A few times a year, I like to go through my husband and I’s employer benefits to be sure we are taking full advantage of everything that is offered to us. While the baby napped on Friday, I decided to sit down and take a look at everything that our employers had to offer us, and whether we were taking full advantage of it. I consider myself to be pretty savvy when it comes to these things, but it turns out I was missing out on some stuff. This got me to thinking that there may be other people who aren’t aware that they are passing some of these things up. Let’s take a look at some benefits, and how to use them correctly.
Flexible Spending Accounts (FSA): Flex spending accounts are accounts that you can put money into pretax, and then use that money for qualifying medical expenses. This is a great way to lower your taxable income. One thing to be aware of, though, is that you can’t roll this money over year to year. What you don’t use, you lose. If you company offers this benefit, check to see what qualified expenses are included, then estimate how much you will spend in that year. We put money into my FSA when I was pregnant, because we knew we would be paying for medical expenses out of pocket. This saved us a lot of money in taxes. To get an idea of how much you can save, take a look at these numbers. If you make $50,000 a year and you put the maximum of $2,550 into your FSA, you can save yourself a potential $766.25 in taxes! If you want to punch your numbers into this equation, you can use the handy little calculator tool Paychex has at http://www.paychex.com/a/demos/section-125-calculators/employee-fsa-calculator.aspx.
Health Savings Account (HSA): My husband works for a company that has a high deductible health insurance plan. Because of this, they offer an HSA, and even contribute to it every year. The biggest difference between an FSA and an HSA is that the money left over in an HSA can be rolled over from year to year. The potential tax savings are similar to the FSA above, potentially $766.25 a year!
Dependent Care Account: The dependent care account usually goes along with the FSA above, but this is for daycare costs associated while you are at your job. The money in this does not roll over either, but you can change the contributions a lot easier. Say for example that part way through the year you change daycare and your rate decreases, you can change your contribution to reflect the new amount. You will want to talk with your HR Representative as soon as you are aware of changes, because the contributions can usually only be done within 30 days of the change. You cannot double dip for tax purposes, which means you cannot have a dependent care account but then also deduct your child care expenses on your taxes. There is a lot of savings in this as well, depending on your tax bracket. For someone making $50,000 who contributes the maximum of $5,000 per year can potentially save $282.50 in tax savings. You can find your savings using the Paychex calculator at http://www.paychex.com/a/demos/section-125-calculators/employee-fsa-calculator.aspx.
Gym Memberships: You may not be a die-hard exercise junkie, but you can still take advantage of gym memberships your employer may offer. My employer offers $30 per month reimbursement for a gym membership. My local YMCA monthly cost is $31, and free child care when you work out. So for $1 a month, I can have a place to go and unwind. Whether you choose to swim, use the sauna, or take a walk while you watch your favorite sitcom, gym memberships can do double duty. You can exercise and get some needed alone time for yourself! If you already have a gym membership but aren’t being reimbursed for it, get your receipts out and start collecting your free money!
401K: This is usually a hot topic on any finance forum or blog you may be reading. Everyone has different advice about retirement and savings. Whatever you believe, you should definitely consider the free money in an employer funded 401K. A lot of companies will offer a company match. For example, they will match you dollar for dollar up to a 5% contribution. That means if you put in $50, they also put in $50. That $50 is essentially like giving yourself a raise every paycheck, being able to use it when you retire. There is one thing you do need to consider, however, and that is the vesting schedule. Different companies do things differently, but most will have a waiting period before you can keep the money they have contributed. For example, they may have you become vested partly throughout a couple of years, becoming 20% more vested each year until you hit 100%. Or you may be 0% vested until you hit 4 years, then you are 100% vested. No matter what, you will always be able to keep your contribution, so don’t let that stop you from contributing. But if you only plan to stay with you employer for a year or so, you may consider just contributing to your IRA instead. Whatever you choose, understand what you company offers first.
Company sponsored wellness programs: My company is a large fortune 500 company, so they have a lot of employees. This ends up benefiting me tremendously in the way of wellness programs. They participate in many events such as 5k’s, and they usually subsidize the cost of entry for employees. In addition, they create their own programs. Over the holiday, there was a program you could join that was geared towards maintaining your weight and not gaining over the holiday. They sent out weekly tips to avoid packing on the pounds. When the program was over, you received a prize if you maintained your weight. These little perks some people do not think about or choose not to participate in. Reconsider! Not only did I have motivation throughout the holidays, but I got a neat glow arm band for use when I ran outside at night. Double bonus!
These are just some of the added benefits (aside from health, dental, and vision) that employers may offer. It is wise to look at all the benefits offered to you and see what you are missing out on! What other benefits are you offered through your employer? Please share below in the comments.