Your Guide to Making the Most of Workplace Benefits

Employer-provided benefits can play a big role in your overall financial health — helping you save money, protect your income, and support your family. But maximizing employer benefits for your distinct situation isn’t automatic. It takes a little digging and some smart decision-making. 

When evaluating your employee benefits packages, it’s important to understand how each offering works and how it fits into your personal and financial goals. If you work remotely or have moved recently, check for any state rules that might affect your coverage. You may also want to take note of these: 5 Mistakes to Avoid During Employer-Benefits Open Enrollment. 

This article breaks down the key things to think about when reviewing and choosing employee benefits. It wraps up with a handy checklist to help you stay focused. 

Medical insurance plans 

Your options for health insurance plans through work may include health, vision, and dental. Think about your age, health, income, cash flow, and emergency fund. These factors matter when choosing between high-deductible and low-deductible plans, or high and low co-pay options. 

• If you are married or have dependents, analyze the benefits and costs of adding them to your plan. Determine how much your employer pays for your coverage and compare this to other plans. Remember to include prescription coverage and in-network providers. 

• Many employers provide more than basic coverage. They offer Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs), and Flexible Spending Accounts (FSAs). These accounts help with health care and dependent care costs.
  Take advantage of employer contributions to these accounts but be mindful of “use-it-or-lose-it” policies associated with FSAs.  
  HRAs can provide rewards for healthy habits, like yearly checkups or exercise tracking. However, moving these benefits can be a problem if you switch jobs.
  Some plans require you to use all your HRA funds before you can use FSA funds. Be sure to check your employee benefits guide or plan documents carefully. 

• If you’re enrolled in a high-deductible health plan (HDHP) and eligible for an HSA, consider using the HSA as a savings tool. HSAs have three tax benefits: Contributions can be deducted from your taxes, money grows tax-free, and withdrawals for qualified medical expenses are tax-free. 
  You can use HSA funds for reimbursement of qualified medical expenses at any time, making it a powerful vehicle for both short-term and long-term savings. 

Retirement saving plans 

Employer-sponsored retirement saving plans, such as 401(k), 403(b), and 457 accounts, are vital for building long-term financial security. 

• Review current investment options and allocations in retirement plans from your employer. Consider your risk tolerance, goals, and the diversification offered by the plan to make adjustments as needed. Pay attention to plan fees and expense ratios, as these can impact your returns over time. 

• Understand the types of contributions available — pre-tax, after-tax (non-Roth), and Roth — and how they fit with your tax situation and retirement objectives. Know the limits for shared and independent contributions for different account types. If you qualify, use catch-up contributions. 

• Employer contributions are another critical factor. Check the vesting schedule to see when employer contributions are fully yours. This is important if you are thinking about changing jobs. Make sure you contribute enough to get the full employer match. This is an incentive to help manage your retirement funds.  

• If you anticipate needing a loan or hardship withdrawal, review your plan’s rules and limitations. Each plan has different provisions regarding amounts, repayment schedules, and interest rates. Consider the long-term impact of withdrawing funds from your retirement savings. 

• If you have previous employer-sponsored retirement plans or IRAs, consider rolling them into your current plan. Review the Summary Plan Description to verify if rollovers are allowed and compare fees and investment options with other accounts. Rollovers may also provide opportunities for Backdoor Roth IRA contributions, which could be a part of your tax planning strategies. 

Life insurance policies 

Getting life and disability insurance coverage through your employer can be easy and affordable. This is especially true if you have health issues or need insurance fast. However, be mindful of whether you can move or change the policy if you leave the job or your health changes. If it isn’t portable, you may face challenges obtaining new coverage. 

• Review the maximum coverage amounts available and assess whether they meet your needs. Sometimes, a personally owned policy may be less expensive, depending on your age and health. 

• Compare both costs and coverage before making a decision. 

Disability insurance policies 

Disability insurance protects your income in case you’re unable to work due to illness or injury. When evaluating employer-sponsored disability insurance, ensure the policy’s definition of disability aligns with your job role and personal needs (such as true own-occupation, modified own-occupation, any-occupation). Portability is again a concern — if you leave your job or your health changes, you may lose coverage. 

• Assess the adequacy of coverage amounts and coordinate your emergency fund with the policy’s elimination period (waiting period). For example, if you have to wait 90 days for disability payments, try to save three months’ worth of living expenses. Additionally, if the coverage is 60% of your salary, consider supplementing with a personal disability policy. 

• Review the taxability of benefits. Disability benefits from employer-paid premiums are typically taxable as income, which may affect your financial planning. In some cases, a personal disability policy paid with after-tax premiums may be more appropriate. 

Other benefits 

Many employers provide extra benefits like stock options. These can include RSUs (Restricted Stock Units), ISOs (Incentive Stock Options), and NQSOs (Non-Qualified Stock Options). They might also offer fringe benefits like student loan assistance or tuition reimbursement, legal services, pet insurance, fitness, fertility support, parental leave, and mental health counseling.  

• Review your employer’s stock plan and grant agreements, paying attention to vesting schedules, tax implications, and other key factors. 

• For fringe benefits, prioritize usage and leverage them fully before paying for similar services out of pocket. 

Employer-Provided Benefits Checklist 

Medical Insurance 

• Review available health, vision, and dental plans 

• Assess costs, coverage, and employer contributions for dependents 

• Compare prescription coverage and provider networks 

• Evaluate HSA, HRA, and FSA options and rules 

• Use HSA as a savings tool, if eligible 

Retirement Plans 

• Review investment options and allocations 

• Understand contribution types and limits 

• Take advantage of catch-up contributions 

• Review employer match and vesting schedule 

• Know rules for loans and hardship withdrawals 

• Consider rollovers from old plans or IRAs 

Life Insurance 

• Assess adequacy of coverage amounts 

• Consider portability and re-insurability risks 

• Compare employer-sponsored vs. personal policy costs 

Disability Insurance 

• Ensure policy definition fits your needs 

• Review coverage amounts and elimination period 

• Assess taxation of benefits 

• Consider personal policy if appropriate 

Other Benefits 

• Understand stock options and grant agreements 

• Leverage fringe benefits (student loan, legal, travel, fitness, etc.) 

• Review state-specific rules affecting benefits 

Need more guidance? 

By taking the time to review each part of your employer-provided benefits, you’re setting yourself up to make smarter choices that help protect your health, your income, and your long-term financial security. 

If you feel unsure or want to dig deeper, your Mercer Advisors wealth advisor can help you tailor the options to your specific needs. 

Not a Mercer Advisors client and want guidance with choosing employer-sponsored benefits as well as creating a financial plan that can help you build wealth? Let’s talk.