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207 -Maximizing Overlooked Employee Benefits in Open Enrollment for Parents
Episode 20725th October 2023 • Money Boss Parent • Anna Sergunina
00:00:00 00:23:30

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It's that time of year when we carefully consider the benefits that could significantly impact our family's financial well-being in the upcoming calendar year.

We usually focus on the essential benefits like life insurance, health coverage, dental, and vision. But in this episode, we're going to dig deeper into a set of benefits that might have been flying under your radar.

Stay with me as we journey through the multiple benefit options --- your family's financial future might just be transformed by what you're about to discover!

Anna's Takeaways:

  • Using Dependent Care Accounts For Childcare Expenses (03:37)
  • Tax-Free College Savings Plans And Legal Services (06:59)
  • Employer-Provided Mental Health And Wellness Programs (12:18)
  • Work-Life Balance Benefits And Their Importance (15:47)

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 Money Boss Parents! Welcome to Anna's Money Boss Parent podcast, your go-to resource for mastering money management while raising a family. Join me as we explore practical tips, expert insights, and inspiring stories to help you achieve financial success and create a brighter future for your loved ones. Don't forget to subscribe, rate, and review the show to support our mission of empowering parents like you to take charge of their finances and build a prosperous life for their families. Let's thrive together on this incredible journey!

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Anna Sergunina:

Hey Money Bosses Anna's here and welcome back to the Money Boss Parent podcast. It is that time of the year, where we get to talk about what benefits should you be paying attention, especially during the open enrollment season. As you're gearing up to get started on your next calendar here today, I want to cover a few different options that parents should be thinking about for next year. Now I know that you we typically talk about the most common benefits such as life insurance, health insurance, vision, and dental and you work through those and make sure that your choices are what you think they're going to be. Today, I want to cover some of the some of the options that may or may not be available to you. Yet, my goal here is to simulate some thoughts where you would be looking for ways to utilize those benefits. Now, for those of you who are not employed, or do not have elaborate employee benefits package would still be able to get access to some of these benefits on your own. And I'll make sure that I touch on those as well. I'm also excited to share with you a few of interesting facts about these benefits. So if you've ready to take charge of your financial future, come 2024 and make smart moves when it has to do with your employee benefits. Let's get started. The first item I want to cover is called dependent care assistance. This is the type of benefit that is available to you through your what's called FSA flexible savings account. It's an account that allows you to put pre tax monies, from your paycheck to cover qualified childcare expenses. And there's a laundry list of expenses that we can pay that are going to be constituted as a qualified childcare expense. And the reason it needs to fall into that that category because IRS has a laundry list of items that they will allow you to pay for from this account. So here are a few examples. nursery school, preschool or equivalent care program for children below kindergarten level, this is actually interesting, because I did know that kindergarten sort of has that threshold. So for example, Liam is going to be going to kindergarten next year, and we're trying to decide if we're going to keep him in the private call it private kindergarten, but it's a kindergarten that is available at his preschool, which is like $16,000 a year in tuition. If we stay there, or we're gonna go to public school, and it is free, so kind of keep that in mind. I don't know if that's the same, probably the same for other states, and we're in California. So the next item is preschool or after school care. So if you have those options, and I know we have friends who have kids that are in kindergarten, but then they need extended care. So after school care is something that you can cover from your dependent care FSA. You can also pay a provider who watches your dependent kids outside of your home like a neighbor, right. So if you have someone you're paying to watch or babysit, you can pay for those expenses. You can pay directly to the day camps. If they go to the day camp. A lot of those day camps were popular during summer. And you can also pay for certain fees or deposits and application fees that you are spending to provide or to apply for for the services. Also the actual dependent care center if it's not a preschool if it's not a kindergarten, it's the actual school slash dependent care center that you can pay for Now here are some examples of what doesn't qualify for you to use these dollars for child support payments, so alimony you cannot pay alimony from this account. The interesting part for this particular angle is because if you pay alimony or if you could pay alimony from this account, you're already getting a benefits of tax deduction and to generally alimony payments, have tax benefits themselves so that that's one reason summer school tutoring. For example, Reem goes to Kumaon after school twice a week So I can't pay for Kumon because it's constitutes to rain. So he takes math and English classes, sleepaway camps, or Boy, those are, of course are like more expensive types of camps. And parents are always looking for ways to pay for those food, lodging, closing education, entertainment, are not eligible expenses for you to use funds from your dependent care account. One thing to keep in mind is that there's a limit of how much you can contribute and 2024, we're still at the threshold of $5,000 per year, per household. For example, if you're married, each of you can put $2,500 into this account from your employees respectively, or total for $5,000 per household.

