by Maurie Backman | Oct. 27, 2020
Open enrollment is almost upon us. These benefits could save workers a bundle.
The upside of working for a company, as opposed to being self-employed, is getting access to benefits that could put serious money back in your savings account. Here are a few you may want to take advantage of.
Flexible spending accounts (FSAs) let you set aside pre-tax income for healthcare and dependent care purposes. Any money you contribute to an FSA can’t be taxed, which is where your savings lie.
As of this writing, the 2021 FSA limits have not been released, but currently, healthcare FSAs max out at $2,750 annually, while dependent care FSAs max out at $5,000. The latter limit has been in place for quite some time, so it may not change next year. The one thing you should know about FSAs is that you must use all of your funds for qualified expenses or risk forfeiting them. In other words, if you set aside $2,000 in a healthcare FSA for 2021, you must rack up $2,000 in deductibles, copays, and other expenses that year to get reimbursed in full. Otherwise, you might lose some of that money.
Like FSAs, health savings accounts (HSAs) let you contribute pre-tax dollars for medical expenses. The only difference is that HSA funds never expire, so there's less pressure to estimate your medical costs for the year in advance.
In 2021, you can contribute $3,600 to an HSA if you're saving as an individual, or $7,200 if you're saving on behalf of a family. If you're at least 55, you'll also get the option to put in another $1,000 on top of whichever limit applies to you.
Many employers offer a retirement plan that, like an FSA or HSA, lets you contribute money for your future on a pre-tax basis. We're still waiting to hear what 2021's 401(k) annual contribution limits will be, but right now, they're $19,500 for workers under age 50 and $26,000 for those aged 50 and up. It pays to see if your employer offers a 401(k) match, which will get you free money for retirement, plus tax savings, just for making contributions.
A growing number of employers are offering wellness or fitness benefits to help employees stay healthy. If your employer offers a fitness subsidy or gym reimbursement, you could shave a lot of money off your out-of-pocket costs. Some fitness plans will let you buy equipment to use at home, too, like treadmills, bikes, or free weights.
Going back to school or still pursuing a degree? Your employer may pick up the tab for some of your education. Plus, you may be entitled to reimbursement for skill-specific classes you take in person or online, so have a look at what your employer offers.
Legal plans are also becoming increasingly popular among employers, and if you anticipate needing the help of a lawyer next year, it could pay to participate. Usually, you'll pay a fee -- sometimes as little as $200 a year, though you could end up paying a lot more. In exchange, you’ll get a year of access to a network of lawyers who can assist you with real estate closings, debt settlement, will creation, and more. When you compare your costs to the price a lawyer would normally charge, the savings can be substantial.
No matter which employer benefits you choose to sign up for, be sure to carve out some time to weigh your options. The decisions you make could save you a lot of money, so you really don't want to rush through them.
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