4 Ways Employer Benefits Can Help You Save Money and Build Financial Security

Signing up for benefits offered by your employer can be one of the smartest financial moves you make. These benefits often provide substantial savings opportunities, helping you build a more secure future while handling everyday expenses more efficiently. Here are four tips for making the most of your annual enrollment and maximizing the financial advantages your employer offers.

1. Evaluate Your Health Care Needs

One of the most significant financial decisions you make each year involves selecting the right health care plan. Health care costs can vary dramatically depending on the plan you choose, so it’s important to evaluate your needs before committing.

Here are a few key factors to consider when reviewing your health care plan options:

• Premiums: How much will you pay each month for your coverage?
• Deductibles: What are the costs you’ll need to pay out of pocket before your insurance kicks in?
• Copays: How much are you responsible for when you visit a doctor or fill a prescription?
• Health Savings Accounts (HSAs): Does your employer contribute to an HSA? HSAs offer tax-free savings that can help cover medical expenses now or in the future.
• Network providers: Are your preferred doctors and hospitals in-network?

When reviewing your options, think about how much health care you used in the past year and whether your usage might change in the coming year. If you anticipate needing more care—such as for a new child or a health condition—you may want to choose a plan with lower deductibles and copays, even if the premium is higher.

Also, make sure you’re fully aware of what your plan covers. Preventive care services such as annual check-ups, screenings, immunizations, and even mental health counseling might be covered at no additional cost. Skipping these services due to cost concerns can be a missed opportunity to save.

Don’t forget about vision and dental care. Even if your health plan covers emergency dental work or basic vision exams, your employer may offer additional coverage that could reduce your out-of-pocket costs for routine dental or vision services. Adding these plans can save you money on regular checkups, glasses, and dental procedures, making them worth considering during enrollment.

2. Use Tax-Advantaged Health Savings Accounts

Health savings accounts (HSAs) and flexible spending accounts (FSAs) are valuable tools for covering health care costs while offering significant tax benefits.

Health Savings Account (HSA)

If your health plan is HSA-eligible, this account can offer triple tax advantages:

• Contributions are tax-free: The money you contribute reduces your taxable income.
• Growth is tax-free: Any investment earnings within the account are not taxed.
• Withdrawals for qualified medical expenses are tax-free: You won’t owe taxes on the funds you use for health care costs.

HSAs are also flexible. The funds roll over year to year, so you’re not required to spend them all by year-end, allowing you to build a long-term health care savings account. If you switch jobs, you can keep your HSA and continue contributing as long as you have an HSA-eligible plan.

In 2024, the HSA contribution limits are $4,150 for individual coverage and $8,300 for family coverage. If you’re 55 or older, you can make an additional $1,000 in catch-up contributions. Maximizing your HSA contributions—especially if your employer matches some of them—is a powerful way to save for health expenses now and in the future.

Flexible Spending Account (FSA)

An FSA allows you to set aside money pre-tax for medical expenses not covered by insurance, like copays and prescription costs. There are two types of FSAs: the health FSA, which covers general medical expenses, and the limited-purpose FSA, which can be used for dental, vision, and preventive care in conjunction with an HSA.

Unlike HSAs, FSAs typically have a “use-it-or-lose-it” rule, meaning any unspent funds at the end of the year may be forfeited. Therefore, be conservative when estimating your contribution, only setting aside what you expect to spend on eligible expenses within the year.

3. Maximize Your Retirement Savings

Retirement benefits like 401(k) plans are one of the most valuable employer-provided benefits. If your employer offers a 401(k) plan, take full advantage of it. Contributing to a retirement plan has both immediate and long-term financial benefits:

• Contributions to a traditional 401(k) are made pre-tax, which lowers your taxable income for the current year.
• Contributions to a Roth 401(k) are made after taxes, meaning qualified withdrawals in retirement will be tax-free.

Many employers offer a matching contribution, typically matching a percentage of your contribution up to a certain limit. This is essentially free money for your retirement, so aim to contribute enough to get the full match. Ideally, you should aim to save at least 15% of your income for retirement, including the employer match.

Some employers also offer auto-increase options, which gradually increase your contribution rate over time. This feature allows you to boost your retirement savings without having to manually adjust your contributions, making it easier to reach your savings goals.

4. Explore Supplemental Benefits for Added Savings

While health care and retirement plans are often the most significant benefits, employers also offer other benefits that can help you save money and improve your overall financial well-being. These benefits include:

• Life and disability insurance: Employer-sponsored plans are often more affordable than purchasing individual policies. These plans can provide financial security for your family if you pass away or are unable to work due to illness or injury.
• Employee assistance programs (EAPs): Many employers offer access to EAPs, which provide free or low-cost mental health counseling, legal advice, financial planning services, and more. These programs can save you hundreds of dollars in out-of-pocket costs.
• Education and student loan assistance: Some employers provide tuition reimbursement or student loan repayment assistance. This benefit can help you advance your career or pay down existing debt, reducing financial stress.
• Wellness programs: Wellness initiatives, like discounted gym memberships, smoking cessation programs, or financial wellness workshops, are often available at little to no cost. These programs can improve your health and financial outlook.

Taking full advantage of these supplemental benefits can improve your financial health, reduce stress, and even save you time.

Conclusion: Unlock the Full Potential of Your Employer Benefits

Employer-provided benefits are more than just perks—they are essential tools that can help you build a strong financial foundation. From health care and tax-advantaged accounts to retirement savings and supplemental benefits, each offers a unique opportunity to save money and plan for the future.

By carefully evaluating your options during annual enrollment and using these benefits to their full potential, you can reduce expenses, increase savings, and take control of your financial future. Consider working with a financial professional to ensure you’re making the best decisions based on your unique circumstances.