Whether you are entering the world of work for the first time or returning after a break, your first task will likely be choosing benefits. New employees are often given a login to an HR portal and asked to select their benefits without always knowing what benefits are available.
But what should you choose? Don’t stress yourself on your first day! Here are six common performance options that you should consider to stretch your money. Your employer can subsidize some of these. Others may have to contribute out of their own pocket, but with pre-tax dollars. This means that, depending on your income tax bracket, you will receive a discount of up to 37%.
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1. Health insurance is a must
The premium may be expensive, but health insurance is vital for almost everyone. Look for a plan that includes your doctor as not all providers are included in all plans. If you don’t have a doctor, the first thing to consider is a plan associated with a large hospital. If you are generally healthy, you can opt for a cheaper rate, but know that it will likely involve a lot of co-payments. If you are covered by a spouse or parent, you can opt out of health insurance, but check your coverage before making a decision. Health insurance can help you get the care you need to turn a small health problem into a big one and save you money in the long run.
2. HSAs, FSA, and Limited-Purpose FSAs are nice add-ons
In addition to health insurance, many employers offer tax-saving Health Savings Accounts (HSA), Flexible Spending Accounts (FSAs) or Limited-Purpose FSAs (FSAs only for eye and dental insurance). With these plans, you set aside pre-tax dollars and use the money for expenses that are not covered by insurance. HSAs are only available with some types of health plans, and money you don’t use now can be used in the future. FSAs and Limited-Purpose FSAs are both use-it-or-lose-it accounts. You can deposit up to $ 2,750 a year before tax, which is a lot of money to give up if you can’t spend it. Compare that to an HSA: The pre-tax deposits in an HSA are yours forever, so a contribution can be a way to save for future health expenses even after you retire.
3. Disability is (usually) more important than life insurance
Many employers offer employees the opportunity to take out discounted life and occupational disability insurance. If you are young and can afford insurance coverage, disability insurance can be a good choice. With occupational disability insurance, your livelihood is covered if you become unable to work, which is a major risk. Life insurance is important if you have dependents or a mortgage, but you probably don’t need it if you are a single tenant.
4. Retirement planning is important no matter how old you are
If your employer offers a retirement plan, signing up is a good idea. While you may not be able to afford the full contribution on your first job, consider contributing enough cash to receive all of your employer’s offers, as it means a tax-free increase in your pay. The tax law allows many different types of retirement plans. The more common ones include 401 (k) plans for for-profit companies and 403 (b) plans for nonprofits that allow employees to make contributions with pre-tax dollars. Your money will then be accumulated tax-free until you retire.
5. Share purchase plans can pay off
You may have been granted stock options as part of your compensation plan. In addition, many public corporations (and some private ones) allow their employees to buy stocks with each paycheck, usually at a discount to the market price. If you can afford it and are happy with your employer’s prospects, this can be excellent business as you can earn stock regularly and at a lower cost (and no commission) than usual. Some stock awards are based on how long you’ve been at Are employers; You may have to work a certain number of years before your stocks or options are fully vested. Shares that you buy with your own money are yours no matter what.
6. Transit benefits are very many for commuters
If you regularly drive to work by car or public transit, you can use public transit to cover bus, train, or parking bills for up to $ 270 per month before tax. If you use public transport regularly, this is a great deal: the monthly pass that gets you to work and back should get you around on weekends and holidays too. Not all employers offer it because not all employees use it. If you have free parking or work remotely, you may want to skip the transit benefits option and choose a benefit that makes more sense to you.
If you find that your benefit package isn’t working for you, don’t worry. You can probably find a way to spend money in your FSA and you don’t have to change jobs to change benefits. You can make new decisions if your employer keeps matriculation open, usually at the end of the year. Now you can focus on more important things, like remembering where you parked.
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