By Chris Taylor
NEW YORK (Reuters) - A couple of years ago, Amanda Coffee and her husband were poring over her company’s open enrollment options, when she noticed an intriguing legal benefit.
“The benefit cost roughly $200 for a year of legal services, which is a lot less than contracting a lawyer on our own,” says Coffee, 38, who is a New York City communications consultant. “We opted into the benefit and took advantage to draft a will and trust."
The savings? Roughly $4,000.
But when benefits season rolls around, most people are not paying careful attention to their choices like Coffee. In fact, about half of benefits-eligible American workers spend less than 20 minutes reviewing all options, according to a survey by Voya Financial (NYSE:VOYA).
That means you could be leaving money on the table.
Here are two good reasons not just to check the same boxes as last year: First, your company might be rolling out new benefits, and second, your own life might be changing in important ways. So do a little fortune-telling and figure out what Future You might require.
“Maybe you have an upcoming planned procedure, like a knee replacement," says Tim O’Connor, a vice president at Prudential (LON:PRU) who leads group insurance enrollment and engagement strategy. "Or maybe you are starting a family. If you know what’s coming, you can help cover a lot of those costs.”
Keep in mind the clock is ticking, since most companies like to wrap open enrollment up by Thanksgiving. Here are the three benefits that warrant a closer look.
FUND A HEALTH SAVINGS ACCOUNT
HSAs are “one of the most commonly overlooked benefits,” says Alyson Basso, a financial planner in Middleton, Massachusetts.
HSAs are typically offered in conjunction with high-deductible health plans, as a way to defray healthcare expenses. They do that by being triple-tax-advantaged: Pre-tax contributions, tax-free earnings, and tax-free withdrawals, as long as you use the money for qualifying expenses.
Because you can actually invest the money, an HSA can essentially act as an additional retirement account as unused funds roll over year after year – for instance, if you have maxed out your 401(k) or IRA. But only 3% of working Americans even understand the full benefits of an HSA, according to the Voya Financial survey.
OPEN A DEPENDENT CARE FSA
Any parent knows the cost of raising a kid these days is astronomical. Prepare to budget an eye-popping $237,482 from birth to age 18, according to one estimate from LendingTree -- and that is not even counting college.
So would you like to save around 30% on costs like daycare or preschool, babysitting, or summer day camps? You can – using a dependent care FSA (flexible spending account), for kids under 13. For singles or married couples filing jointly, the current annual maximum contribution is $5,000.
“For working families with children, a dependent care FSA is invaluable—especially since most incur at least $5,000 in dependent care expenses annually,” says Spenser Liszt, a financial planner in Dallas. “It’s a great way to avoid taxes on a necessary family expense.”
GET INSURED TO THE HILT
For individuals looking to take out their own policies for life, short-term or long-term disability or liability, costs can often be prohibitive.
But if your company is offering policies through open enrollment, it can be a game-changer, thanks to group rates that make such policies much more affordable. With liability, for instance, you could get millions in extra coverage, in case you are ever on the receiving end of a lawsuit.
“One of the most undersubscribed benefits I see is disability insurance,” says Cathleen Tobin, a financial planner in Rhinebeck, New York. “Group coverage through an employer costs employees almost nothing – and can be a financial lifesaver if it’s ever needed.”