Pumpkin Spice Your Way to Lesser-Known Employer Benefits

The fall season is here and with it comes everything pumpkin spice (Costco’s PS loaf 🤤) and enrolling in employer benefits. Benefits enrollment may not be the most delicious part of your job, but it's undeniably one of the most important. Many people don’t realize this, but employers (especially larger companies) give a big portion of compensation through work-provided benefits. That means that if you’re not carefully reviewing which ones you can benefit from, you could be leaving a whole lot of money on the table next to your untouched PS loaf. And there’s a special place in the afterlife for people like that.

You might be familiar with the more well-known benefits like matching 401K contributions, heavily subsidized medical insurance, and cheap life- and disability insurance. So, in this blog, I want to share my 5 favorite not-so-well-known benefits that you should consider as you navigate benefits enrollment.

1. A High Deductible Health Plan (HDHP) + Health Savings Account (HSA)

For families that are generally healthy and don’t expect to have major medical expenses next year (i.e., pregnancies, planned surgeries), a HDHP is usually the way to go. Not only do you save money on the premiums each pay period (to offset a higher deductible), but you can also use those savings to fund an HSA to cover current or future medical expenses. The HSA deserves its own blog post for all of its benefits, but here are some of the most important:

• The funds in the HSA account can be invested like a 401K and compound growth is always a good feature to have.

• It’s the only account out there that has a triple-tax benefit: money goes in pre-tax, it grows tax-deferred, and (if used properly) can be withdrawn tax-free. 

• The money is yours. If you leave your job, you get to take those funds with you like your 401k. A flexible spending account (FSA) or health reimbursement arrangement (HRA) don’t have this benefit.

• It doesn’t have the nasty “use it or lose it feature” of FSAs. The funds in the HSA rollover indefinitely. Therefore, you’re not scrambling at the end of the year buying 5 pairs of glasses and 10 bottles of sunscreen to use up your funds. 

• Many employers add their own funds to your HSA. It’s akin to a 401K match. Free money, hurray!

You might be saying: Yeah, but I don’t want to be on the hook for a high deductible for routine visits. The good news is that most HDHPs cover preventative care (think yearly checkups, bloodwork, and screenings) with little-to-no out of pocket costs. And if you do need expensive medical care, the deductible limit kicks in at $3,200 ($1,600 for individuals).

2. Dependent Care FSA (DCFSA)

This benefit is, IMHO, the most overlooked. As parents of really small children, we pay for preschool and other forms of childcare. As parents of not-so-small children, we pay for things like after-school care and summer/winter day camps. We usually pay these expenses with after-tax dollars. That’s like being kicked when you’re already down. 

But it doesn’t have to be this way. The DCFSA allows you to save up to $5,000 for families ($2,500 for singles) in a pretax account to pay for these expenses. If you’re in the 24% marginal tax bracket, that’s up to $1,200 in tax savings on an expense you’re going to incur anyway. With this account you can pay things like au pairs, work-related babysitting, before- and after-school programs. Basically any type of care that allows you to work or look for work is fair game. Why not make the high-cost-of-childcare pill a little easier to swallow?

3. Limited Purpose FSA (LPFSA)

Dental and eye-care expenses are also costs that we usually pull out a credit card (i.e. after-tax money) to pay for. But you can pay these with pre-tax funds using a LPFSA. Although you cannot pair a HDHP with a traditional FSA, you can pair it with LPFSA. This account allows you to save up to $3,050 pre-tax dollars to cover dental and vision expenses. So if you’re looking to give yourself a reality-show worthy makeover and finally get the LASIK and braces you’ve been thinking about, this account will pass some of the expense to Uncle Sam.

4. Wellness Programs

Employers know that healthy individuals make for happy, healthy employees. And happy, healthy employees are often good for the company’s bottom line in the form of reduced insurance premiums and better customer service. Therefore, many employers will actually pay you to take care of yourself. This can be in the form of reduced medical insurance premiums or money credited to your HSA or FSA once you meet certain requirements. For example, my wife’s employer gives her $800 and me $400 in HSA funds once we complete tasks like doing an annual checkup and attesting to meditating. 

Plus, employers usually provide a bunch of resources to help you find the tools that work for you including employer-paid counseling/therapy and discounts to gym memberships. Now, taking care of yourself (especially meditating ☺️) is something that you should be doing regardless of whether your employer pays for it or not. But knowing that they have your back on this is sometimes the motivation we need to get started. 

5. Legal Assistance

Under this benefit, you can get very cheap (about $20/month) legal assistance in a variety of topics. But the one that I find most helpful is getting legal help to set up your estate plan. Many of us have yet to complete this important financial planning topic so this is a great opportunity to do so at a fraction of cost that you’d pay if you hired a lawyer on your own. This is especially true if your situation is one where you need a living trust. I can personally attest to this as my wife and I used the legal assistance plan offered by her employer to set up our own living trust and other estate documents with a reputable attorney all for the low, low price of about $300. 

So, as you sit down with your pumpkin spice latte to decide on next year’s benefits, consider these five as a way of shoring up your financial situation and overall health. 

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