It is the wonderful time of the year when many employees have the added task of reviewing and selecting their employee benefit elections for the next year. Below are a few general thoughts on employee benefits. Please do not take any of this as a specific recommendation as each individual’s situation is different.
Medical coverage is one of the primary benefits people are selecting. I am frequently seeing clients choose the option that allows for an HSA contribution (high deductible health plan) if they have no or minimal expected medical expenses for the year. This is because after you take into account the premium, tax savings on the premium, tax savings on the HSA contribution, and the amount the employer contributes to the HSA (if any) it is frequently quite a bit less out of pocket (if no medical expense) than the option without the HSA. Please note, typically the deductible and out-of-pocket max are higher with these plans.
Long-term disability insurance is another very important benefit. There is little else that would be as financially devastating as a disability that makes it so you can’t work for several years or even several decades. When signing up for long-term disability, it typically makes sense to pay premiums on an after-tax basis (including the premiums in taxable income) if you have the option. When you do this, either a portion or all of the benefits you receive upon disability would be tax-free. Please note many group policies are not as robust as private policies. For example, their definition of disability may be stricter or they may only cover a disability-related mental condition for a short time period.
The third primary option is group life insurance. Making sure you have the correct amount of coverage is paramount here.
There are a number of specific options someone who is pregnant or who is expecting to become pregnant could choose. For example, some short-term disability policies cover a portion of maternity leave. Make sure to call the insurance rep and walk through your specific situation to see if it would provide any benefit. Sometimes you have to have the policy in place for a certain length of time prior to becoming pregnant. Once again none of this is a specific recommendation. Feel free to reach out if you would like me to speak to your situation specifically. It is not uncommon for me to review clients’ employee benefits.
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