Have you ever wished you could wave a magic wand to help you through life’s harder moments, like facing unemployment or paying for your $200 monthly commute? Unfortunately, we don’t have a wand to offer you. But we can play the part of the fairy godmother and offer you advice on how to use your pre-tax benefits to achieve some pretty magical outcomes.
Toil and Trouble – Facing Job Loss with COBRA
Experiencing job loss can be a grim situation. One of the most stressful elements of job loss can be securing continued coverage for you and your family. You have options through both COBRA and the Marketplace. There is no either/or element when it comes to selecting continued coverage. You can pick and choose which program you will use for various parts of continuous coverage. For example, you could opt to go to the Exchange for medical coverage but elect COBRA coverage for your dental plan and FSA. Learn more about COBRA coverage fundamentals.
Magic Pumpkins – Riding in Style with a CBP
If you’re out of magic pumpkins and have resorted to commuting on the train, you can still work some modern magic to pay for the ride with a Commuter Benefit Plan (CBP).
A CBP has two accounts under it– a Mass Transit Account and a Parking Account. If you usually take mass transit to work (a bus, a ridesharing service), you should sign up for a Mass Transit Account through your employer. Find out if ridesharing services like Shared Rides and uberPOOL are available in your city. If you also use parking services like garages, SpotHero, or a park-n-ride, you can sign up for a Parking Account as well.
If you run out of funds in either one of your commuting accounts, you might feel derailed. Thankfully, it’s easy to make sure you always have enough money in your Mass Transit Account and Parking Account.
Fairy Tale Wedding – Celebrating Love with a New Election
Many people marry their own prince or princess. If both people have benefits through their respective employers, they are given the opportunity to change their benefits. This includes updating (and often increasing) how much money they set aside in their pre-tax accounts. Find out what other life events allow you to change your election.
The Insurance Dragon – Fighting Off High Premiums with an HSA
Sorting through insurance can feel like facing a fire-breathing dragon, especially if you have high monthly premiums coming out of your paycheck.
Fight off high premiums with a Health Savings Account. In order to enroll in a Health Savings Account through your employer, you need to be enrolled in a High Deductible Health Plan (or HDHP). Enrolling in a health plan with a high deductible means your monthly out of pocket cost will be lower, but your deductible (the overall amount you’ll have to pay out-of-pocket before insurance kicks in) will be higher.
Not sure which option is better for you? Strategize by adding up how much you could save in a year if you opt for the health plan with lower premiums and a higher deductible.
For example: Let’s say Cindy chose a health plan with a lower deductible and a monthly premium of $150. Over the course of the year, she pays $1,800 out-of-pocket in premiums. If she had decided she wanted an HSA and had selected the HDHP with a monthly premium of $120, she would have paid $1,440 in premiums and saved $360.
A Visit from the Stork– Caring for your family with FSAs
If you’ve recently welcomed a new addition to the family, congratulations! Having a baby is a qualifying life event. You can update any existing benefits you have or you can enroll in a new benefits plan. If your family is growing, you will want to see if your employer offers a Dependent Care Flexible Spending Account (or DC FSA).
There are several kinds of FSAs, including a Medical FSA and a DC FSA. Much like with the CBP accounts mentioned earlier, the FSA umbrella covers both Medical FSAs and DC FSAs. You can sign up for both accounts and have them at the same time. One of the most common expenses people use their DC FSA for is daycare. However, there are certain rules and limitations, which you can find here.
Happily Ever After
The 40-hour-week grind is far from a magical experience, but it’s not as bad as being trapped in a tower and told to spin flax into gold overnight. If Rumpelstiltskin shows up, we advise you politely decline his offer of early retirement in exchange for your first born. Instead, opt for the magic of pre-tax benefits and live happily ever after.