Treavor Dodsworth CFP®, CPA, CKA®
#63 - Employee Benefit Notes
Every year, typically about this time, employees around the country receive packets of information about their employee benefits. While I personally enjoy (maybe too much) looking at the employee benefit options at my wife’s work, I realize for some this is scarier than any of the Halloween festivities. Today, I wanted to send over some miscellaneous employee benefit notes. Hopefully, these miscellaneous notes give you a little more information when looking at your benefits.
Just because an insurance plan has a more expensive monthly cost doesn’t necessarily mean it provides better coverage for your situation.
Typically when a medical insurance plan lists an out-of-pocket maximum it is referring to the most that you as the insured may pay over the covered period (excluding premiums). This is usually the opposite for dental. When a dental plan lists a maximum amount, it is typically referring to the most that the insurance provider will pay over the covered period.
Paying an attorney to complete or update your legal documents can be very expensive. One potentially inexpensive way to complete this is through an employee benefit legal plan. These plans vary in what they cover and the monthly cost you will pay but occasionally they will provide access to an attorney who will complete your legal documents for a nominal cost.
Occasionally, employers will give employees the option to pay long term disability premiums either on a pre-tax basis (disability premiums aren’t subject to income tax) or post-tax basis (disability premiums are subject to income tax). In most situations, it makes sense to pay long-term disability premiums on a post-tax basis, as then the disability payments (if you did become disabled) are usually not subject to income tax.
If you are pregnant or are expecting other major known medical expenses, you need to look at your employee benefits in a different light. There are several benefits that need to be reviewed to see if they make sense in your situation - short term disability, hospital indemnity, a more robust medical plan, etc.
There are exceptions to much of what I mentioned above so be sure to review your specific options and situation. If you are a client, definitely reach out when you have your employee benefit options so we can review what specifically makes sense for you.
Interesting Article(s) or Video(s)
IRA Help - Don't Overlook After-Tax Plan Contributions and More On After-Tax Contributions
Many individuals aren’t aware that after-tax contributions exist but they can make sense in some situations (most notably the mega backdoor Roth strategy). After-tax contribution earnings grow tax-deferred. There may be a situation where you can ultimately get them out tax-free but this is limited.
Thank you for reading!