Time for Open Enrollment

It's not quite holiday shopping season yet. But it is Open Enrollment season for more than 80-million Americans who are shopping for their employee benefits for next year. Stephanie AuWerter, editor of SmartMoney.com, offers some tips on getting the most out of your company benefits.

The first thing to keep in mind is, health care costs are on the rise again. In 2009 the average employee at the big firms will shell out nearly $4,000 of their hard earned money for health care. That's up about 9% from this year. So if you have more than one health care plan to choose from, review your options, don't just blindly renew. Make sure you're in a plan that is right for you both in terms of coverage and cost.

And take advantage of Flexible Spending Accounts. More workers need to take advantage of these really great accounts. These accounts allow you to use pretax dollars to pay for healthcare costs not covered by your insurance. This includes your deductible and co-payments, but also can include things like eye glasses, over the counter medications, stop-smoking programs and so on. The one catch here 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. So, 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 age 13, or an elderly parent who lives with you who also needs daycare. The other type of account lets you use pretax dollars to pay for commuting and parking costs. If you're offered these types of accounts and you have these types of expenses, it's a no-brainer.

Something else to consider is 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 we're finally starting to see them rolled out. 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. These are a great option for younger workers. And no matter what, try to increase your 401(k) contribution for 2009.

And finally look for other fringe benefits. Gym discounts, discounts on cell phone providers and discounts for buying a hybrid car. Many employees, especially big ones, offer all kinds of employee perks. Find out what's available. Taking advantage of these options is like getting a little raise and with no added work.
by Stephanie AuWerter