Job Benefits: Making the Most of Open Enrollment

Perhaps you've been hoping for a raise and your boss just gave you that be-glad-you-have-a-job look. Or maybe you're just feeling squeezed by higher prices, or depressed by the black hole that used to be your retirement fund. In this time of trouble, there's one spot left where you can look to make up some of the shortfall: your company perks.

And this is the right time, as many employers are holding "open-enrollment" season for their workers to make decisions about their benefits packages for 2009. "Employees who take time to do their homework, weigh their choices and make smart trade-off decisions will be in the best position to make their benefits dollars stretch further this year," reported Hewitt Associates. That's important because Hewitt also found that the average employee will pay 8.9 percent more next year on their health insurance plans than they did in 2008.

Here's how to wring those pricey benefits for all they are worth:

Don't depend on the default setting. If you have to choose your health plan for next year, don't assume that you'll automatically get re-enrolled in the plan you currently have. In the first place, that plan may have gotten worse, says Hewitt. In the second place, your employer may consolidate all employees who don't choose a plan into the least costly (to the company) and least attractive (to you) plan. That means you have to read all the boring, impossible-to-understand documentation you're being handed. Note the items that various plans won't pay for, such as fertility treatments, name-brand drugs or self-referred visits to specialists. Also, make sure the ones you care about are covered by looking for a plan that fits your family: If you've got young children, you'll probably want one with fewer copays and free healthy-child visits. If you have chronic conditions, make sure the drug coverage is solid. If you love your doctor, call and make sure she takes the insurance you're choosing. Get help, with Web sites like planforyourhealth.com or Metlife.com/benefits, which offer health-spending simulators and tools for plan comparisons.

Consider the high-deductible/health-savings combo. These plans typically set deductibles quite high (for 2009 it's $1,150 for self-only coverage and $2,300 for family coverage), and then allow tax-deductible contributions to a health-savings account so you can cover those deductibles. The advantages are significant: monthly premiums are typically lower, and if you can afford not to spend it down, the cash in the health-savings accounts can build year after year and be used in retirement. For 2009, singles can contribute $3,000, couples can contribute $5,950, and anyone over 55 can throw in an extra $1,000.

Use pretax money whenever possible. If your company offers pretax dependent-care accounts or flexible-spending health-care plans, take advantage of these. Even if you don't have children needing daycare, find out what the rules are in terms of using that cash to help your parents or pay for summer camp.

Spend what you ' ve already set aside now. If you've got cash left in a flexible-spending account for 2008, make sure you use it up. The typical deadline for spending these "use it or lose it" accounts is Dec. 31; however, companies can extend that into March if they see fit. So, order the new pair of glasses, get the annual checkup, get everyone's teeth cleaned. If you're still going to have money left over, see if your employer has or will extend the date to mid-March.

Keep feeding the 401(k). That's hard, when you've already lost the money you put into it this year, concedes Michael Smith, an Atlanta financial planner. But it's the only way to recoup losses and keep your retirement on track. For 2009, you can contribute as much as $16,500 into your 401(k)—$22,000 if you're 50 and older. Bump up your contributions as much as possible. Make sure you're putting that cash into diversified investments and curtail its dependence on your company stock.

Use Roth benefits, too. Smith and his wife, planner Elizabeth Jetton, split their retirement savings between a tax-deferred 401(k) and a tax-free Roth retirement plan. Contributions to the Roth don't get a tax deduction going in, but withdrawals from them in the future are tax free, so the money earned in the account will never be taxed. That will come in handy in retirement, when the couple will be able to withdraw a mix of taxable and nontaxable dollars to fund their expenses.

Comparison shop privately for all of your insurance, just to see what ' s out there. As employers transfer more of the health-care benefits cost to their workers, the spread between privately offered insurance and group plans starts to shrink. If you're a young, healthy family, check out competitive plans at ehealthinsurance.com, just to make sure your employer's plan offers you the best deal. Similarly, shop privately just to get quotes on disability and long-term care insurance before you sign onto your company's plan, suggests Smith. As for life insurance, employer-provided group plans usually are very inexpensive, but not adequate. And because you would lose that coverage if you lost your job or changed jobs, it's best to those with dependents to buy life insurance on their own, he says.

Take all the freebies you can get. The one place companies are adding money to their benefit plans are in fitness and preventive health, according to Watson Wyatt Worldwide. That means they'll shell out for everything from gym memberships to smoking-cessation programs to discounts on massage therapy and acupuncture. In addition, many large companies offer education benefits, match charitable gifts and negotiate discounts for their employees; they may cover car rentals, admission to local cultural events or even airline tickets. Study the whole list, use what you can, and don't be shy about asking the human-resources department for a discount you don't see on the list. Negotiating for a deal with a local retailer is one way your company can put money in your pocket without actually spending any.

Job Benefits: Making the Most of Open Enrollment | Business