Making the Most of Open Enrollment: A Wealth Management Advisor’s View on Employee Benefits

As the annual open enrollment season approaches, it’s time to review, reconsider and rearrange your employee benefits with the help of a seasoned wealth management advisor. This period is an invaluable chance to optimize your benefits package for your financial well-being and future security. In this quick guide, Ellen Horan, CFP^®, CPA, Partner, delves deeper into the world of employee benefits, providing insights and strategies to help take you from “head scratching” questions to “no brainer” decisions during open enrollment.

Dependent Care FSA—Immediate Tax Savings

For those of us with childcare costs, a Dependent Care Flexible Spending Account (FSA) can be a game-changer. Maxing out this account is a smart decision, as it offers immediate tax savings. The beauty of the Dependent Care FSA is that it allows you to set aside pre-tax dollars to cover eligible childcare expenses, effectively reducing your taxable income and putting money back in your pocket.

Health Insurance—Low Premium/High Deductible & HSA

When it comes to health insurance, it’s essential to carefully consider your options. For many employees, choosing a low premium/high deductible plan is a wise move. Not only does this choice lower your monthly premiums, but it also opens the door to contribute to a Health Savings Account (HSA). By directing your premium savings into an HSA, you can enjoy substantial insurance premium and tax savings. What’s more, if you invest these HSA funds wisely, you can watch your savings grow over time. An experienced wealth management advisor can assist with your HSA savings and investment strategy, ensuring your portfolio is diversified, aligned with your risk tolerance, and tax-optimized for maximum growth.

401(k) Matching—A Lucrative Opportunity

The 401(k) matching benefit is a hidden gem in many employee benefits packages. Virtually every employee should aim to contribute enough to their 401(k) to meet their employer’s match. This seemingly simple decision can result in an immediate “profit” annually. However, to supercharge your retirement savings, it’s advisable to align your contribution with your desired savings rate, ensuring that you’re on track for a comfortable and secure financial future.

Retirement Plans—Extra Catch-Up Opportunity

If you’re approaching retirement age, there’s one more “no brainer” decision to consider. If you’re over age 50, take advantage of the extra catch-up contributions allowed in your retirement accounts. This is a valuable opportunity to boost your retirement savings and build the financial security you need in your golden years.

Life and Other Insurance—Explore Your Options

Life insurance is an essential component of many benefits packages, but it’s often less expensive when purchased directly, particularly if you’re in good health. While group-based plans may be convenient, exploring individual policies could save you money in the long run. To make the best decision, carefully evaluate your life insurance needs with an experienced wealth management advisor who can assist in decision-making regarding a personal policy that aligns with your unique circumstances. Alternatively, dental and vision plans are generally straightforward decisions. These benefits may not require extensive analysis or overthinking. Simply pick a plan that suits your needs and be sure to make the most of any preventive care benefits they offer.

Disability Coverage—The Tax Advantage

Disability coverage is a valuable but often overlooked benefit. Many employees get it wrong by not realizing they can elect to have their employer-paid premiums included in their income. This might seem counterintuitive, but it’s a shrewd move because, in the event of a claim, your benefit payments will be tax-free rather than taxable. This can save you a significant amount of money in the long run, ensuring that you receive the financial support you need during challenging times.

Short-Term Disability—A Gender-Biased Opportunity

For women considering having children, enrolling in short-term disability coverage can be a strategic move. It’s arguably one of the best investments you can make. By paying a relatively small premium for coverage, you can receive thousands of dollars in return during maternity leave, significantly easing the financial burden of having a child.

Helping You Get There…

Making informed choices and taking advantage of opportunities like FSA contributions, HSA savings, 401(k) matching, and more, enhances your financial well-being and can secure a brighter future. Make sure to review your options carefully and seek guidance from a wealth management advisor if needed, as your choices can have a lasting impact on your financial health. With the right decisions, you can make open enrollment a “no brainer” for your financial future. Connect with a member of the Boulay Financial Advisors, LLC team today to better understand your options during open enrollment.