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Getting a handle on your employee benefits and perks

Deborah Nason
Each autumn, be sure to review your employee-benefit options in four areas: retirement saving, health, life/disability insurance and other perks.

Company benefits and perks are an essential and much appreciated part of compensation, but staying on top of changes every fall can be a chore.

"Most people don't look at their complete packages every year," said Eric Roberge, certified financial planner and founder of Beyond Your Hammock. "They just do [the minimum] — what they have to do."

Here are the areas that warrant special attention, along with the questions financial advisors suggest you ask before choosing your company benefits.


Retirement funds/401(k) plans

Roberge asks his clients to answer these questions:

  • Do you have a matching contribution?
  • Are you taking full advantage of it?
  • Have the investment options (especially mutual funds) changed?
  • Are you allocated correctly?
  • Should you rebalance?

It's important to pay attention to how you save, advisors said.

"One thing that I've found is commonly overlooked is the proper 401(k) contribution," said Clark Randall, CFP, owner of Financial Enlightenment. "The overly ambitious think they are fully funding it, but they are actually funding their plan too quickly and missing out on the allowed company match."

Robert Wander, CFP and owner of Wander Financial Services, warns clients to check their retirement account default allocations. If the company match comes in the form of company stock, beware of becoming overexposed.

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Brett Anderson, CFP and president of St. Croix Advisors, advises his clients to increase their 401(k) savings each year by 1 percent, because it is easy and they won't miss the money. He also asks clients to determine whether they have too much money in pretax retirement accounts.

"When you retire, will all of your income be taxable?" Anderson said. "Funding a Roth IRA account is a great option for tax-free income in those years.

"Most clients like a blend, balancing out their tax rate today and in their retirement years."

Health insurance

Health insurance is a very big topic for the 30-something clientele Roberge at Beyond Your Hammock serves. The questions he asks include:

  • Have the premiums or coverage changed?
  • Should you switch to a high-deductible plan?
  • If you use a health savings account, does the company contribute to it, too?

Roberge finds that clients often don't understand the value of using a high-deductible plan with a health savings account option.

Financial advice benefits

According to a 2017 study from the Society for Human Resource Management, 49 percent of employers surveyed offered some kind of financial advice. Breaking it down further, 36 percent offered this advice via an online setting; 34 percent one on one; and 28 percent in a group setting.

"The premium gets significantly lower, but they tend to be afraid of the high deductible," he said. "They assume they'll have to pay the whole deductible, but in reality — with the built-in savings from premium alone and if the employer contributes to the HSA — even if they paid more out of pocket, they'd pay the same amount as the higher-premium/lower-deductible plan."

In addition, HSAs offer tax-advantaged ways to pay out-of-pocket health-care expenses now and in the future, said Levi Brandriss, CFP with Ameriprise Financial, adding that money set aside in an HSA can be carried forward indefinitely to meet out-of-pocket expenses down the road.

"If you foresee a major health-care expense next year that is not covered by your insurance, such as braces for a child, consider electing an option with a flexible spending account," he said. "Money deferred in this account is deducted from your paycheck before taxes and must be used before the end of the year, unless your employer plan allows money to be carried over year-to-year."

Disability and life insurance

Many people don't understand their group insurance coverage, especially disability, said Roberge. "They don't understand that there's a better chance of being disabled than dying, and they have no idea exactly how their disability coverage works," he said. "For example, you know it provides 60 percent coverage, but what is the elimination period? Will it be taxed?"

Regarding the taxability aspect, Wander of Wander Financial Services noted that, although companies usually pay for the disability policy, employees have the option to pay it themselves via payroll deduction. By doing so, the benefit will be tax-free when used. This can make a noticeable difference in income when one is receiving only 60 percent of one's regular salary.

"As your life changes, so will your needs [so] keep up to date," said Anderson of St. Croix Advisors. "Life insurance, for example — having the proper amount is an overlooked benefit until it's too late."

Other benefits and considerations

Roberge suggests clients look into any other specialized benefits that could help save money, such as commuting benefits, gym membership or child care.

"If you need to create or update your estate plan, opting in to a legal assistance plan for a year could be worth it," said Brandriss of Ameriprise.

An October benefit checkup also presents an opportunity to review other financial details.

Make sure beneficiaries are updated if there is a life change, such as marriage, divorce or birth of a child during the past year, said Wander at Wander Financial Services.

For his part, David Demming, founder and president of Demming Financial Services, said that October is a good time to rerun tax forecasts for clients, because most bonuses and other salary adjustments hit in the first half of the year.

— By Deborah Nason, special to CNBC.com