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Why it's important to review workplace benefits in October

When it comes to updating benefit packages every October, "most people run for the hills," said Mark Germain, certified financial planner and founder and CEO of Beacon Wealth Management. "They wait until the last minute and just check off the boxes. And they don't always seek out advice, because they don't understand the options and don't know what questions to ask."

Germain recommends that employees consider these three factors:

  • Anticipated expenses. "What will they be spending on in the next 12 months? Medical? Disability? Child care? Education? Legal? The single most important thing is, which options will be the least out of pocket for them in the coming year?"
  • 401(k) plan. Check to see if there is an employer match and if regular deposits are set up.
  • Long-term care insurance. "Some companies allow employees to buy this within the company plan. They need to understand that buying it now is cheaper than when they retire, and they may be able to convert this policy to a private plan and take it with them when they leave the company."
Man in office
Yuri_Arcurs | Getty Images

October benefit planning is also an opportunity to link back to April 15.

"These [fall] benefit meetings with clients are a time to look at last year's tax return and see what they can do differently with benefits to help next year's taxes," said John Gugle, CFP and principal at Alpha Financial Advisors. For example:

  • "If the employer offers a high-deductible health insurance plan, utilizing a Health Savings Account will result in a credit on your tax return."
  • "Increasing your contribution to your 401(k) will reduce your taxable income, thus lowering your taxes," Gugle said. "Check to see if you are enrolled in an automatic savings escalator, and find out if the plan allows a Roth option."
  • "For those with deferred compensation plans, determine how much you want to defer in the coming year," he said. "The more you defer, the less tax liability you will have, and you may even drop down a tax bracket."

During the annual evaluation period, find out what new perks may be available. "One unusual benefit that I'm seeing more and more is a paid sabbatical," Gugle said. "You are completely not allowed to work. I see this benefit being used to reward long-term key staff."

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Benefit questions to ask annually

Health insurance:

  • Did you pay for a lot of items out of pocket, or did you not go to the doctor at all?
  • Do you plan on having a child this year?
  • Does your spouse have a better plan that you should be utilizing?
  • Does your employer offer a high-deductible plan to allow you to take advantage of an HSA?

Life insurance:

  • Did your family grow recently?
  • Are the kids now adults?
  • Is the mortgage paid off?
  • Did you have a health event that may leave you uninsurable in the private life insurance market?
  • Do family members still rely on your income to meet their needs?
  • Did you have a pay increase?

Disability insurance:

  • Did you get a recent pay raise that now puts you above the basic coverage?
  • Does your employer offer a better disability policy compared to the standard policy provided to all employees (e.g., 70 percent of pay vs. 60 percent)?
  • Is there a policy that will make contributions to your retirement plan even while you are disabled?
  • Should you buy a private disability policy to supplement your current employer plan?
  • Are you paying your premium or is your employer? (This has an effect on how the benefits are taxed.)

Source: Chad Chubb, CFP and founder of WealthKeel


Steve Burkett, CFP with Palisade Investments, advises couples to coordinate their benefit options and take the long view.

  • Medical plans. "Young and healthy employees are good candidates for a high-deductible health plan coupled with an HSA," he said. "Ideally, [they] could maximize their HSA savings each year, and if they don't use all of the money, the account can build for future years, even potentially deferring ... a portion of the money in the HSA all the way into retirement.
    "Coordinating benefits among spouses is a great idea — maybe one spouse can do a high-deductible/HSA plan while the other does a more traditional plan and carries the kids on the more traditional plan."
  • 401(k) plans. "Spouses should definitely coordinate the plans and match employer contributions," Burkett said. "Even in acrimonious marriages, this could bring folks together for a fun topic, since spouses will share equitably in splitting qualified retirement plans in the event of a divorce."
  • Extended disability. If you cannot "comfortably weather the waiting period before a long-term disability policy kicks in ... [you] need to strongly consider short-term disability," he said. "You need to adequately insure you and your spouse's earnings ability, as that [human capital] is the most valuable thing most of us have."

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— By Deborah Nason, special to CNBC.com