Melanie’s Note: I have a special treat for you today. My mom, who is pretty much my #1 fan and so supportive, is on the blog today sharing her expertise in employee benefits. Whenever I have questions, or start a new job, I ask her for advice. Enjoy and feel free to ask any questions.
Dear Debt Readers:
I am continually inspired by your comments, guest posts and “Dear Debt” letters. I applaud your courage in opening your financial underwear drawer and sharing your debt and financial stories!
For the past 30 or so years, I’ve been in the Human Resources field both administering and managing employee benefit plans and I wanted to share my top 10 insights with the “Dear Debt” readers in hopes that I will help you avoid some financial landmines in selecting and using your employee benefits.
1. Starting or Changing Jobs?
You wouldn’t take a new job without finding out how much you’re going to be paid so you should apply that same logic to finding out about the company’s benefit program before you accept that new job. Key things to find out include:
- What plans do they offer?
- How much will you have to pay?
- What doctors can you use?
- Who can be covered under your plan?
Afraid to ask these questions? Check out the company website as many will list some basic benefit information in their “Careers” or “Working for Us” sections.
2. Enroll timely and choose wisely
Most companies give you a window in which to make your choices and if you miss this opportunity, you can (depending on the company) be assigned coverage or be without coverage. Take the time to enroll within the prescribed time or you may have to wait for a year to make changes
3. Don’t misrepresent your relationship status
Does your company permit you to enroll your domestic partner in the company medical plan? If so – that’s great. If they don’t – be very careful about misrepresenting your relationship status just to get insurance for your honey. It’s very common now for companies to audit their plans to identify these ineligible dependents. If you’re found to have a non-eligible dependent you could be charged for their medical expenses paid by the plan and could quite possible lose your job as well. Ask yourself if it’s worth this risk?
4. Find out how to use your plan – before you have to use it!
When you’re sick, your first priority should be to get well. Worrying about the cost of care doesn’t help your recovery.
I was pregnant with Melanie when I ended up in the hospital for the first time. And it wasn’t for her delivery. I had the misfortune of rupturing my appendix when I was six months pregnant and ended up in the hospital for two weeks. This was before I was in the employee benefits field. While my first priority was to get better and ensure Melanie was okay as well, I wondered how we’d handle our portion of a lengthy hospital stay. This worry was further exacerbated when Melanie was born two months early and was in the NICU for almost two months.
We were very fortunate on so many levels.
- We were both healthy!
- Although our combined bills were close to 100k (this was almost 30 years ago so I shudder to think what that would be today), our out-of-pocket was ZERO! This was primarily because the care was provided at the hospital I worked at so they waived deductibles and coinsurance.
5. Don’t forget the value of other plans such as life and disability insurance
You’ll want to get some level of coverage in both of these categories to provide for your loved ones when you pass on or to provide you with income if you can’t work.
I’m fortunate to live in the State of California where we have State Disability Insurance which is deducted from my pay like any other taxes. For any medical leave that I’ve been on over the years, I’ve been fortunate to have full pay by using a combination of California State Disability and sick leave.
As for life insurance – you’ll want to have coverage that isn’t tied to your work so if you change jobs and they don’t offer as much coverage you won’t have a decrease.
6. Don’t forget to update your Benefits as your life changes
Getting married? Having a baby? Got divorced? Make sure you review and update your benefits accordingly as your life changes. Most companies allow you a limited window of about 30 days to make changes after a life event occurs. Don’t miss this window! One of the most heart-breaking part of my job is to tell a new parent that they have to wait to enroll their baby into the plan because they missed this window.
7. Got divorced? Make sure you remove your ex from all of your plans!
Imagine how you’d feel if your loved one passed away and you discovered that s/he didn’t update his beneficiary designation to include you? Worse yet – what if the ex was still listed? Imagine how I have felt having to deliver this news!
8. Don’t forget to save for retirement
Here are my tips to make it easier:
- If your company provides a match – you’re leaving money on the table if you don’t get in the plan ASAP.