Anna Sergunina:

So I want you to be mindful of this because sometimes you could find yourself that you actually aren't utilizing all of these expenses, or all of these dollars for the expenses that you incur, if you have kids that are still in their three to five to actually probably seven or eight years old, that that you have after scare up after school care costs, then this definitely helps you. Alright, my number two idea for you is to think about college savings plans. I have noticed recently that a lot of employers are starting to offer an option where they have additional benefits to offer their employees contribution or dollars for these 529 college savings plans. Traditionally, these plans are what parents open on their own, to help save for college related expenses. And the biggest advantage of these plans is that contributions are made with after tax monies. And so therefore, you get to grow your money tax free, and when you withdraw the funds in the future. And that's the whole benefit, especially when you have young kids, you get to use those funds for qualified educational expenses without having to pay the tax on the growth that you've had in those accounts. These plans are typically state sponsored accounts. And that doesn't mean the state actually owns the plan. But there's a lot of benefits that exist. Aside from just having the tax free option for the funds to grow. Some states actually offer deductions for the contributions that you make into those plans, do you get an additional benefit on your state taxes that you have to be mindful of i One of the things that I've always weigh when deciding which state to pick the plan from and keep in mind that just because you live in the state that doesn't offer deduction, or for taxes, for example, California doesn't doesn't mean that you can go out and pick a plan from a different state, for example, I opted in for a Vanguard plan or plan and had Vanguard investments because I was looking for low cost index funds is I wanted to reduce the cost there as much as I could. And that was the choice because I didn't have the option for deduction. So you have to weigh in what makes the most sense for you at that moment, because the deduction on taxes may seem like a really good benefit. But when you look at the fees in the actual investments over time, it could really add up. Now one of the interesting facts with these plans is that they've gotten they've gotten to to be available in most states over the years. And they also have a feature is that if your child goes to school that's in a different state, you can use the funds. So don't freak out that what if my child doesn't use these expenses? Or what if the what if I'm not able to pay for the college related expenses from this account? Or what if they go to school that's in a different state, you have the flexibility to use the funds, number one, number two, you have the flexibility of how and when you can take the funds out. So I really urge you to think about if your employer has incentives for you to contribute to these accounts, please take them and for the second part, if they don't, I think it's still a great, great, great option because you get to grow your funds tax free and I can't think of any other accounts other than Roth IRAs, where you can do that and also with the amount that you are able to contribute to those accounts. Number three on my list are legal service plans. A lot of you are starting to see this as as an option of off your benefits in the form of a legal plan. So typically, those legal plans are kind of like the starting level of options for you to access legal advice. And the most typical legal matters could be estate planning documents, and where you can get your wills drafted. Or you can have your trust created healthcare for power of attorney, or any other, you know, really sort of basic basic benefits, such as if you have to talk to your landlord, or if you had a traffic accident or there's a speeding ticket. So there's, there's an option for you to access an attorney within the network that this employer contracted with. I am for most part here suggesting for you to check in explore this, this legal service plan is because you may have an option to this estate planning feature. And so as as you guys know, I'm big on making sure that parents and to, if you have dependents, people that are going to be dependent on you, you want to make sure that you actually express your wishes in writing and to hire an attorney outside of these legal service plans is rather costly. So if you have an option to create a basic estate plan, I urge you to look at what what it allows you to do. Now interesting fact is that these these legal services can help families save money on legal plans, as I mentioned, because typically attorneys charge 1000s of dollars for you to use their services. Now, I want you to be really careful, right? Not to assume that just because you have somebody draft these documents for you, that you shouldn't be seeking legal help. But it's a starting point, for you to make sure that you have named guardians, you have a will if you have need for the trust, all those things are in place, and actually executed. Number four on my list is something called a mental health and wellness program. And these programs are typically provided by your employers. And they offer things like counseling, stress management works, workshops, or classes. And it really is focused on improving your overall well being. Another name for this kind of a service or option is three letters. It's called E a piece employee assistance programs. And I've seen every simply did a workshop financial financial wellness workshop for a company that has like over 500 employees. And I was really impressed by how robust their employee Assistant Program is one of the things that that program offered, which I was trying to highlight for them in my presentation is, is counseling for any related financial kind of things. A lot of times people want to have someone to talk to when they're working through paying off their debts. And this program had a really rich plan where someone could reach out to their counselors, and specifically help have them work with them on how do we pay off the debt? How do we change our behaviors around spending. So I want you to think about this option is kind of like a well being it's not just financial, because financial is one piece of the whole puzzle, but mental, physical, emotional well being of a person. And so I'm excited that a lot of employers have those options, you just need to dig into what the benefits are and how you can utilize those. Typically, these programs are funded by the employer. So there's no cost or contributions that employee has to make. And so I liked that idea, because most of the benefits, you have to contribute some some sort of

