Starting Out


Boost Your Benefits

Kimberly Lankford

High-deductible health insurance plus a health savings account is a winning combination.



The biggest perk on your employer’s benefits menu is likely to be health insurance, but you’ll probably have to share the cost. If you have several options, consider a high-deductible policy, especially if you’re healthy. These policies generally have the lowest premiums and, if your deductible is at least $1,250 for single coverage or $2,500 for family coverage, you may qualify to make contributions to a health savings account. You don’t pay taxes on contributions to an HSA, and you can use the money tax-free to pay health insurance deductibles, co-payments and other medical expenses.

See Also: Our Special Report for Starting Out

Most high-deductible policies provide preventive care (certain checkups and tests) that is free of deductibles and co-payments. Many employers contribute about $500 to employee HSAs for single coverage or $1,000 for family coverage, no matter how much you contribute yourself, says Jeff Munn, vice-president of benefits policy development for Fidelity. Employers may also contribute extra money to HSAs for wellness programs.

If your boss doesn’t offer an HSA-eligible high-deductible policy and you have a lot of out-of-pocket medical expenses, make use of your employer’s flexible spending account (FSA). You can set aside up to $2,500 per year, which isn’t nicked by taxes and may be used tax-free for out-of-pocket medical expenses. Most employers let you carry $500 from one year to the next.

What if you don’t have workplace health insurance? You can buy a policy on your state health insurance exchange (see HealthCare.gov for links). If your income is below 400% of the federal poverty level (about $47,000 for an individual and $63,000 for a couple), you can get a subsidy to help cover your premiums. The Affordable Care Act allows you to stay on your parents’ plan until age 26, but if you live in a different city without access to their network of providers, consider buying a policy on the exchange.

Advertisement

Other Bennies

Sign up for pretax commuter benefits, if they’re offered. You can set aside up to $130 per month for public transportation and up to $250 per month for parking (and $20 per month if you bike to work). If you have children younger than 13, you can contribute up to $5,000 pretax to a dependent-care FSA for day care, preschool, after-school care, a nanny or day camp while you and your spouse work (or if one works and the other is a full-time student).

Don’t worry about life insurance—your employer may offer extra coverage for a fee—unless you have a spouse or children who depend on you financially. You may be able to add extra disability insurance, but this coverage can be pricey. Calculate whether your employer’s group disability benefits are enough to cover your bills.



Editor's Picks From Kiplinger


You can get valuable updates like Starting Out from Kiplinger sent directly to your e-mail. Simply enter your e-mail address and click "sign up."

More Sponsored Links


DISCUSS

Permission to post your comment is assumed when you submit it. The name you provide will be used to identify your post, and NOT your e-mail address. We reserve the right to excerpt or edit any posted comments for clarity, appropriateness, civility, and relevance to the topic.
View our full privacy policy


Advertisement

Market Update

Advertisement

Featured Videos From Kiplinger