Open enrollment season is a great time to take a good look at your benefits - you may be spending more money than you need to. Stephanie AuWerter, Contributing Editor for SmartMoney.com, has some tips.
One area where you won't be saving money this year is in health care costs. "In 2010, the average employee at a big company is expected to shell out $4,000... to pay for health care costs," says AuWerter. "Over the last nine years, out-of-pocket health care costs have tripled." AuWerter suggests reviewing your health care options during open enrollment to make sure you're signed up for the best plan for you and your family.
One area where you can start saving is by taking advantage of flex spending accounts. "Here you use pre-tax dollars to fund an account where you can pay for out-of-pocket health care costs," says AuWerter. This can be anything from deductibles to prescriptions; some companies even allow you to use flex dollars for over-the-counter items like sunscreen and stop smoking programs. The catch, though, is that if you don't use all the money you set aside, you'll use it at the end of the year. It's best to invest conservatively in flex spending accounts.
There are also specialized flex accounts available for child care, adult day care and commuting costs. Dependent care accounts allow you to set aside up to $5,000 pre-tax money for child care and elderly care costs. Transit accounts allow you to set aside pre-tax money for parking, tolls, etc. that directly impact your daily commute. Check with your employer to see if they offer these specialized accounts too.
You may also consider changing your retirement savings plan. AuWerter suggests looking into a Roth 401(k). "Like a Roth IRA, you fund these accounts with after-tax dollars, but the withdrawals taken during retirement are completely tax free," says AuWerter. Experts expect taxes to increase in the coming years, so paying the tax on your investments up front could be a good move.
Don't forget fringe benefits, though. Many companies offer discounts on all kinds of things like gym memberships, hybrid cars or cell phone plans. See which companies your employer works with directly and take advantage of those savings. "Taking advantage of this is like getting a small raise," says AuWerter.
For more information on revewing your benefits, visit www.SmartMoney.com by clicking here.
By Erin Petrun
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