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Are You Taking A Pay Cut?

Up close view of $100 bill

If you work for an employer that offers a benefits package as a part of your compensation, I strongly encourage you to make sure that you fully understand all that is being furnished to you. Alison's upcoming NFP certification course, for example, qualifies under her employer's tuition reimbursement program, meaning, essentially, that she's gaining several thousand extra dollars in compensation this year. Your employer furnishes benefits in exchange for a lower overall salary, so when you let your benefits sit unused, you're essentially taking a pay cut!

While we tend to think of our major medical insurance as reactionary, meaning that we only use it when something bad happens, there are components built in that are proactive. In fact, as medical costs continue to rise, insurers are more willing to invest in wellness programs today so they don't have to pay for expensive procedures and hospitalizations later. Courses to help you break bad health habits, provide pedometers, annual wellness visits and even money for medical expenses may all be on the table. It's important for you to understand the intricacies of your policy so that you know what's allowed, how much it'll be, and what incentives are offered. I've always found the benefits summary page to be the most helpful. It can be found with your plan information and it lists, in table format, the coverages as part of your plan for in-network and out of network medical expenses. Understanding that chart can save you a lot of money.

Probably the most unused portion your medical coverage is that for dental and vision. You're probably covered for two dental cleanings a year and an annual vision exam with some coverage for glasses or contacts. Again, by not using these covered visits, you're taking a pay cut. I've found it most helpful to get on a schedule so that I don't forget. As close to January 1 as possible, I schedule a dental cleaning, vision exam, and my wellness visit. Then, I do my other dental cleaning in July. That way, I know I've done what I need to do.

There are other, smaller benefits offered by your company. They may take the form of tuition assistance, retirement savings, vacation time, short and long term disability and more. Some companies are really creative with their benefits programs and you might have access to some extremely cool benefits, like gym membership, discounts, or other inventive programs. Your company likely publishes an annual benefits guide, usually in the month of October or November, that lays out everything in your package. Grab an electronic copy and store it for reference throughout the year.

Annual enrollment usually happens in the month of November and it couldn't be more important. You generally can only change your benefits outside of annual enrollment in very few circumstances, such as a marriage, birth of a child, death of a spouse or child, or changing jobs. Otherwise, your only chance to change your benefits is during annual (sometimes called open) enrollment. You'll get plenty of emails reminding you to complete your enrollment and, honestly, it's the most important thing that you'll do all month. Failure to complete the enrollment in the set window could result in your family getting the worst possible coverage, or even no coverage at all. Go through the enrollment process, calculate the cost, and make sure that you're picked the right benefits for your family.

I personally love annual enrollment and talking about benefits not only because it's important, but because these benefits provide critical coverages to our family without the outrageous costs that we'd pay if we bought them in the open market. Don't take a pay cut this year. Understand your benefits, use them as appropriate, and make sure your update your elections during the annual enrollment period.