Fight inflation by maximizing your employee benefits

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Employee benefits are one of the most attractive things about a potential job and can determine whether you take an opportunity or leave it. When you decide to take the job, do you maximize the benefits?

If not, you may be leaving some money on the table. And in this time of high inflation, you need all the cash you can get to offset rising prices.

In the spirit of focusing on what you can control, let’s talk about employee benefits and how you might be able to use them to your advantage during these uncertain times.

Know your benefits

Before you can maximize your employee benefits, you need to know what they are, says Samantha Gorelick, a certified financial planner at Brunch and Budget, a New York City-based financial advisory firm.

“Many people don’t really know how much their employer will pay, or what their employer is offering in the way of 401(k)s, contributions to (a health savings account) or (a flexible spending account), or even short- and long-term disabilities,” she says.

Gorelick says knowing what you have access to can affect your financial situation.

FYI, this is also open enrollment season for some companies, so it’s a great time to better understand your benefits. Open enrollment gives you a limited time to activate benefits you may not receive, evaluate your plan and its costs, and opt-out of benefits you may no longer need. It usually takes place between October and January, depending on your company.

Think about health savings accounts

Evaluating your health care options isn’t always the most glamorous task, but it can have financial benefits.

For example, if you find that you haven’t used many health services in the past year and are in relatively good health, contributing to a health care FSA or HSA may be more cost-effective than paying a large monthly premium.

HSAs and FSAs mimic bank accounts that allow you to pay for health care costs out of pocket. Sometimes, your employer will contribute to those bills as well. To contribute to an HSA, you must have a high-deductible health care plan.

Both accounts can present opportunities that employees can take advantage of, especially around tax benefits, says John Campbell, senior vice president and senior wealth strategist at US Bank.

“When you look at their HSA or FSA accounts, this is an opportunity for them to set aside pre-tax money that they can draw on to cover qualifying or eligible medical expenses and deductibles that may be there,” she says.

With HSAs, the money you contribute grows tax-free, and qualified health care withdrawals are also tax-free.

See: Your HSA Can Be Extra Savings For Retirement: How To Make Smart Choices During Open Enrollment

Note that FSA and HSA are different in that with the former you have to spend the money in the account by the end of the year. However, with HSAs, you can roll over any money you don’t spend into the following year. You can also invest with your HSA, like you would with a brokerage account, says Campbell.

“So it’s not just about getting a money market type of rate, but they might also be able to take some of those funds and have a portion of it that goes to mutual fund type investments within the account itself,” he says.

Campbell says HSAs are a savings and investment vehicle that people can use to keep up with rising health care costs in the future.

If you decide to use HSA or FSA, keep in mind that they have different contribution limits. The FSA limits are $2,850 for individuals and $5,700 for families in 2022 and can be used with many health plans. Individuals with a high-deductible health plan can contribute up to $3,650 to HSAs; if you have a high-deductible family health plan, you can contribute $7,300.

Find out more: Get triple the tax benefits with an HSA and find an affordable health plan while you’re at it

Tap into salaries for education

It is unknown what could happen to the labor market if inflation continues to rise. One way to enhance your resume, so you’re in a good position no matter how the job market swings, is to use education benefits like tuition reimbursements or learning stipends.

Consider using that benefit to take a course or gain a qualification that develops your skills and increases your earning potential.

“If your employer offers tuition reimbursement, this could help by freeing up money you may have spent out-of-pocket on tuition, allowing you to save or invest that money,” says Campbell.

Not to be missed: That’s why the sabbatical could be the next best thing for the American workforce

Negotiate a salary increase or employee stock

Consider negotiating a pay raise or employee stock to improve your financial situation.

As the end of the year approaches, think about evaluating your performance throughout the year and building a case to renegotiate your salary. If you have salary reviews coming up, even better.

“A pay raise can help you offset some of the increases in the cost of living due to inflation and maintain your purchasing power and ability to save,” says Campbell.

Read more: What can I do to improve my salary? Am I paid fairly? In a strong job market, here’s how to push for a pay raise.

Evaluate retirement account contributions

Everyone’s risk tolerance is different when investing, especially when the market is in a nosedive.

If you can bear it, consider increasing your contributions to retirement accounts beyond your employee’s match if you get one, says Gorelick.

If you’ve maxed out the 401(k) limits, after-tax 401(k) contributions may be another investment strategy if your employer offers it. You can contribute up to $61,000 after-tax dollars into your 401(k) in 2022, giving you more tax-deferred growth on your investments.

On the other hand, you may be too financially stressed to raise your contributions, and that’s understandable. Other options, in that case, are to replenish cash reserves or reduce retirement account contributions.

“We are in times of inflation, which means most people may choose to keep more money in their pockets instead of putting it away in an investment account,” Gorelick says.

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Elizabeth Ayoola writes for NerdWallet. Email:


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