Getting The Best Benefits

It's earnings season on Wall Street, but in offices across the country, it's "open enrollment" season, a time when employees are tasked with choosing options for their employee benefits plans.

Offering some advice to help you hunt down the best options is Stephanie AuWerter, Deputy Editor of Smartmoney.com.

First, Auwerter says, health care costs are on the rise again so expect to pay more next year for your health care. In 2007, the average employee will shell out more than $3,400 of their hard earned money for employer health care. That's up from eight percent from this year. So if you have more than one health care plan to choose from, review your options and don't just blindly renew. Make sure you're in a plan that is right for you both in terms of coverage and cost.

Secondly, take advantage of Flexible Spending Accounts. AuWerter says it drives her crazy that more workers don't take advantage of these really great accounts. Flex accounts allow you to use pretax dollars to pay for healthcare costs not covered by insurance. This includes your deductible and co-payments, but also can include things like eye glasses, aspirin and other over-the-counter medications.

The one catch to Flexible Spending Accounts is that this is a use-it-or-lose-it proposition. You need to use the money in roughly a one year period or you lose it. That tends to scare people away. So, sure, be conservative, but don't skip this option altogether.

Also, max-out your dependent care account and transit accounts. These are different types of flexible spending accounts. One lets you use up to $5,000 in pretax dollars to pay for the daycare costs of a child that's under the age of 13 or an elderly parent who lives with you who also needs day care. The other type of account lets you use pretax dollars to pay for commuting and parking costs. If you are offered there types of accounts and you have these types of expenses, it's a no-brainer - sign up!

Fourth, consider the Roth 401(k). Employers have been slow to embrace this new twist on the traditional 401(k) plan. But thanks to some tax code changes that were passed this year, we expect more to start offering this type of plan in 2007. These are great options for younger workers. Like a Roth IRA, these accounts are funded with after-tax dollars, but withdrawals taken during retirement are completely tax free and that's a big gift from the government. Now matter what thought, try to increase your 401(k) contribution, the sooner the better.

And lastly, look out for other fringe benefits. Gym discounts, discounts on cell phone providers, discounts for buying a hybrid car - many employers offer all kinds of employee perks. Find out what you can get because taking advantage of these options is like getting a little raise and with no added work. It's hard to find a better deal.

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by Stephanie AuWerter

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