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Maximizing Your Employee Benefits

You're probably familiar with the idea that saving, budgeting and investing are all basic building blocks for a sound financial plan. But, there's another area that has a significant impact on your financial picture—your employee benefits.

Maybe you are guilty of not taking the time to look over the benefits summary that was provided, not asking questions because you were embarrassed, or not thinking about what your needs are? Often, these mistakes result in a missed opportunity for financial protection, or more money out of your pocket. Let's look at a few instances where you may have an opportunity to be better informed.

Medical Insurance

There are many parts to a typical employee benefits package. Probably the most important benefit is health insurance. Although most organizations require you to pay a fee for your health insurance, you usually acquire it with a discount. Make sure you fully utilize these health benefits by using all the preventive care options available (especially if you work for an organization that pays preventive care at 100 percent). Also, if you have prescription coverage, use it. Too many people who have prescription cards fail to present them at the pharmacy. Although you may only receive a few dollars off, that little bit adds up over time.

It's also important to understand the ins and outs of your health coverage. Be sure you can answer the following questions: Do you or a family member visit the doctor often? Do you have a chronic condition? What are the co-payments and deductibles (if applicable)? What resources are available to help you manage your health and keep your costs to a minimum? Are there free services or discounts available? If you have unexpected large claims (such as a hospitalization), do you know the out-of-pocket maximums? Are you familiar with your prescription drug coverage? Are you getting the most for your dollar by taking generic drugs when available?

Flexible Spending Accounts

One frequently overlooked benefit is the Flexible Spending Account (FSA). This is an employer-sponsored benefit that allows you to pay for eligible medical expenses on a pre-tax basis. If you expect to incur medical expenses that won't be reimbursed by your regular health insurance plan, like over-the-counter drugs or medical-related supplies, consider taking advantage of your employer's FSA if they offer one. FSAs may also cover dependent care expenses. Be sure to inquire if this option is available should you need it.

An FSA saves you money by reducing your income taxes. The contributions you make are deducted from your pay before taxes, and are never reported to the IRS. The end result is that you decrease your taxable income and increase your spendable income. You can save hundreds, or even thousands, of dollars a year.

Other Insurance

Many employers also offer voluntary insurance products paid by employees. Examples of these products are whole and term life insurance, accident, disability, critical illness, long-term care and auto/homeowner insurance. Each product is designed to meet a variety of short- and long-term financial needs. It is important to identify what your needs are, be familiar with how your standard benefits package does or does not adequately meet those needs, and how the voluntary insurance product can fill the gap.

These are just a few of the decisions to be made when it comes to your benefits. Make the effort to be better informed, understand what is being offered, and relate how these offerings can make a real difference to your finances. Finally, always remember Local Government Federal Credit Union (LGFCU) has many financial resources available to you, and we're ready to answer your questions. If we can help, give us a call at 877.367.5428.