5 Tips for Setting Up Your Employee Benefits


Consider a Health Savings or Flexible Spending Account

Want to stretch your salary a little further? Of course you do. Check to see whether your employer offers a health savings account or a flexible spending account.

A health savings account (HSA) is basically a savings account for medical expenses incurred only by employees enrolled in high-deductible health insurance plans. A single adult can deposit up to $3,050 a year in this account while a family can put in $6,150. Contributions are pretax, meaning that you don't have to pay income tax on the money. You don't have to worry about your money going anywhere, either. With an HSA, the money stays in your account, year after year, until you spend it.

While contributions aren't typically mandatory, it's generally a good idea for anyone with a high-deductible health insurance plan to put money in an HSA. These funds will help offset the cost of unexpected doctor visits or prescriptions, which are unlikely to be covered under the lower-cost insurance coverage.

Like HSAs, flexible spending accounts (FSAs) are pretax and can be used to save for medical expenses. FSAs can also be set up to pay for dependent care, such as child or adult daycare. The medical accounts are limited to $2,500 in contributions, while the dependent accounts max out at $5,000. One big difference between HSAs and FSAs is that any unspent money in an FSA is forfeited to the employer at the end of the year. So if you decide to open an FSA, be sure to estimate your medical and dependent care expenses based on the previous year. Otherwise, it's not such a great deal!

These accounts are not typically opened automatically, so let HR know which you want and how much you want to contribute each month.