The 2×2 System is where you set aside two hours on the calendar two times a month to complete a predetermined financial task. This modest but consistent effort can help you sustain financial health and build wealth in bite-sized chunks. To view October’s blog covering planning for a financial emergency and ideas for paying for education expenses, click here. We hope you find this month’s information on employee benefits and flex spending helpful.
November Session 1: Research your employee benefits.
For many of us, a significant part of our jobs is sifting through emails to determine which contains vital information. That means a bunch of potentially useful information—like updates on employee benefits—gets weeded out simply because there’s not enough time to engage with everything. But now, during this month when open enrollment typically happens, give yourself time to review the offerings for each of these potentially valuable employee benefits:
- Medical
- Dental
- Vision
- Retirement plans
- Life insurance
- Training and development reimbursement
- Stock option plans
- 401(k)
- Profit sharing
- Wellness resources and mental health coverage
- Student loan repayment assistance
- Remote work
- Disability insurance
- Commuter reimbursement
Tip: The standard calculation is that your pay is only 70% of the total resources offered by your employer. If you’re not making the most of the rest of your benefits, it’s like throwing away 30% of what’s available to you. Before your open enrollment period begins, take a moment to think about how your life may have changed over the past year. Has your health status changed? Do you require more medical care today than you did at the beginning of the year? Did your marital status change, or did you have or adopt a child? Did you stop smoking? Have any of your current medical providers left your plan? Has your employer changed the plans or benefits they are offering? Pay special attention to changes in monthly premiums, deductibles, and copays. While your first instinct when hearing about open enrollment may be to check all the same boxes as last year, reviewing your options and costs can help avoid big hits to your budget in the coming year.
November Session 2: Use your flex spending account funds.
Do you have a flexible spending account (FSA) through your employer for medical costs? With the year coming to a close, it’s your time to use any money remaining in your FSA before you lose it. If you don’t currently have an FSA or health savings account (HSA), take this opportunity to research whether or not one might help you save money. You might be surprised. If you’re unfamiliar with an FSA or HSA, here are the basics.
An FSA enables you to save for medical expenses, but you do not need to be enrolled in a high-deductible health plan (HDHP) to qualify. An FSA lets you set aside pre-tax funds for healthcare or dependent care expenses. You can use the funds for copays, medical bills, prescription drugs, over-the-counter medications, and more.
With an HSA, you must have coverage under a qualified HDHP, not be covered by Medicare or any plan not qualified as an HDHP, and not be claimed as a dependent. You can use your HSA funds to pay for dental, vision, and medical services, including physical therapy, hearing aids, and more. An HSA offers three tax advantages:
- Payroll contributions are pre-tax, which lowers your taxable income.
- Any earnings you make grow tax-free.
- You can withdraw the money tax-free for qualifying medical expenses as determined by the IRS.
Whether you have an FSA or an HSA, please examine your plan carefully to determine what is allowed and what is not. Be sure to know the contribution limits for individuals and families for each plan.
Tip: You may have been advised to use your leftover FSA money to stock up on practical items like bandages or sunscreen. That’s perfectly fine, but do yourself a favor by exploring the full spectrum of available products. A personal massage device or air purifier might do more to enhance your quality of life right now than something you’ll stash away in a drawer and maybe use someday.
Another matter to consider is where to put your HSA funds. Our HSA account offers 2.50% APY* on all balances. You get easy access to your funds with a free HSA Visa® Debit Card, and we gladly accept rollover and transfer funds from other HSAs.
Final thoughts.
The end of the year is the time to start reviewing all your benefit options. The decisions you make now can have a significant financial impact on your life in 2025. Remember, you cannot contribute to an HSA and an FSA in the same plan year, so chart the pros and cons of each and their potential impact on your life. One last thing: As you review your benefit options, be mindful of your company’s open enrollment deadline. Don’t miss it.
*APY = Annual Percentage Yield. Yields are subject to change at any time. Fees could reduce the earnings on an account. Fee reimbursement promotion offered is subject to change and termination.
Consult your tax advisor or refer to IRS Publication 502. Contribution limitations and other restrictions apply to HSAs. To have a Federally Qualified HSA, you must purchase and maintain a HDHP with minimum deductibles of $1,300 (individual) and $2,600 (family), and maximum out of pocket expenses less than $6,850 (individual) and $13,700 (family). Generally you cannot be covered by another low-deductible health insurance policy. The tax treatment of HSA contributions and distributions under your state’s income tax laws may differ from the referenced federal tax treatment, and from state to state. Consult with your financial or tax advisor for more information. This Credit Union is federally-insured by the National Credit Union Administration.
Refer to section 213 (d) of the IRS Tax Code. Visit the U.S. Department of Treasury website for up-to-date contribution limits and more detailed information on plans and taxes.
Promotions offered are subject to change or terminate at any time.
