How Can I Take Advantage Of My Employment Benefits?

If you’re among the many Americans who remain “employed but worried,” there’s no time like the present to make sure you squeeze every last drop out of your employee benefits before news of a pink slip puts them out of reach.  For starters, take a look at:

  • Flex Spending Accounts – Get familiar with your plan’s details and deadlines. If necessary, move up eligible expenses to ensure you spend your share before you lose the chance.
  • Group Health Insurance – Schedule known needed treatment ASAP, before you get laid off.  For example, if you’ve been putting off making that allergy, dentist, or eye doctor appointment, waiting until after a layoff could cost you.  First, if your new health coverage is not as comprehensive, a likely scenario, you’ll end up paying more out of pocket.  Second, if you can’t pay with Flex Spending plan dollars, you’ll get whacked again.  (NOTE: If you are eligible for a spouse’s health insurance or for COBRA continuation coverage assistance, you may have some wiggle room, but check to be sure!)
  • Life Insurance — If you need insurance and your only coverage is through your employer’s group plan, start doing some research ASAP to determine the best way to make up for the loss of this coverage.   Term life insurance is the best, most cost-effective option for many people, but if your health history prevents you from obtaining affordable — or any — private coverage, it may make sense to take your group policy with you, if you can.  Either way, compare rates and benefits so you don’t have to decide in a hurry.
  • 401k Loans –  If you have an outstanding 401k loan that you’ll be required to repay in the event of a layoff, but you don’t have the cash to do so, you may be in for an unwelcome surprise next tax season.  That’s because, if the loan is not paid off, the IRS will treat it as a taxable distribution. If you’re under 59 1/2, you’ll also be subject to a 10% penalty.  (Here’s a good article from Kiplinger.)   One option:  If you have been continuing to contribute while you repay your loan, you might be better off directing the contribution toward paying off your loan – unless you are getting an employer match on your current 401k contributions (& perhaps even then.)   As always, the right answer varies depending on the situation.  Do the math to determine what’s best for you!
  • Outplacement benefits – Be sure to take advantage of whatever services your ex-employer-to-be provides to help you secure a new job.

About the author

Sherrill St. Germain, CFP®

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