- It’s becoming more common place for companies to auto-enroll employees in the plan. If your company does this – just keep it going – don’t cancel. What you don’t “see” as take home pay – you won’t miss.
- If the investment choice seem overwhelming, many companies offer life cycle funds which are rebalanced as you get closer to retirement. Simply pick a fund that is closest to the year you’ll retire.
- If you want to contribute more but want to see the impact on your pay before you make this commitment – check out sites like Paycheckcity.com to do some modeling.
- I was once able to increase my savings by $100 and not impact my take home pay because I offset the increase with a change in my tax withholding
9. Educational Reimbursement
Many companies will reimburse your college coursework after you’ve worked for them for a period of time. Typically there are annual limits and may exclude fees and the cost of books. In my old job, I was able to obtain two professional certifications using this benefit.
10. Take advantage of any unique benefits your employer offers.
My current employer offers up to $400 for wellness activities if you complete a simple Health Risk Assessment. Other unique benefits that might be offered include discounts to movies; amusement parks or plans such as pet insurance.
What is the most valued benefit you have at your job? What is the most unique offering?
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13 comments
Nice to meet you, Melanie’s mom!!! Wow that must’ve been scary pregnancy stuff!! So glad it all worked out and you both were okay. When I was expecting our first, there were major medical issues too and we were lucky too that we didn’t see a bill. My, how times have changed! We are blessed in that my husband works for a great company with awesome benefits all the way around. Thanks for a great and informative article.
Interesting point about the dependents. I wonder how they would determine if someone was ineligible to be covered as a dependent.
My current favourite things about my job are informal – the flexibility and the random free things I get through working in media.
Hi Melanie’s Mom! I am Melanie’s #2 fan. 🙂 Thank you for the great tips on how to maximize benefits at work. I am thankful to currently work with an employer that does offer benefits because I’ve been on both sides of the coin and this one is certainly better to say the least.
Great point. My most valued benefit is hands down health insurance. I rarely use it, but it is nice to have.
The one thing I wish my employer did was match my 403b contributions, but alas, public school teachers do not get that luxury, ha.
Great tips, Melanie’s Mom! All great points, but the one I am going to focus on is my friends situation.
She and her bf had been together for four years, but were distance for the majority of that time (in two different provinces no less). When he got a good job they moved across the country together, started living together, and then she was put on his benefits. But the problem I told her at that point was that they weren’t common-law, even if they’d been together for so many years. I told her they could easily audit that and see that they lived in two different places for the previous years and then her benefits would be cut. We actually got into a huge fight over it, and she got super pissed about, sending me about 12 texts in a row afterwards because her lawyer boyfriend said that common-law isn’t well-defined, yadda yadda yadda. Well I know it is well-defined by the federal government, and they didn’t meet any of the criteria that was laid out there.
Okay, I’ll stop ranting. Basically, don’t misrepresent because it can sometimes not be worth the risk!
This is a great guide to benefits. Thanks for sharing Melanie’s mom 🙂
Excellent advice to consider when comparing the costs of benefit programs through your employer. Be sure to look at out of pocket expenses to find out how much you are responsible for paying should you find yourself having to spend time at a hospital due to surgery or illness. Make sure you are aware of what services and procedures are included in your plan as well!
There are many people that do not even take advantage of the company 401K match. That is a no-brainer.
I take great pride in the amount of work benefits I use. Every year we get a statement that shows the dollar amount and services that we used that my work paid for, and last year it was well over $10,000. This year will be at least double that. It’s part of your compensation package, so you should definitely be using it!
We also opt in to life insurance, because it’s much cheaper through my employer.
What great tips, thanks Melanie’s mom!! I agree about not lying about the dependents part – there have been major audits lately and some of my friends were dinged for it (though I think they just had to be taken off, not sure if there were any monetary penalties). So very nice to meet you and I’d love to hear more tips!
I like number 4, because many people don’t really learn about the plan until they really need it and are devastated to learn about what they really bought into.
It’s awesome your mom is so supportive Melanie, AND that she has some insightful tips to offer! I wish more people were aware of how their benefits worked before they started using them- not only for their sake, but it would make my job easier as well 🙂