may require you to achieve a certain level of points that coincide with various health activities managed by a third party. Activities may range from bloodwork, smoking cessation plans, or participating in a steps competition. If you fail to complete the required health activities, you may see your monthly medical premium increase the following year. Be sure to check your benefits guide to fully understand how to comply with your employer’s health and activities requirements to ensure that your annual medical premium costs do not unnecessarily increase by thousands of dollars.

          1. Additional Benefits

To be competitive in the job market, some companies offer voluntary benefits that could help you save money, like tuition reimbursement for working toward a degree or certification that can advance your career, or gym membership discounts.

If you are financially supporting a 501(c)3 nonprofit organization, your company may match a certain percentage of what you donate, which can help you increase the amount you contribute to your favorite charity.

Other potential benefits you may be missing out on include pet insurance, increased life insurance coverage beyond the standard amount your company offers, and telehealth medical experts who can provide efficient and affordable healthcare services virtually.

Your company’s benefits guide can be one long intimidating PDF that can quickly become a nuisance in the midst of your transition to a new employer. But take the time to carefully review your benefits and be prepared to contact HR with any question as you may end up missing out on great opportunities or costing yourself thousands of dollars in potential savings.


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