Anna Sergunina:

portion. Interesting fact about employee assistance programs is that according to the American Psychiatric Association, and I don't think it's a surprising fact, but more than one in five US adults, so like 20% or more, have experienced mental health issue since 2020. And as we're going through pandemic, it's not surprising that the rise of in need an interest in these programs exists today. So as you're sitting down to look at your benefits once again this fall I want you to think about how can your you utilize this program, and you know what's available to you. Because if you think about this is like one, I think, point that we miss, when we look at how much money we actually make, or what our total compensation package, all of these, as you think of sometimes you think of these small benefits actually build up your overall compensation. So instead of going out, and jumping through the hoops to find counselors, therapists, right, financial people write to help you deal with your other issues that you may have in terms of your finances utilize these benefits. And then last, but not least, is something called work life balance incentives. And it's kind of built on this employee assistance program. But I think we've kind of adjusted the way that we work, how we work where we work. And so this work life balance includes things like flexible work arrangements, I'm seeing and hearing a lot from clients where they're like, now back to work, two days a week remote work options, right. So there could telecommuting the rest of the week, and also more flexibility about an around paid family leave policies, a lot of these things are probably going to be regulated by what your state allows, and what you know, what if there's a short term disability plan in place, but also, I feel like these benefits allow parents to balance their professional life, and also family responsibilities effectively. Now, just like in the previous option, there's no contribution limits or options or amounts that you have to contribute to that it's typically something that employer offers or sets in place for you. So again, if the couple of the first ones I mentioned, like the flexible spending account for dependent care, you have to put out your dollars, look at these benefits, and consider how they could help you next year, or in the future. One interesting fact about flexible work arrangements is that they've become pretty popular during the pandemic we had. And a lot of as you can see, a lot of employers are expending what it covers. Because let's face it, working from home or working in an environment where family lines, family and work lines have worked so blurred for the last, however many years now, is is difficult. So if anything, I would be looking for ways of utilizing these, these benefits. So I want you to think about what could you be adding to your overall stack? Let's call it a stack. I like that word a lot. And how can you be using these benefits? This is one thing to just because your employer offers these and you opt it in, during open enrollment use these benefits? Because otherwise, you know, how are they really benefiting you? Overall? I'm excited for 2024. I know there's a lot of interesting stuff that's, that's coming out in terms of what you can have as an employee, we are getting a pretty robust increase in a lot of the contributions like the 401k options. And you'll be hearing more about that as we talk through what 2024 looks like. But I want you to think about your family in the form of how can you increase your overall well being and utilizing these options. For those of you who are not employees of a company. And maybe you have a business like I do, you still can create these benefits for yourself college plans. 529 college plans, that's a benefit that you can set up for yourself without having to work for an employer employers just helps sometimes to make these contributions. And you know, services like legal plans or wellness programs, all of this is still an option for you to set up. Unfortunately, you don't have a contribution from an employer because it's not available to you. You have other benefits surrounded that structure. So let me know what you think. I'm excited to revisit some of these things towards the end of the year. And let me know if you have any questions. And until next time remember you are the bosses of your own money.





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