What’s the best part about fall?
While your mind may instantly turn to pumpkin spice, light layers, and jewel-tone leaves, those lovely seasonal novelties won’t impact your money too much (or so we hope)!
At Gen Y Planning, the best part about fall is helping clients choose their company benefits.
You might be thinking, isn’t selecting benefits just an HR formality? Why spend so much time wading through the documents when it’s all going to stay the same anyway?
To that, we’d like to offer a different perspective. Strategically selecting your company benefits is a fantastic way to save yourself a lot of money, potentially thousands of dollars.
Warning: this post could save you thousands of dollars. Why? SO many of these benefits come from using pre-tax dollars. Paying with pre-tax dollars lowers your taxable income, which is a huge perk if you’re trying to lower your tax bill.
For example: if you are single and in the 24% Federal tax bracket and 6% state tax bracket and you max out your 401(k) with $23,500 in pre-tax contributions and your HSA with $4,300, you’d be lowering your taxable income by $27,800, which could result in a tax savings of over $8,000!
October and November marks the open enrollment season for many companies, and it’s the only time of year when you can make changes to your elections outside of a qualifying event (getting married, having kids, spouse losing a job, divorce, etc.)
So cozy up with your spiced coffee and plaid blanket, pull out that giant booklet and start reading.
Understanding Key Insurance Terms
Before we dive in, let’s clarify the jargon you’ll encounter:
Premiums are your regular insurance payments. Copays are the set dollar amounts you pay at each visit. Deductibles are what you must spend before insurance kicks in. Coinsurance is the percentage you pay after meeting your deductible (20% coinsurance means you pay 20%, insurance pays 80%). Your out-of-pocket maximum is the most you’ll spend per year, after which insurance covers 100%. Finally, your network includes the providers your insurer has contracted with for discounted rates.
Selecting Health Insurance
Your medical insurance is likely the biggest ticket item and presents an opportunity for significant savings.
HDHP + HSA (High-Deductible Health Plan with a Health Savings Account)
HDHPs must have a minimum deductible of $1,700 for individuals or $3,400 for families in 2024, with out-of-pocket maximums capped at $8,500 and $17,000, respectively. While deductibles are higher, monthly premiums are very low.
The real magic? HDHPs are the gateway to HSAs. You must be enrolled in an HDHP to contribute to a Health Savings Account, which is a savings and/or investment account for health expenses.
HSA highlights:
- Maximum contribution for 2026 is $4,400 for individuals or $8,750 for families (including company contributions)
- Covers most medical, dental, and vision costs, plus menstrual care products and over-the-counter medications
- You’ll receive a debit card for easy access at pharmacies and providers
Contributing to an HSA gives you a triple tax benefit. HSAs are genuinely investment unicorns:
- Contributions are pre-tax
- Gains grow tax-free
- Withdrawals for qualified medical expenses are tax-free
Unused funds roll over each year (unlike FSAs where you lose most unspent money). Even better, you can invest your HSA funds just like an IRA. Those who invest their HSA funds have account balances 6.5 times larger than those who don’t!
Try to think about an HSA like an IRA for healthcare, not like a piggy bank. If you have the cash flow to pay for medical expenses now, contribute to your HSA and invest it so this money can work harder for you in the future. When you leave your employer, the HSA goes with you.
Many companies contribute to your HSA or offer wellness incentives that deposit into your account. (Woo hoo! Free money!)
We typically recommend HDHP/HSA policies for those who are young, relatively healthy, and don’t anticipate significant health expenses for the year.
PPO (Preferred Provider Organization)
PPOs are more flexible than HMOs. They contract with hospitals, doctors, and specialists, offering broader access to providers. You pay less when you stay in-network but can use out-of-network providers for an additional cost. Most PPOs let you see specialists without a primary care referral.
PPOs have higher monthly premiums but lower deductibles. You’ll satisfy your deductible quicker, which matters if you have regular medical expenses.
PPOs work well for individuals who visit the doctor regularly and anticipate significant medical expenses, such as childbirth. However, compare out-of-pocket maximums between PPO and HDHP options, as an HDHP may be more affordable even for major expenses.
HMO (Health Maintenance Organization)
HMOs provide healthcare services for copays rather than deductibles and coinsurance. They’re often less expensive with competitive premiums and affordable copays.
The drawbacks? HMOs typically only cover in-network services and often require primary care physician referrals for specialists (with some exceptions like mammogram screenings).
If you’re happy with your HMO providers and the premiums are competitive, it may not be worth switching. Just remember that out-of-network visits won’t be covered except for emergencies.
FSA (Flexible Spending Account)
FSAs let you save pre-tax dollars for medical expenses. The maximum contribution is $3,400 for 2026 (same for single or joint filers).
FSAs require more planning than HSAs because you can only roll over $680 each year (2026). Any unused funds are lost, making FSAs “use it or lose it” accounts. Estimate your typical medical spending (glasses, contacts, doctor’s visits) so you don’t overfund. Also, your FSA doesn’t transfer if you change employers.
Generally, you’ll use an FSA with a PPO or HMO, whereas you’d use an HSA with an HDHP. If you qualify, choose an HSA over an FSA due to the rollover provision. (You can technically have both if you use the FSA only for dental and vision costs (called a Limited Use FSA), but it adds complexity.)
Dependent Care FSA
Dependent Care FSAs are an excellent way to use pre-tax dollars to pay for eligible dependent care costs including daycare, after-school programs, summer day camps, disabled spouse care, or elder care.
The contribution limit is $7,500 per family or $3,750 if married filing separately for 2026. This means you’ll pay for the first $7,500 of daycare costs using pre-tax dollars as a married-filing-jointly family. This is a big increase from previous years, so if you’re paying for high daycare costs, be sure to take advantage of this!
Health Benefits Round-Up
When choosing your health plan:
- Compare premiums, deductibles, copays, and coinsurance for each option. High premiums usually mean lower deductibles and vice versa.
- Examine out-of-pocket maximums, especially if expecting significant medical expenses like a new baby.
- Understand your network options and whether you need specialist access.
- Consider your anticipated care needs for the year.
- Coordinate with your spouse’s benefits to find the best family configuration.
- For recurring expenses (prescriptions, therapy), call providers to check costs under different plans.
Protect Your Income With Disability Insurance
Long-Term Disability Insurance
Your ability to earn an income is likely your most valuable asset. Many companies offer base LTD coverage, but you often must enroll to receive it.
Review the plan’s stipulations:
- Coverage percentage (typically 40-60% of base salary; increase to 60-70% if possible)
- Elimination period (usually 90-180 days before benefits begin)
- Benefit duration
LTD payments are taxable. Group plans are more affordable than individual policies, but they often have broader disability definitions (“any occupation” vs. “own occupation”), which could limit qualification. If you’re in a specialized field like medicine or dentistry, consider purchasing a supplemental individual policy.
Short-Term Disability Insurance
Short-term disability often covers maternity leave. These policies typically cover 60-80% of base salary for 25-30 weeks, with elimination periods of 30-90 days. If you’re planning maternity leave this year, review your options carefully.
Understanding Life Insurance
Life insurance protects your family, dependents, and loved ones if you pass away. Many companies offer base group term life insurance (often 1-2x your base salary) with options to purchase more. Coverage over $50,000 is taxable.
If you don’t have dependents, the employer-provided amount may be sufficient. Those with dependents should purchase a separate term life insurance policy so coverage continues if you change jobs.
As a rule of thumb, aim for 7-10x your annual salary in coverage, adjusted for your family’s specific needs (mortgage payoff, college funding, etc.). If you can’t purchase a private policy, buying supplemental coverage through your employer (usually up to $250,000 without a medical exam) could be beneficial.
Don’t forget to update your beneficiaries on all life insurance and retirement plans.
Save For The Future With Your Retirement Accounts
Most employers offer retirement plans like 401(k)s, 403(b)s, or TSPs, often with a company match (typically 3-6%).
At minimum, contribute enough to receive the full company match. This is free money! If your company matches 100% of the first 2% you contribute plus 50% of the next 4%, you’ll need to contribute 6% to receive a 3% match.
Getting your full match doesn’t mean you’re “maxing out” your retirement plan. The projected max is $24,500 for 2026, with the IRS set to confirm details after the government shutdown ends. If you can afford to save more for retirement, you should. This is one of the best ways to lower your tax bill.
Extra “Perk” Benefits To Investigate
Other benefits worth exploring:
Finance Focused:
- Group Legal Plan: Access attorneys for estate planning documents at low cost
- Employee Stock Purchase Plan (ESPP): Buy company stock at 10-15% discount (consult your CPA before selling)
- Store Discounts: 10-50% off if you work for a retailer
Employee Development:
- Tuition Reimbursement: Many employers cover up to $5,250 per year
- Continuing Education: Help covering certification costs
- Charitable Matching: Companies often match donations up to $1,000 annually
Personal Benefits:
- Wellness Programs: Monetary incentives for health activities (free money!)
- Paid Vacation & PTO: Check if days roll over and if you can purchase additional PTO
- Commuter Benefits: Reimbursement for tolls, parking, metro cards
Benefits for Parents:
- Paid Parental Leave: Available for birth, adoption, or surrogacy
- Childcare Assistance: Reimbursements or on-site backup care
Benefits You Might Skip
Some benefits aren’t worth the cost:
- Pet Insurance: Premiums and copays often exceed occasional vet visits
- Spousal Life Insurance: Unnecessary if your spouse has coverage elsewhere
- Child Life Insurance: Small payouts ($10,000) better added to your emergency fund
- Supplemental AD&D: Base employer coverage is usually sufficient
Ready To Get Started?
Is your coffee cold yet, or are you just already onto your second cup?
We know that selecting your benefits in open enrollment can be overwhelming. This is where it can be really helpful to have a CFP to reach out to. If you’re interested in becoming a Gen Y Planning client in the future, you can join our waitlist here! If you have questions, or are looking for more details, it can be helpful to reach out to your company’s HR department directly. They’re meant to be a resource for you as you navigate benefits and more!